Sales & Marketing Strategy Chapter Nine: Profit Corp Case Study: Implementing Sales Strategy

by Business Management Series on March 9, 2012 · 0 comments

in Business,Business Management Series,Management,Marketing,Sales

John Smith realized that the three people he has in his organization would have to wear many organizational hats. He sat down and wrote his business goals and objectives and developed a strategy for sales growth which included the infrastructure needed to support sales.

His overall milestone is to secure 25% of the Miami-Dade Metro Area (MDMA) marketplace in IT sales in the next two years. This was an aggressive goal and may need some adjusting as his business moves forward. He started to develop a bottom-up projection by using this goal as a baseline.

He deduced that 25% of the entire market (the total market of South Miami Beach—SMB—customers in the Miami, FL area, including small businesses who have employee sizes ranging from 10-50 employees is 13,740, rounded down to 10,000) is approximately 2,500 small businesses. Since his two employees will be sales and technical hybrids, he estimated that only a percentage of their time would be spent on sales. With John included, he needed to realistically calculate how long his people could invest in sales activities.

After analyzing his employees for a week, he found that their organization can make 120 cold calls per day. Of this, they were getting an average of a .026% close rate per day. Although this will vary over time, this current bar will be used to measure and forecast for the next six months to a year.

John can set deadlines and goals for his sales efforts and measure against his overall objective of acquiring 25% of the market. John kept in mind that year one would inspire many drastic and volatile changes in his organization and that he would need a way to track the changes to his sales efforts.

He developed a worksheet that shows the capabilities of his workforce and will also allow him to forecast the costs of hiring additional sales people; this will allow him to free up his technical bill-out time. John knows that as customers begin to leverage his services, he is going to dedicate more time to customer service and less to sales-out time. This spreadsheet breaks out the capabilities of both his employees and himself. It allows him to make scenario changes and play “what-ifs” for weighing out sales, billable service hours and customer maintenance time.

He created this spreadsheet to track his opportunity cost of having his technical people sell instead of hiring new salespeople. At this time with his limited start-up capitol, he has no choice. This spreadsheet will serve him well later; however, when he begins to secure more accounts.

The average amount of customers that one person can handle varies greatly from 200 to 1,000. There are several factors that affect this number, including sales cycle turnaround, customer maintenance tool, and each individual’s own ability to multi-task. Rather than make assumptions, John is going to use this spreadsheet to track his progress month over month for six months, before he makes a major alteration to his sales force.

In order to achieve 2,500 accounts in 24 months, he would need to close 105 accounts per month consistently. His current ratio shows him closing only 78 per month. John has no prior history or sales data upon which to base these hypothetical sales figures, so he is going to watch this closely for six months. This will give him ample time to determine what the close rates are of his existing sales force and determine goals needed to hire additional sales people. He also plans to implement a marketing strategy to both support and enhance their sales out efforts.

John has also put together a spreadsheet tab for each of his employees (of which they are required to track and report weekly at a Monday morning sales meeting) for their statistics to review and regroup if the sales effort is not at its capacity.

In six months, he will evaluate what will need to happen to take his business to the next level and achieve his goals. New customers are not only the direct result of good sales ability, but also a solid marketing strategy behind it to both make the sales out effort easier (name recognition) but to also create demand for his company, adding net new customers to his sales efforts.

Profit Corporation: Transforming Ideas into Profit

John Smith, founder of Profit Corporation has decided to develop a marketing strategy in conjunction to his sales strategy. He will handle the management of the plan in-house, while looking at key partners to outsource the fulfillment of certain vehicles. His first goal was to address and convert his key objectives in tactical marketing strategies.

Overall milestone: Secure 25% of the market

John Smith wishes to have secured 25% of the total addressable market in two years, which we have defined as 10,000 SMB businesses that have an average spending of $15,000. Total addressable market is $150 million. 25% percent of this would be 37.5 million, or 2,500 customers. John Smith has evaluated that his sales force alone forecasts about 936 customers per year.

Objective

To address this, prior research done by John Smith shows an average sales representative should be responsible for making (depending upon who it is) between 20 and 75 sales calls per day. Based on this number, the sales team should be making a collective 3000 outbound calls per month. One the things John has decided upon is to develop a marketing strategy over the next 3-12 months to enhance his sales efforts.

We will use only the above milestone, but your organization may have several milestones and each one must be planned accordingly.

