A quick overview of the book on Amazon states:

The essential "how to" book for anyone bringing a product to market, writing a business plan, marketing plan or sales plan. Step-by-step strategy of how to successfully organize sales, marketing and business development for a new product or company. The book offers insight into what makes some startups successful and leaves others selling off their furniture. Packed with concrete examples, the book will leave you with new skills to organize sales, marketing and your business for success.

This series of questions I have recently been using in discussing potential marketing opportunities with customers. It quickly determines how effective I can be marketing their product. If they have trouble answering these, there can be a huge disconnect between them and their customers/prospects.

1. What problem are you solving for your customer?
2. Does the customer know they have this problem?
3. Are your customers actively trying to solve this problem?
4. Do customers have a budget allocated to solve this problem or otherwise trying to spend money to solve it?
5. Are your customers actively spending money, time or effort on solving this problem and failing?

These questions though derived for a startup sometimes are even hard to answer for a mature company. I would even encourage you to re-visit these questions as time goes on so that you don’t drift away from your core values or mission.

If you would like to learn more about Steve Blank, he is participating in the Start-up Lessons Learned Conference Friday, April 23, 2010 from 8:30 AM – 6:00 PM (PST)
San Francisco, CA. The goal for this event is to give practitioners and students of the lean startup methodology the opportunity to hear insights from leaders in embracing and deploying the core principles of the lean startup methodology. It is also being Simulcast across many locations.

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Can you retain this customer?

Do you really look at this as a consideration when developing your marketing segments and the value you place on acquiring a certain type of customer? Most of us look at repeat and referral strategies across the board for every segment. Though, I would not disagree that we should have a strategy for each but consider the segment or that type of customer that you acquire that always seems to give you the benefit of the doubt or refer business to you. Should you not be biased in how you allocate your resources to that segment? Would it not be beneficial to offer certain incentives to that segment? Is this not the measure that most determines the profitability of the customer? My first question to most new clients: Do you have customers that refer you, and why? That is the strongest indicator on the health of the brand.

A great book on the subject is The Ultimate Question by Fred Reichheld. The Net Promoter website is a great place to start. To calculate your company’s Net Promoter Score (NPS), take the percentage of customers who are Promoters and subtract the percentage who are Detractors.

When John Jantsch author of Duct Tape Marketing, talks about the Marketing Hourglass, he says, “The top half indeed resembles the funnel concept, but the expanding bottom half, to my way of thinking, adds the necessary focus on the total customer experience that ultimately leads to referrals and marketing momentum.”

Just considering these statements above you can see why I feel so strongly that you need to consider throughout the entire marketing process your ability to maintain and build that customer into a repeat/referral customer. The initial sale should be nothing more than allow your best advocates to experience the entire brand! If you have segmented your marketing channels into: Who you want as a customer (part 1) and Who wants you? (Part 2), the next logical step is, Who will repeat and refer?

Losing customers is the clearest possible sign that customers see a reduced stream of value from the company. It is simply the strongest indicator that a brand is in trouble, even if you are replacing the lost customers with new customers. New customers typically cost more to acquire having to go through, the entire hourglass and older customers are working in the bottom half of the hourglass. Since that is true, repeat customers tend to produce greater cash flow and profits than newer ones. Referral customers are also more profitable because they typically enter the hourglass not at the top but at a much lower stage.

Ask yourself, does retention and referrals matter? Put numbers to it. How much does it cost to obtain new customers, to retain old customers? Consider, do the repeat/referral customers have different purchasing patterns? What makes a repeat customer attract other customers?

How would you go about in gaining a repeat customer? I believe customers evaluate you based on three areas: Value for the price, Quality, Service. If you provide metrics that are very responsive to these areas and continuously educate to receive input from your customer base, you will go a long way in retaining clients. However, these measurement metrics must not be at the expense of your customers time and resources.

You should consider ways of making them a part of your operations, service, sales and marketing processes. As an example, you may notice less frequent contact or payments extending. Look at these as signs to engage your customer. Building quality measurement systems into your process may be the most important ingredient in your marketing hourglass.

Related Posts:

Determining your Customer Perspective – Who do you want?

Determining your Customer Perspective – Can you satisfy these customer segments?

The Eagles always understood!

