Create a Sales Process: 5 Reasons Why You Should

I recently met a friend for coffee.  We were visiting a place that both of us had been to previously, but neither of us were regulars.  We had been chatting when we first walked in, so I wasn't really paying attention to the menu posted on the wall behind the cash register.  No problem.  I always get the same thing; a berry herbal tea.  But when I asked if they had any herbal teas, they handed me a huge book of options.  Some of the teas on the list were highlighted, some were scratched out, and some had no markings.  It was explained that they didn't carry every tea in the book and were out of some that they do carry, but I could tell by the markings in the book.  At this point, I was feeling the pressure of the line of people behind me and couldn't even tell what my options were due to the very complicated process.

This business could greatly benefit from implementing a formalized, intentional sales process.  A sales process is a defined step by step plan on how to help a customer move from being a prospect, to making a decision and purchasing a product or service.  When effectively implemented, a sales process can actually be one of the most valuable assets of an organization.  Therefore, every business should implement a formalized sales process for five reasons.

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Target's Business Model

Walmart leads the world as the largest and most powerful retailer.  Their big box stores offer low prices and a large selection to their customers who line up to take advantage of the savings.  As I explained in a recent post, Walmart has been able to offer such low prices due to their economies of scale. But it has come at an expense; their customer service is often nonexistent.  And this provides an opportunity for other businesses to gain a strong market share in Walmart's shadow.  One of these businesses is Target.

In this article, I am going to dissect Target's business model focus of customer service and how they have found a competitive advantage to compete with Walmart without (completely) slashing their prices.

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Economy of Scale Example: How to Compete

Competing in the age of big box stores can be overwhelming.  "Mom and Pop" stores have been run out of business by huge corporations like Walmart, Home Depot, Kroger, and yes, even Amazon.  Yet, many consumers want to "shop local" and support business owners.  But how can a small business compete with the big box giants of today?  By applying strategic innovations to their businesses.

But first, we must understand why it is important to have an awareness of economies of scale.

I first learned of the concept of "economies of scale" in my high school business class.  It was explained to me in basic terms that big businesses gain efficiencies from being large that make it difficult for small businesses to compete.  While economies of scale include things like a knowledge base, expertise, distribution, partners, and advertising, one of the biggest challenges small business owners have in competing with giant retailers is price.

Several years ago, a friend of mine owned a game store where they sold all types of games, both common and unique.  He was able to dig into a niche market and were experiencing success.

At the time, the game "Apples to Apples" was brand new and building momentum.  My friend started offering this game early on before

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Problem Solving Innovation

Innovation can solve dog doo problems in the city. 

Innovation can solve dog doo problems in the city. 

Innovation is often the result of searching for a competitive advantage.   This makes perfect since - we specifically are looking to see what innovation can put us ahead of our competition.  As we explained in our post on Innovation as a Competitive Advantage, innovation can be a great tool to get ahead.  Innovation, however, can also be an excellent tool for solving a problem.

Problems in the world are ever increasing, and innovation can be used to solve many of these.  It is just a matter of realizing the potential opportunities.   For example, let's consider two different problems.

PROBLEM 1: On a recent visit to Chicago, I had the opportunity to spend some time downtown.  One thing I observed was the challenges that dog owners face in an urban setting.  There really isn't anywhere for dog owners to "walk" their dogs. The result? Dogs must do their dirty business right on the busy sidewalks and the owners must bag and carry the waste with them. 

PROBLEM 2: For the second problem, we can consider the rising levels of methane gas emissions.   The problem with methane is that it can potentially act as a green house gas, meaning that when in our atmosphere, it can create a heating effect.  While the main source of methane comes from natural gas, methane also comes from additional sources, such as from the waste of humans and animals.

The way this problem was solved is a perfect example of innovation.

Just down the road from MIT in Cambridge, MA, artist Matthew Mazzotta created an innovation that solved both problems: what to do with urban dog waste and a way to avoid methane emissions from this waste.  His idea was to turn dog waste into an energy source.  The result? Park Spark. 