Developing a marketing plan

John Smith began to develop his marketing plan by leveraging the existing research he gathered for his business plan and looking to sources that would allow him to start to develop intelligence on his target audience. John deduced that with his limited marketing budget, making sales happen (as a direct result of his marketing efforts) was the key to a successful implementation. He first sat down to write the situational analysis; this is a summary of the obstacles and goals, as well as the plan to address his target market.

Profit Corporation: situational analysis

Profit Corporation has set an overall goal of achieving 25% of the target audience of SMB customers in the Miami, FL area in 24 months. Current sales efforts would produce only 75% of the goal of securing 2,500 clients. The following objectives must be met in order to ultimately achieve the overall goal.

  • Tactic 1: Purchase a list of 10,000 total potential clients to utilize for sales out and marketing strategies
  • Tactic 2: Implement a direct mail campaign to 1,000 leads per month
  • Tactic 3: Execute a monthly email newsletter blast to the entire database

As you can see, John Smith is doing the best that he can with a limited budget. Having previously made some preliminary calls, he has priced out a few marketing elements that at the current time were out of his range. After the purchase of the list, the only monthly expense he will have will be the mailer printing and fulfillment. He has the capability to send out mass emails utilizing his own equipment, and can produce them in-house.

His next goal is to break out each one of these tactics, their costs and their expected return on investment.

Internal Marketing Activities

Objective 1: Purchase a list of the 40,000 total potential clients to utilize for both sales out and marketing strategies

Description: Profit Corporation will invest in the purchase of a vertical market specific list in the Miami, FL area, of 10,000 potential leads. They will use this database to prioritize their call-outs, direct marketing and business intelligence for future marketing elements.

Cost: The cost of this marketing tactic will be a one-time fee of $5,000 to lease the database for one year. This includes all the demographics needed to make a strategic marketing decision.

Expected ROI: This database is essential to gathering the right intelligence and bringing our company closer to its goal of securing 25% of the available SMB market in Miami, FL. If this objective is achieved, we would have secured 2,500 customers, or a total market opportunity of $25,000,000.

The ROI on this expense would be 5000 to 1.

Timeframe: 1-2 Weeks

Customer-centric marketing activities

Objective 2: Implement a direct mail campaign to 1,000 leads per month

Description: Profit Corporation will hire an outside company to design and print a postcard mailer to be fulfilled via the database in conjunction with USPS. Profit Corporation will print out the addresses on their business inkjet printer and have them fulfilled at the USPS; by purchasing a Standard Class Rate permit, an imprint account number and the USPS approved sorting software.

Cost: The cost of this marketing element includes the following:

USPS Standard Class Permit $160 (one-time annual)
USPS Imprint Account $160 (one-time annual)
USPS Sorting Software $25 (one-time)
10,000 Printed 4.25×5.5 Post cards $500
Design Costs $250
Postage (23.4 cents per mailing) $2,340
Ink Costs $100
Total Costs to Implement this vehicle $3,535
Total Cost To Replicate $2,840

Expected ROI: using the industry average of 1% return on this particular vehicle, we expect to yield 100 customers, with a total market of $100,000, the total expected ROI is 27 to 1. Replicating this mailer, to send out twice to the same database, at the same rate of return would still yield a 15 to 1 ROI

Timeframe: 10 months (1,000 per month)

Objective 3: Execute a monthly email newsletter blast to the entire database

Description: Profit Corporation would like to make sure they are touching each lead a potential of three different ways. Having implemented a sales strategy, as well as executing a mailer campaign, Profit Corporation will send out a monthly email blast containing technology features, news and events to the target database. This newsletter will be informative and also functional, plugging Profit Corporation as the sole provider for the needs featured.

Cost: The only cost investment will be the dedicated 2-4 hours required to putting together a template and 4-6 hours each month adding content. This presents a total opportunity cost (based on billable hours) initially of $650 the first month, and $390 each additional month, for a grand total of $4,940 for the entire year.

Expected ROI: With an expected return rate of 0.25%; we expect to yield 25 new customers, representing a total market value of $25,000 annually.  The ROI on this vehicle would be 4 to 1.

Timeframe: 12 months (sent out monthly)

John Smith now has a rough idea of a marketing strategy for the next twelve months. This will also serve as the primary content for the sales and marketing piece of his business plan. This is rudimentary, but most of what is developed in year one will be an educated guess. The final section of Profit Maps will aid you in how to best measure your strategies and your influence in the market, and how to refine and reintroduce your strategy as your overall market changes.

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Looking for ways to get ahead in today’s competitive marketplace? This Business Management series provides resellers with basic strategies, skills, and tools you can use to better manage and grow your business.

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