How to grow your business the smart way
Cold calling, email marketing – oh no no no no…NO not me!
There is a lot of confusion about how to grow a small business. Many people think if you advertise more, you’ll gain more customers and your business will grow accordingly. Nothing could be further from the truth. Prospecting for new business needs to be part of your growth strategy.
Ways to grow a business
Growing a business does not automatically mean increased profits. Growth can often mean increased overheads, money tied up in increased inventory or having to employ additional staff. For growth to be sustainable, you have to know your market and be competitive in that market. Not only that, you need to understand the difference between marketing, advertising and personal selling.
There are four ways to grow a small business and make it more profitable.
- Attract more customers through marketing and promotional activities
- Increase the average sale through the number of sales per customers
- Increase the average price per sale per customer
- Reduce expenses
Reducing your expenses is usually the hardest of these four growth strategies for SME’s. This is because most small to medium business enterprises don’t have this opportunity because they don’t have the economies of scale that bigger businesses have. Small businesses already operate on a shoestring budget.
The size of your business is in direct proportion to the number of customers you have. You either want to gain more customers, get your customers to buy more or get your customers to buy more often. This sounds simple enough, but why the focus on gaining more customers and not developing more products or services. Without customers who buy from you, you have no business.
So the most logical way to grow a business is to increase your customer base and increase your sales as long as they are profitable sales. This means having a focus on acquiring new customers and persuading your current customers to buy more, more often. An effective way to grow your business is through various prospecting activities.
If you don’t engage in some kind of proactive prospecting as part of your overarching marketing strategy, where do you expect your business to come from? You can’t rely on your current customers for long. At some stage you will lose a percentage of your current customers for a variety of reasons.
Why Customers leave
Customers do not remain customers forever and there are a multitude of reasons for this.
- 1% Leave because they die.
- 3% Move to another town, city or country.
- 5% Find alternative solutions or develop other business relationships who could be friends or come highly recommended.
- 9% Start to do business with your competition. This is not always because you have done anything wrong it could simply be because the person you did business with was replaced by a new person and they have a strong relationship with another provider so they take their business elsewhere.
- 14% Are dissatisfied with the service they have received. Perhaps you didn’t deliver what you promised and the customer no longer trusts you. A great reason to under promise and over deliver.
- 68% Leave because they are upset with the how they were treated. I might not be you in particular, it might be one of your staff or someone else in your organisation. It could also be something that’s happened in the industry that’s given them a bad taste in their mouth.
As you can see by the statistics above, customers will not stay with you forever. This is called natural attrition. With natural attrition, you always have to acquire new customers to make up for the ones that leave. If you don’t focus on acquiring new customers and keeping the customers you do have happy, eventually your business will drop off to nothing.
Marketing is not selling
So why shouldn’t you rely on marketing and promotional activities to acquire new business? Because marketing is not selling. People buy from people, not companies and certainly not a promotional activity or advertisement. Marketing and promotional activities are designed to make the phone ring, encourage a prospect to visit your place of business of business, make an inquiry through your website or contact you via email. At some point, you have to engage in personal selling.
Personal selling is a promotional activity and should form part of your overarching marketing strategy. Advertising and promotions form part of the marketing ‘communication’ strategy. This is how you communicate your marketing message. Every marketing message has a goal; to build your brand equity, promote a product or service, encourage inquiries or generate new leads as an example. But what if you marketing and promotional activities aren’t working? What if these activities aren’t bringing in new leads? You have a choice, either sit back and wait for the phone to ring or you can proactively go out there to seek new business.
Imagine if you only relied on your current customers to see your business through the years ahead. If you did, according to the statistics above, you will go out of business very quickly. All businesses need to keep prospective customers in their sales pipeline to ensure ongoing business.
The Sales Funnel
You may or may not have heard of the sales funnel. The sales funnel is a pictorial representation of how leads work their way through the qualifying and buying process. It visually describes the sales process beginning with a cold or warm lead and what happens with these leads as they move through the funnel until the sale is concluded or the prospect drops away.
A lead is placed in the top of the sales funnel but not all leads turn into customers. Some leads might not be in the market to buy your products or services, they are simply not a good fit. Other leads might be in the market in the future, just not now. Still others are good leads, become hot prospects and for whatever reason choose not the buy from you.
