Friday, July 10, 2009

The 60 Mile Comfort Zone

In talking to small companies across the country about ways to expand their business, I noticed that there were some common factors. They almost all had an established set of customers with whom they worked, located with in a radius of about 60 miles. This seems to be the Comfort Zone of the owner of a small company. The sales of the company’s product or services are based on the personal relationship between the owner and the customer within The Zone.

It is great to have a group of friendly customers who you work with on a regular basis, but how do you take the company to the next level? If you are dependent on one group of customers then you are subject to the same economic cycles as they are.

Jumping out of The Zone

To grow a business past this initial stage requires a Sales and Marketing Plan. Some of the topics which should be addressed in the plan are:

Who is the new target market?
What are there needs of this new market?
Where are they located? Are there test locations or are you looking to expand nationally?
How do you find the clients in the new locations?

This seems fairly simple but I am surprised how many small businesses struggle with these few basis questions.

At this point in the Blog I will make an offer to any company who would like advice about taking the next step to grow. I will talk to you for 23 minutes about ways to expand your company into the larger US marketplace. I only ask that you jump to my web site and fill in the contact information. I will send you back an email with a time for you to contact me. You pay the phone call and I will talk to you for 23 minutes.

Who is the new target market and where are they located?

“I am looking for the manufactures that use precision machined parts made out of Titanium any where in the US”
“I am looking for Chief Learning Officers, of Fortune 1000 companies, located in the Metro Boston or Metro Providence area”
“I am looking for builders of large rotating machines that have require extreme life and reliability”
“I am looking for OEM builders of Automation Machines with between 16 and 128 inputs and outputs, anywhere in the US”
“I am looking for CEO’s of small to medium sized companies that recognize there own need for a coach to help them”

By specifically analyzing your target customers, you break up the overwhelming large potential market of the United States, into a specific target that you can point your finger at. Be detailed and specific to define the target. You can always define more then one target market, and establish a plan to target each one.

I like to do this as an exercise in my Sales Rep Training Classes. I go around the room and ask professional sales people, who their target customers are. Usually it takes one or two them to start talking before the others student’s brains turn on and they come up with ideas. I like to use the old fashioned method of writing on a flip chart in front of the class, and freely share the ideas with everyone in the class.

I had one independent sales rep based in Chicago, who thought his customers were anyone breathing in the northern hemisphere of the planet…… He went out of business.

What are there needs of this new market?

The sales strategy must address the needs of the customers. If you are selling a low cost commodity product, then set up a low cost method to sell the product to the customer. Apple is a great example of a paradigm shift in the selling of software. Software was sold to customers in colorful boxes on shelves of stores, like CompUSA and Egghead. As the internet developed, there was a shift to downloading of the product from the developer’s web site. Apple changed that model with the App Store for the iPhone and iPod. Now you can just touch the desired software and it is automatically be delivered and installed in your device. Apple now has total control over the distribution of all the software products for this niche market, and collects a fee on each App sold.

On the other extreme are custom designed automatic assembly machines, designed to increase production and lower the cost of manufacturing products. Each machine is designed to meet the needs of that one specific customer exactly. Since each customer is different each machine is also unique.

In the case of Apple there are no sales people involved in the purchase of the App software. In the case of the custom machine, the Sales Engineer works closely with the customer throughout the entire design process. The custom machine builder’s sales process is entirely based on building up a long term relationship between the sales person and the customer.

In both of these examples the structure of the sales team should be selected based on the needs of the customer.

More about how do you find the clients in the new locations, in the next entry.

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