The Park Spark project is a collaborative art project that  "brings together visual art, technological research, city planning, and community organization."  The process works so that dog owners deposit their dog waste into a methane digester which utilizes the byproduct of the waste, methane, to burn a light in a lamp post.  Yes, dog waste is being used to light a streetlamp.

Following the lead of Park Spark, several other cities around the world have begun to follow suit.  This innovative project brings to light an amazing opportunity that could potentially solve more than one major problem we face today. 

What problems have you seen solved through innovation

Innovation as a Competitive Advantage

Innovation as a Competitive Advantage -

Finding a competitive advantage is often a necessity for many smaller organizations.  Big companies have economies of scale that give them the edge.  Since small companies cannot obtain the same economies of scale as their larger counterparts, how do so many small business compete?  Through innovation.  The creativity and ingenuity that so many small businesses cultivate provide them with a competitive advantage that big business just cannot compete with.  Innovation can be the key to a small business competitive advantage.  

A competitive advantage occurs when an organization develops or obtains a certain attribute that allows them to outperform the competition.  A very simple example of this is the competitive advantage that large, "big box" companies have.  These large companies are able to obtain products for a much lower cost than a smaller competitor.  Large companies purchase larger quantities which drive down their costs as products are often sold at a lower cost for larger quantities. 

In addition, larger companies are also often able to reduce distribution costs.  In its simplest form, distribution is the process of how a product gets from the maker of the product to the store that it going to sell it.  By establishing their own in-house distribution systems, larger companies can reduce their costs instead of relying on a more expensive third party to deliver the needed product.

So how is a small business supposed to compete when these large companies have all of the price advantages?  The answer is innovation. 

  1. Innovation in larger companies can be a very, very slow process.  Take Starbucks for example.  If Starbucks is interested in innovating their product line, they must innovate on a very large scale.  Planning, preparation, testing, tweaking, and training must all take place before a new product can be rolled out.  In contrast, a small local coffee shop could potentially roll out that same new product in just a few hours (or however long it takes to put the new item on their menu). 
  2. Innovation doesn't always have to be related to the product either.  Innovation in service, delivery, and atmosphere can occur much easier and quicker for a small innovation.  The reason?  Large companies are just too big to be able to "pivot" (or quickly change) like a small business can. 

What innovations have you seen in smaller businesses that would just not have been possible in a larger business? 

Redbox - Innovation Has-Been?

Since I was first introduced to Redbox in 2006, I have found them to be one of the most intriguing companies in recent years and are one of the great examples of innovation.  While they have had amazing success, the question I now have is: is Redbox an Innovation has-been? 

If you aren't familiar with the company (which I am not sure how you could have missed the red kiosks located at thousands of grocery stores and pharmacies in the US), Red Box is a kiosk DVD rental service.  The idea is that rentals cost just over a dollar a day and can be returned to any kiosk in the country.

First, I find it fascinating that McDonald's Corporation, a company we associate with as a food service business, was the original funding company.  It is easy to understand the innovation behind launching Redbox, however, if we think of McDonald's as being in the Real Estate business rather than being in the food service business. 

One of the core elements of Red Box is the strategic placing of their kiosks, many of which are located at the golden arches and this thinking by McDonald's was quite brilliant.  McDonald's knew the resource they had in their locations and used this as a distribution channel for many kiosks early on.  Imagine a family vacation road trip.  You stop at a McDonald's for breakfast and rent a couple of movies at a Redbox for the kids to watch on your minivan DVD player.  That night (and five states later) you swing by another Redbox and return the rentals which only cost you a few dollars to rent.

Secondly, I find it strange that a company has grown so large in an arguably dying industry.  While it is true that the DVD rental kiosk was an innovation that helped to destroy the brick-and-motor model of Blockbuster, DVDs are a technology that is arguably on its way out due to online download and streaming options.

The question now becomes, what happens to Redbox when DVDs become obsolete?  Their brand (i.e. "box") is designed around the kiosk, so it will be interesting to see how Redbox deals with the moving trend to streaming videos over the internet.  Will Redbox Instant (their attempt at a streaming service) fail to effectively compete with Netflix for the online market or will they find a way to innovate once again?