Developing a sales strategy is one of the most important things you can do to increase your profits and strengthen the health of your business. A sales strategy is a pro-active means of identifying prospects. It is a carefully designed group of products that meet the needs of customers. It is an intentional effort to usher prospective customers into paying sales. In a day of increased competition, reduced barriers of entry, and overwhelming regulatory burdens, small businesses can no longer sit back and wait for customers to come to them. They must pro-actively see out sales by developing a sales strategy.
In the area that I live, we have a shopping center less than a mile from our house. We get groceries, go to the library, bowl, take laundry to the dry cleaner, and eat out. There are dozens of stores and every year one or two new stores go into this center.
A couple of years ago, we watched a store called "High Pony" go in and go out of business within a relatively short amount of time. I never went into the store once and honestly had no clue what it was. My wife eventually explained that "high pony" represented a ponytail, and that the store was a boutique that focused on women's hair products. She explained, however, that all of their products were expensive and they didn't have any low-priced products. She encouraged me to go into this business and talk to them about developing a sales process, but by the time I got around to it, they were already out of business.
This business clearly suffered from a lack of an effective sales process. Many of us couldn't tell what they sold by the name of the store, their main advertisement, and they didn't have a good funnel to turn curious shoppers, like my wife, into paying and returning customers.
In this article, I would like to share with you three steps that every business owner can take to develop an effective sales strategy.
The first step in developing a sales strategy is to identify your target customer. This is a person (individual or business) that is likely to purchase a product from you.
A target customer doesn't even need to be someone who would actually use your product, just someone who would purchase it. For High Pony, I could have been one of their target customers. I would not have been purchasing for myself, but I have a wife and two daughters. I have nieces and a mother-in-law.
To identify your target customer, here are a list of questions you can ask yourself:
- What are the demographics of my existing customers?
- Why do my customers do business with me?
- Who uses products in my industry?
- Who purchases products in the industry of my business?
- Who would products in my industry benefit?
- Who are the customers of my competition?
- What are some niche markets identified by my industry?
Once you have answered these questions, the next step in identifying your target customer is to create an avatar of your ideal customer. Basically, the idea here is to strategically determine what type of person you are selling to. An effective avatar will have enough demand to support your business, but will also be somewhat narrow in focus.
For example, Planet Fitness is a gym that recently opened two stores in my town. Instead of just saying that their target customer is "anyone who wants to work out," they have narrowed their focus to individuals who may feel uncomfortable working out in a competitive gym environment. They have branded their stores as the "no judgement zone" and attract many people who have never had a gym membership before. On the flip side, Phoenix Training and Fitness is a specialized training company in Indianapolis, Indiana, that targets elite athletes who run triathlons and marathons. Just like Planet Fitness, they have narrowed their focus to more than just "anyone who wants to work out."
The second step in developing a sales strategy is to conduct a needs analysis. A needs analysis is the process of extracting needs from customers in order to fulfill the demand.
The easiest way to perform this analysis is to conduct a simple survey of existing customers. In conducting a survey, a business can easily identify needs that are not being fully met. To encourage the completion of surveys, some companies offer an incentive for completing a survey. For example, Subway offers each guest a free cookie when they complete a one-minute survey online. Taco Bell has also offered incentives like a chance to win an iPad or $500 in cash for completing a survey.
The benefit of a survey is that you can collect both aggregate data, as well as individual data. By asking open ended questions that require a written response, a survey can provide unique ideas that could only have come from a needing customer. Alternatively, multiple choice questions can identify customer preferences, concerns, and likes.
The final step in developing a sales strategy is to understand what a sales process is and to create a sales funnel. A sales funnel is the process of how a business evolves a prospect into an ideal customer. It is a pro-active effort to create a mutually beneficial relationship with the customer.
As I have explained before, a sales funnel includes four main parts. First, the funnel must identify individuals who would be likely to purchase your product. (These individuals come from your target customer avatar that we discussed previously.) Secondly, a sales funnel should provide these individuals an opportunity to try out the product. This "taste-test" gives you an opportunity to show the prospect why they need your product.
The third part of a sales funnel is to offer an entry-level product. This lower-commitment sale allows a customer to try out a product without fully committing to the product or businesses. The final part of a sales funnel is to offer a commitment-level product. This is the product or service that your "ideal" customer would purchase.
Effectively implemented, a sales funnel will provide an opportunity for a customer to move to the next part of the funnel, creating a clear path toward becoming an ideal customer.
A Question for You
How strategic have you been in developing a sales strategy?