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Thinking Like An Entrepreneur

Thinking Like An Entrepreneur
Table of Contents

Chapter 3
Men Are Cheaper Than Guns

Chapter 4
Intellectual Capital And Bootstrapping

Thinking Like An Entrepreneur


Business Entry Strategy (Part II) : Small Business Marketing 101

Whether you're starting a new business or running an existing business, you constantly need to market your products and services. Effective marketing translates into growing your company's revenue and becoming a successful business.

In our last column, we discussed the importance of studying your industry with a particular focus upon understanding distribution within your industry. For some companies, getting adequate distribution plays a major role in enhancing revenue.

For example, when someone goes into a hardware store to buy a hammer, the manufacturers who have their hammers positioned on the shelves have a major advantage over a manufacturer who isn't represented.

Yet, having distribution doesn't guarantee that consumers will purchase your products. Marketing converts prospects into customers. Most people who want to start a business first ask themselves what they want to do. Then, as an afterthought, they contemplate how to find customers.

After studying your industry, but before writing a business plan, create a marketing plan. Who are your customers? How will you reach them? Why will prospective customers want to do business with your company? What distinguishes your company from your competitors? How do your competitors acquire and retain their customers? What have potential customers told you about your products?

Entrepreneurship guru Peter Drucker says good entrepreneurship is market-driven and market-focused. In his classic book, Innovation and Entrepreneurship, Drucker tells the story of William Conner who created an enzyme-compound which dissolves a particular ligament in the eye. Conner built a very successful business based upon this single compound and later sold his business for a small fortune.

Was Conner a research scientist who just happened to be dabbling in ligament-dissolving compounds? No. Was there a widely-known need for ligament dissolving compounds in general? No.

Conner was a salesman to the medical industry when he decided he wanted to start his own company. Conner went out and spoke with surgeons about the problems and difficulties the surgeons faced. This is what is meant by being a market-driven company. Don't ask what you want to create. Ask what the market wants created. Learn from the market.

Conner learned that the process for cataract surgery was in general routine and easy, except for one incongruity making the surgery difficult and unpleasant for physicians. During the surgery, surgeons had to cut one eye ligament. This involved some risk to the patient and much stress for the surgeon.

With research, Conner learned that there was an enzyme which dissolved this ligament. After patenting his enzyme-compound, Conner quickly captured and dominated a niche market providing this compound to surgeons who performed cataract surgery. No longer did surgeons need to cut the ligament. They could easily dissolve it.

Had surgeons told Conner about some other need, his business would have moved in an entirely different direction. Having a market focus led Conner to success.

Market-driven companies must be flexible. You never really know where market demand will lead. Filling an existing market need is a great business entry strategy. But, to find such needs, you must get out and talk with your potential customers.

You show me a great marketer, and I'll show you someone who spends time understanding the real needs and concerns of his market. He talks with customers. You show me a marketer who spends all his time contemplating his own ideas, and Iíll show you an unsuccessful marketer, who creates assumptions about the perceived needs of his almost-customers.

Your marketing strategy must be an integral part of your business. For example, if you're a personal financial consultant who serves the affluent, your marketing strategy will be greatly different from the marketing strategy of an online bookseller.

Thomas Stanley, author of Networking With The Affluent And Their Advisors, tells us that people who are especially effective in marketing and networking with the affluent are aware of the special concerns of the affluent. One of the greatest needs of affluent business owners, for example, is enhancing their own revenue.

Stanley tells us about a financial advisor who was talking with the wealthy owner of a welding company. Rather than focusing upon the financial advisor's "me, me, me" interest of getting as much money under his grubby management paw as possible, the advisor focused upon his potential client's real concerns and priorities.

Upon meeting the wealthy welder, the financial advisor immediately said that he had several clients who owned oil rigs which needed welding services. The financial advisor put the welder in contact with the oil riggers. The welder received much business and opened a multimillion dollar account with the financial advisor.

By showing an understanding of the needs of the wealthy welder, the financial advisor differentiated himself from the multitude of financial advisors who only offered money management.

But, getting a single customer isn't the greatest benefit of effective networking and serving the true needs of your clients. Serving the true needs of your clients leads to word-of-mouth referrals and client retention.

While the marketing and networking methods of Stanley work for those serving the affluent, what about an online bookstore? Today, for the mass market, personalization is becoming automated.

Jesus Mena, author of Data Mining Your Web Site, says that the goal of online customer profiling, data mining, clustering, segmentation, statistics, pattern recognition of neural networks, and a whole host of other high-tech marketing terms is still to serve the customer better.

By profiling a customer, online sellers can position offers and advertisements that are of particular interest to each customer. Ultimately, you want your marketing, advertising, and offers to resonate with the target market.

Sometimes, a particular company will strike a cord within a population, as did the online auctioneer, which, in only a few short years, went from being a new dot-com to becoming part of established Americana. Other times, a particular ad campaign will prove especially successful, as did the entertaining AFLAC Insurance Duck Campaign created by The Kaplan Thaler Group.

While you can't guarantee marketing resonance to the extent of the AFLAC Duck, renowned sports marketer Jon Spoelstra, author of Marketing Outrageously: How to Increase Your Revenue by Staggering Amounts, says that you must avoid bland marketing at all costs.

Bland messages sent to untargeted audiences get lost in the noise (According to Shel Horowitz, author of Grassroots Marketing: Getting Noticed in a Noisy World, the average adult in the U.S. is exposed to two thousand messages every day).

When brought in as a marketing consultant to revive the Sacramento Kings' season ticket renewals, which had fallen through the floor, Spoelstra was advised that, even though he wrote a great renewal letter, it wouldn't be read by the fans, who were now throwing out all correspondence from the team.

Spoelstra guaranteed the letter would be read. The letter was tied to the leg of a three-foot-long rubber chicken wearing a jersey that said, "Don't fowl out!" The rubber chicken was stuffed into a tubular Fed-Ex container and mailed to fans.

As Spoelstra explains, the Fed-Ex box was the headline. The rubber chicken, the subheadline. The only purpose of the headline is to get the prospect to read the subheadline. The purpose of the subheadline was to get the reader to read the letter. Fans did read the letter attached to the chicken. And, a $12,000 rubber-chicken campaign generated about $2.5 million in extra renewals.

Spoelstra also says that smaller companies with limited ad budgets must measure success in terms of how many dollars of revenue is generated per dollar spent on advertising. Small business advertising must not only build awareness, it must ask for a trackable sale.