by Mitch Lairmore
July 10, 2017
My hobby is riding older motorcycles. Unfortunately, older motorcycles tend to break down now and again. Usually, they break down where you don’t have access to help such as a mechanic. So that means repairs have to be made without help. It is a very frustrating situation. Your bike won’t start and you are not sure what is wrong. You don’t have the ability to get professional help.
In order, to deal with this you can take advice from the pros for this situation. If an older carbureted engine won’t start the adage that the pro’s use is spark, air, fuel and compression. These are the four elements that are required for an internal combustion engine to work. The repair process is to systematically test to find out that the engine has spark, air, fuel and compression one at a time to rule that out as the cause of the problem. If one of the four elements is missing, fix it.
As a small business owner a comparable situation to an engine that won’t start is lack of sales. Small businesses can find themselves in the situation where sales are in decline or sales for a new offering really haven’t started. It is a frustrating position to be in. Perhaps we can adopt the professional mechanic’s approach to our business. We can systematically test to find if we have the four essentials for sales.
Four (of the seven) P’s of marketing are price, promotion, place and product. If one of these P’s isn’t working, sales performance won’t be reaching the potential of the business.
Price: If our price isn’t reasonable it can have a big impact on sales. We can evaluate price a few different ways. What is our customer’s next best alternative (NBA) and how does that price compare to our price? Can we do a return on investment (ROI) calculation that shows our offering is, in fact, a good investment for our customer? If we are able, have we validated our price by talking to customers to see if they believe our price is reasonable?
Product: is our product competitive? For example, does our product offer equal or superior feature/benefits to alternatives? Do we need to make an investment to improve our product to meet customers’ needs/expectations? Have we validated that our offering meets customer needs through beta tests or preliminary sales? Can we get a customer testimonial that our offering solves a customer problem?
Place: If our product meets customer needs and our price is reasonable and competitive, customers may not be able to conveniently find or purchase our product. Where do customers typically find information about offerings similar to ours? Where do customers typically purchase these products? Is it convenient for our customers to purchase from us? For example, if we are selling a food product and we are not stocked in grocery stores it makes it more difficult for customers to purchase.
Promotion: Is our offering one the best-kept secrets in the industry? Customers have to be aware of our offering in order for us to be considered. It may require ongoing marketing because customers only think about buying products like ours when they need them immediately. They may have known about our product but forgot about when they had to make a purchase decision.
We can test our Place and Promotion by talking to customers and looking at historical behavior of customers. For example, do we have better sales when we emphasized a particular sales channel? Was there a campaign that generated results that we are not doing any more?
If sales are not up to your expectations, approach this business issue like a good mechanic. Systematically test/evaluate the four critical needs of a working system and fix what is wrong.