Referral Machine Guide

Technorati : Buyer persona, Duct-Tape-Marketing, Net-promoter-Score, Referral, Repeat, Target Market

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I understand that starting with this statement may not be the best lead in this day and age, but you do have to start your process thinking here. Start-up or an existing business has to define their ideal customer. When you do, you understand your marketing challenges so much more clearly. So, who do you want as a customer? I would assume that you would like to have one that is economical to obtain, profitable once you have them and easy to retain. We need to start with a few specific characteristics but the overwhelming issue that you must address is how that interaction with the customer happens within your company, and if you can support it in a way that is acceptable to them.

How Many Customers Do You Need? Think of the throughput of your organization and the mix of customers that you can effectively support. Can you only a support a few large customers, or many small customers? If you would like a mix of both, consider your percentage, 80/20, 70/30? Think how this would change not only your marketing but your operational structure?

What are the characteristics of your marketplace? Do you understand the market size, the growth rate(shrinking or growing), the different segments and your competition? You also need to understand the economic value of customers in each category that you may segment them in. After you determine the characteristic, ask yourself: Can you economically compete in this arena? Cost to service certain markets can be considerable; it may be a good time for a SWOT analysis?

Decision Matrix template provided by Systems2win

What specific characteristics vary among customers that affect their profitability? We try to have an ideal customer but the bottom line is that all customers are different. Some of the specific characteristics that might be different are:

• Volume
• Sales support
• Inventory required
• Distribution support
• Credit and collection costs
• Speed of collection
• Engineering support
• Order entry support
• Field service

Maybe the most important consideration is when you consider the items that your organization values the most, do your customers value them also? It is a hard road to go if you sell your organization on the values that identify your organization and then turn around and find a customer base that disregards them. So, who do you want as a customer?

Related Posts:

Have you taken the path of your customer?

Another word for Marketing – How about Voice of the Customer?

Have you struggled defining your Ideal Client – Find out how

Is your Value Stream Mapping backwards?

Technorati : Buyer Persona, Ideal Client, SWOT, Target Market

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After a recent presentation to a group of start-up businesses, I asked for feedback. The only negative feedback I received was that someone was really looking for that Aha moment. Or that one great thing to do in marketing that could help them jettison their product or service.

Why is that? I think inexperience marketers always wonder why little of their marketing works. They run ads, get PR and time and time again are baffled that just little works in the way of marketing. I disagree that there is not anything that works. I believe just about everything works, but only just a little. The world has become so fragmented on the way it receives information that you have to reach even a very target audience in numerous ways. I think that is why building a community with your existing customers is being emphasized. If they are targeted enough and have a strong enough dependency on your product or service, you will have the ability to communicate with them.

In implementing a Duct Tape Marketing System that Aha moment comes when the customer finally discovers their Target Market/Ideal Client. Immediately after that time it seems that their core message materializes and their marketing messages start following a defined path.

Even with have a defined message, you still have to use numerous methods to reach your audience. Again, there is not one way that is going to work. But what does work is great content and linkage. You must link every single event together and build on that. Think like a spider web. Every connection you make, you must find a way to link it to another event or another instance and to another and to another. Soon you will have started to spin your web and when you start collaboration you can start tying their net into yours.

It gets a little more elaborate than this but if you are looking for that big bang from a marketing firm, I don’t think it is there. I just don’t think it can be made cool enough for you!

Technorati : Effective-Marketing, Ideal-Client, Marketing-System, Target-Market

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A few suggestions to simplify your marketing:

1. Quit trying to sell to people that don’t want your product.
2. Quit the phone calls
3. Quit mailing to people that don’t read it
4. Narrow your print ads to publications that address your target market
5. Place online ads where they are much targeted.
6. Approach bloggers and social networks that are targeted to your market only.
7. Ask customers and prospect what they want to hear about.
8. Look at key trigger words that will tell you to stop marketing
9. Get creative and service only our customer’s needs.

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A good reason, why I think a full refrigerator is overrated, FOOD ROTS.

Think about how your own refrigerator is used. The kids come home, they open the refrigerator up, they look at it and do not see anything to eat and it’s full! When they do use it, they never use the last little bit of anything, do they? It’s all waste, no matter how much or how little.

Most marketing is very much a same way. A customer has so many choices, and it’s really not because of him. It’s because of us trying to be everything to everybody. We are so afraid to target ourselves and to limit ourselves in any way, that we just become one of many inside the refrigerator. Just one of all the choices, because all we are saying that we can put something in your stomach and fill you up.