Prospects can also fall out of the sales funnel if you don’t follow a sales process like the Bi-Sell-Cycle™.
Stages in the sales funnel
A lead is sometimes referred to as a suspect and sits at the top of the sales funnel. They are generally someone you haven’t spoken to. If a lead matches your target market, then they may be someone worth pursuing.
There are two types of leads; warm leads and cold leads. A warm lead is someone who has some interest in doing business with you. They come to you through your website, advertising, promotional activities, social media, a referral or a contact you have made through your personal and professional networks.
A cold lead is where you proactively go out and seek business in your target market through cold calling or email prospecting activities. A cold lead generally involves contacting a person you have never contacted before or have any connection to. For example, picking out a random person to call from LinkedIn or a printed or online directory. Ideally warm leads are the best prospects to fill the top of your sales funnel.
The second stage in the sales funnel is where a lead becomes a prospect. That means they have confirmed they have some interest in your products and services. It’s at this stage you meet with them to determine their level of interest. By asking effective questions and taking them through the buying and selling process, you both agree on what the next step is.
Once you have agreed to move forward, the next stage in the sales funnel is that they become a qualified prospect. This is the most critical stage of the sales funnel because you have verified that they have a need for your product or services, they see value in your offering, they have the budget and they are the decision maker or part of the decision making process.
Client or customer
If you have followed all the steps in the meeting process, taken them through the Bi-Sell-Cycle™ and handled any objections that may have arisen, you stand a very strong chance of closing the sale and they pop out at the bottom of the sales funnel as a client or customer.
There are a number of reasons why prospects will drop out of the sales funnel. They may be happy with an existing supplier, they may find another supplier who suits their needs better or perhaps they would love to buy from you but don’t have the budget or the timing is not right. Regardless of why a prospect falls out of the sales funnel, the important thing to remember you need to keep the top of your sales funnel full to ensure you have customers fall out the other end. To do this, you have to engage in some kind of prospecting activity to keep generating new leads.
Generating leads can be achieved through a variety of activities including advertising, mass mailings, networking, referrals, your website, word of mouth, cold calling, telemarketing or any other marketing activity.
Telemarketing is any marketing activity that occurs over the telephone. Outbound selling is sometimes referred to as telemarketing although telemarketing is not confined to making outgoing calls. It can also be when prospective customers call you in response to an advertisement, signage, a referral or from your website for instance. Telemarketing can also include contacting customers who have previously bought from you.
Outgoing telemarketing activities are still a valid and effective approach to generating new leads.
Cold calling involves contacting a prospect out of the blue trying to generate interest in your products or services. It doesn’t have to be via the telephone, it can also include prospecting activities such as knocking on someone’s door or walking into their place of business. It means you are reaching out to them without any idea if they would be interested in your products or services.
If you are struggling to grow your sales and don’t feel comfortable cold calling, you can employ a telemarketing company to make calls and set up appointments on your behalf.
Often small business owners can’t afford to employ a telemarketing specialist so you have a choice; sit back, wait and hope a prospective customer will call you or be proactive and engage in cold calling activities yourself including networking. Once you overcome your possible fear of cold calling and networking, you might learn to enjoy the process and astound yourself at the results you get.
Once you have made a connection with a prospect, you still have to sell them your products or services, usually over the phone, via email or face-to-face. This is a completely different skill set from prospecting. There is no point generating leads and making amazing contacts if you don’t know how to sell your products and services once you come face-to-face with a prospective customer. The buying and selling process is only one component of conducting a successful sales meeting with a prospect.
Keeping your sales funnel topped up
You need to keep your sales funnel topped up with leads to replace customers who will leave through natural attrition. Prospecting through cold calling and email marketing are two ways you can keep the top of your sales funnel full in addition to networking and other promotional activities. Remember, not all leads turn into customers. By keeping up regular prospecting activities you are ensuring the longevity of your business.
On a final note
When you keep the top of your sales funnel full, you are more likely to have a sustainable business.
In a Nutshell
- You will lose a percentage of your customers through natural attrition
- Keep the top of your sales funnel full with new leads to make up for customers who leave
- Cold leads are where prospects have no idea of what you offer and you have no idea if they are interested in your products or services
- Warm leads are better leads as they already have some interest in your products or services
- Not all leads turn into a customer
- Generate new leads through prospecting activities which could include telemarketing and cold calling in addition to other marketing activities