Developing a business strategy is a big task for a blog article and so I will narrow the discussion to what I believe many of us have to do – develop a strategy for a business or marketing plan. First off, what is the strategy for? Ansoff’s matrix provides a useful framework. Our objective could be in any of the four corners of the matrix:
Differentiation – selling more to existing customers or defending existing customers from the competition.
Market development (in new markets) – selling to new customers in different segments or different geographical markets.
Product development (by introducing new products) – selling a new offer to existing customers.
Diversification – selling a new offer to new customers.
Whatever the objective, the steps in developing the strategy are broadly the same and there are six of them:
Step one: know your target market inside and out
It is no good developing a marketing strategy unless you can be very sure who is going to be your customers. Who is it that is prepared to part with hard earned cash to buy your products or services? Most business strategies fail at this first step. They are too vague about the target audience or they have an over optimistic view of who will be customers. This requires you to have a significant and objective knowledge of your market. As well as knowing who your customers are you need to know how many there are, how they can be reached, what they are doing to fulfill their needs at the present, what would cause them to switch, what barriers could stop them doing so, and how much they will pay for your product.
Step two: anticipate the reactions of the competition
If your strategy is to have any impact, the chances are that some incumbent suppliers of products and services will lose revenue and profits at your expense. What is likely to be their reaction? They may reduce prices, lock their customers into special deals, introduce new products and services to support their offer, or leverage any special relationships they have with customers. Hungry competitors do not readily allow you to eat their lunch.
Step three: be very clear as to your customer value proposition
People have to have a reason for buying your product or service. Remember you are slightly biased. What is it that will induce someone to choose your product as an alternative? If people are reasonably satisfied with their current supplier it will require a significant benefit to get them to shift. As a rule of thumb the benefit needs to be around 15% to gain a movement in your direction. What this means is your product /service must either be 15% better in its performance or 15% cheaper than current offers. And this is as a minimum; a 30% benefit would be better. It is difficult to prise buyers from their usual routines unless they are really dissatisfied. Behavioural economists tell us that most people are more worried about losses than gains. They are more frightened about the devil they don’t know than the devil they do know.
When you are communicating your value proposition, be sure to make it very clear. It is better to have a unique proposition than a blur of benefits even if the benefits add up to a reasonable amount. In a confusing world people like to get straight to the point with a simple offer they can understand.
Step four: make it easy for people to buy from you
People are used to having choice. It is one of the most significant factors in our modern marketing landscape. This means that customers expect to be able to buy your product direct or from a variety of other sources. Buyers are looking for speed and convenience and this is provided by omnichannels. They must be able to place an order by phone, online or should they so desire, face-to-face.
Step five: let everybody (certainly those in your target market) know about you
Ralph Waldo Emerson, a famous 19th-century American thinker and philosopher, didn’t do marketing any favours when he suggested that if you build a better mousetrap, the world will beat a path to your door. (I have misquoted him but this was the essence of his famous statement). Emerson was implying that all that is needed for a successful strategy is a great product. The problem is that there are some brilliant mousetraps sat on shelves because people don’t know about them. In a congested marketplace it is important to be heard above the surrounding noise. This means it is important to reach potential customers and tell them who you are, what you’re doing, and why they should buy from you. They need to hear this not once or twice but many times. Marketing messages, like nails, need many hits with a hammer if they are to sink in.
Step six: stay fresh
If your strategy is strong enough to win business from the competition, make sure that after all that effort you hold on to your valuable custom. It is estimated that winning a new customer costs between 5 and 10 times more than retaining an existing one. This means never taking customers for granted. It means showering them with an enormous amount of attention and constantly reminding them about the great decision they have made to choose you as a business partner. They would also appreciate feeling that you will look after all their forthcoming needs. This means an expectation of future products and services that are faster, cheaper and better than ever.
So there you have it in a nutshell. Six steps to build sales. Once you have your target audience in your sight, you have weighed up the competition, make sure that you have the right product, at the right price, in the right place. And, as this is a never-ending race, make sure that you never stop working on it.