When you have a clearly defined marketing funnel, you take customers through the cycle not only for your benefit but for theirs. Qualifying a customer is primarily for their benefit. A good match between customers, suppliers and products is the single most important strategy you can use to grow your business. Losing a prospect in the middle of the funnel should happen. If you meetings are about why you lost these prospects, you may want to re-think your position a little. Think how could lose them sooner and spend more time bringing others into the funnel and qualifing them quicker. Your least expensive marketing should be to the masses and/or less qualified prospects. Once someone gets into your funnel, find ways to qualify them quickly. Rotten food stinks up the whole refrigerator.

So how do we go about distinguishing ourselves? I believe the single most effective way to do this is to determine your customer’s needs? We can’t fulfill every need, but what is the one thing that we can fulfill?( Use the 5 Why’s to do that). If you want to get your marketing on track, I think this is the single most powerful influencer that you can do. Take a look at the refrigerator once again; do you want to be the eggs on the left or on the right?

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Time and time again, I struggle with people identifying their ideal client. This is my attempt to take some of the mystery out of the selection. I think once you have this identified, 50% of your marketing is done.

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But many of my clients come to me because they are in trouble or starting up. The first question I always ask is, Who is your ideal client and What is your target market? The second question – Who is not and What is not? After that, I know if I can help them or not. If they cannot define either question, we are in trouble, because I must convince them it is not everybody.

However, I ran across an exercise the other day through a nonprofit site that I thought was excellent. Now, I have modified it and have given credit below but take a look at this process and see if it helps you:

1. Accept that your target audience is smaller than you think: That’s right, just accept the fact that it is not the world. Maybe, if you are limited geographically that would be start. But acceptance is the key right now.
2. How many people do you need: Do you need all of China or just one province. What will it take me to be successful? If it is just 1 new customer a week that would mean a certain number of contacts per week would be needed. Looking at your sales cycle, think through the process. If to get 1 customer it takes 5 presentations a week. To get 5 presentations it takes 25  direct contacts a week which takes activity of 100 leads per week. You are just taking a simple sales cycle, putting numbers and time to it. 
3. Focus on the ones you can persuade: Start looking at the people that will buy into your product or service. Lets face, trying to sell something to someone that is going to make his life/job more difficult is tough. Pick you battles with the people that have the most need for your product.
4. Segment till you can’t segment anymore: What is important? What is not? As you segment, peoples buying patterns become very apparent. I always find this part of the exercise fascinating. You start creating the actual value that you give to a customer in this segment. But on the other hand, you may actually see where certain segments that seemed completely different actually have commonality.  
5. If not the same person, target audience with most influence over decision maker: Sometimes early in the process, you cannot reach the decision maker effectively and must start with another person. Of the people you could start with, which one will eventually have the most effect over the decision maker? Why not start your marketing efforts here? 
6. Find distribution sources: There is nothing that can bring numbers more quickly to the table than distribution and affiliations. We could include networking into this group but my experience is that networking does not bring large numbers and really fits more into the channels above. Distribution and affiliation is where the true mass of numbers are. Consider who has the contacts to bring you the type of customers that you have described above.
7. Find an audience that will show and voice support: Are there certain groups that may have a strong reason to support your product or services. Should they be marketed to in a different manner than an individual or organization that intends to purchase the product. These groups could prove very powerful for you or even someone that could influence regulation or public support.
8. Test target before launch: Your perception may be wrong. Don’t build an entire marketing plan and strategy around your perception or your team’s perception. You  must go out and test the waters. Try your theories out, now is the time to be wrong. Offer some incentives that could accelerate people through your marketing cycle so that you can gauge your end result.

This information was based on a study I read that was a combined effort of  the Communications Leadership Institute, www.communicationsleadership.org and the Spitfire Strategies, www.spitfirestrategies.com. And of course, it has been duct taped!

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Don’t be a big fat zero: It is pretty scary to brand yourself. You always feel like your limiting yourself and as a result try to be everything to everyone. And as a result your are nothing to no-one. A ZERO! Another alternative is to to leave your customers do it. That perception, is of course probably the most correct one and as I have recommended before go call 10 of them and find out what your brand is. A word of caution is that it is very difficult to change this image and if you so choose to try it is expensive. I have written several posts on this.

But don’t be less then zero: I think the scariest part is leaving the branding to your non-customers. Now, let me do the math. Your customers in your target market is called market share. Your market share more than likely is something less than 50%. Maybe, 5% if you are extremely successful. So, if you have not developed a strong brand, if my math is right, 95% of your target market is defining it for you. So, go read John’s post, I think you need to take hold of it and brand yourself with everything you got before someone else does.

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Service, Product, Retail, Construction, Professional services, Employees, and Volunteers … it doesn’t matter. A referral system should include 7 basic steps that will help you identify and succeed in ways you never imagined. The principles are outlined in a 7-step process that we will communicate this week in leading up to Referral Week. It is the basic understanding on how to apply the Referral Flood program to Your Business or Organization.

Step 1 = Create a referral target market(s) – you must first create a target list of companies and individuals who can be motivated to refer. This can be clients, volunteers or a network of related businesses. Most people think that everyone is already doing it or would be unwilling to do it. They just look at it as a black and white issue. But I will tell you one thing; very few things are black and white. Ask yourself, who would be willing to refer my company and why? Who is going to benefit? Example: Does a Home Stager make a Real Estate agents job easier? If you want to build a strong referral network and program, sit back and think about what is the motivation for this person or organization to refer us? What is in it for them? Don’t think about yourself.

But as you go through this list, don’t start with strangers. Strangers are not going to refer you unless there is a real incentive package included. The less you know the person, the greater the incentive you must make. The more the people know, like and trust you the easier it is to refer.

This is not rocket scientist type information but it is amazing how most of us forget about it and jump into a network group thinking that someone is going to refer you. They seldom do but remember the old adage to give before you get. So think about a few of these Target Markets and how they would benefit from referring you.

The reason I made a Venn diagram is to demonstrate your Core Referral Message that will be discussed in the next post and how to hit a home run with it.

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List your core messages, you can have more than one but keep it short and sweet.

1. Which one differentiates you the most?

2. Which one screams the loudest?

3. Who and what influences whom?

4. Which would could prove the most effective?

5. Which one has the highest risk attached to it?

6. Which one  has the Lowest Risk?

7. Which one is the easiest to support?

8. Which is the easiest to implement?

   1. In the short term?

   2. In the Long Term?

9. Which one is the most affordable?

10. Which of them is most recognizable to your customers?

11. what are the best vehicles to reach your audience or constituents?

12. Can you combine and optimize?

13. If you decide on more than one, what is the best timing to introduce each?

So what is your core message?

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Can everyone in your organization name it?

Can everyone of your customers name it?

Here are some tactics in developing one:

1. Reduce product pricing
2. Make it difficult for others to duplicate
3. Make it difficult for buyers to switch
4. Introduce new product or services
5. Differentiate product or services
6. Develop enhancements
7. Establish strong business alliances
8. Leveraging your suppliers
9. Be first in the market place

If you want to stand out from the crowd there is no better way of doing it than have a great competitive advantage. Do you have a few more?

Want a little more background, check out the Business901 Product Marketing Process.

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Case in point, Dorothy from the Wizard of Oz! She was running away from home for a better life. They did not understand her. I have 2 teenage boys, can I run? No, I understand that this is a part in their life that they need to find themselves. They need to find their own identity.

I have always thought many companies struggle with that. I talk to businesses everyday that define their target market as small business. I want for someone to take note here, SMALL BUSINESS IS NOT A TARGET MARKET.

So how do you define your niche? For starters, it is what you do well. Now, think about this – what do you do better, really better, than anyone else. What individualizes you more than any one single point. What would your customers say? What would your strategic partner say? What would a referral partner say?

I was taught the "Five Why" method. Keep asking why to each answer 5 times. At the end, you probably have the answer that you are looking for.

1. Who(Why) is your target Market?  Small Business
2. Why? I work with companies that do not have an in-house marketing department.
3. Why? Our system is set up to handle that function.
4. Why? Because it is a systems.
5. Why? Because systems work.

So now, who is my target market from just that short exercise, I can tell you right now. If you don’t believe a system works, you are not my target market.

How about Dorothy?   Remember the words of the lion to the wizard. Yeah, and the wizard took off without her. Linda, the good looking witch came back and told Dorothy what? "You have had the power all along, you just had to find it." I encourage you as a business to find your niche and identify with it. If you want your marketing to work, don’t try to be everything to everyone. Find the power within your organization and tap those shoes together. It’s about the shoes!

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