The PROFITcycle: Marketing

Have you ever wondered why some technically superior decorators go out of business while mediocre ones make healthy profits? Often, the answer is marketing. An ineffective or nonexistent marketing program can doom even the best business, while a strategic marketing effort is essential to success.

So why don't more decorators develop and implement a marketing plan? Perhaps they think that if their work is technically accurate and looks good, clients will beat down their doors. Unfortunately, it usually doesn't work that way.

A carefully thought out marketing plan, however, can increase your sales. The second part of the 12-step PROFITcycle is marketing. The PROFITcycle is a business model developed to analyze each step of production for apparel decorators. Last month's installment covered Step One?audit and review?identifying your business's strength's and weaknesses (see Jan. 2003 IMPRESSIONS, p. 58).

MARKETING 101

A planned marketing approach helps you sell an identified product at a predictable gross sales level. Before you create a marketing plan, be sure you've determined what you'll sell, how you'll sell it and who you'll sell it to. Until you've made those decisions, you and your salespeople are just spinning your wheels.

Many business owners make the mistake of confusing marketing with sales. Although the two functions are intimately connected, there's a distinct difference between them.

Marketing is identifying target clients and developing strategies to sell your products to them. Good marketing means keeping your name in the customer's mind so when he has a need, your company is the first one he calls. Sales, which will be addressed in detail next month, involves implementing such strategies and focusing on those customers who can bring the highest return on investment.

The information gathered about potential clients will help you develop a plan to get your sales team headed in the right direction. Without such knowledge, salespeople are forced to use hit-or-miss methods to identify and sell to potential clients.

IDENTIFYING THE CUSTOMER

The first step in developing a marketing plan is to identify the target customer. It's important to focus on a certain category of customer and develop a plan to make that group aware of your business. Don't take a shotgun approach by sending out marketing materials and hoping they land in the right hands. This is a waste of time and money. Instead, identify those customers who have the greatest likelihood of being a successful, profitable partner with you, and concentrate your efforts on them.

A shotgun approach may net one client who places a $50 order. However, a marketing piece targeting 10K race directors may land several $5,000 orders.

Look at the types of companies you're doing business with and identify those that are the most profitable, require lowest maintenance on your part and offer the highest return. This is the ideal market segment in which you want to expand.

Once you've identified that market segment, look at the demographics of customers you already have in that segment. Then find new clients with similar characteristics.

If you have a customer who meets the above criteria and spends, say $5,000 a year, it's a safe bet that within 50 miles you'll find another company with an identical profile.

It is relatively easy to purchase information about companies you're interested in contacting. Just provide criteria about your target market to a sales leads or list management company, which will check its database and compile a list of matching firms. You may pay as much as $3 to $10 per name, but you'll have a list of what may become your most profitable customers.

REACHING THE CLIENT

With your list of target customers in hand, the next move is determining how to reach them. Try the following proven, five-step promotional technique:

First, mail an introductory letter from your company's owner or president. Second, within 10 days to three weeks, follow up with another piece reinforcing your desire to do business with them.

Third, send a "lumpy envelope"?a printed piece with a promotional product included. The printed piece might include a limited-time offer to waive set-up charges or provide free digitizing. It should also have a theme, a call to action and a short list of products and services you offer. The promo product should be something the target customer will put on his desk and see repeatedly, increasing your name awareness.

By the third mailing, people truly interested in your company will have responded. Don't offend uninterested people and waste money by continuing to send them materials.

The fourth step is a personal visit, during which you show samples and collect information on the company's needs, number of employees, type of business, etc. Ideally the visit results in at least a small sample order.

The last step, a letter mailed shortly after the order is filled, thanks them for the order and requests feedback. Ask them, "How did we do? What can we continue to do for you?"

Strategically, you should have two or three promotions like this going on at the same time, but targeting different markets. The goal is to diversify your prospects because typically you will enjoy wild success in one market, note average performance in another and bomb completely in a third.

Each market has a unique cycle. Tapping into several markets with different cycles can continually bring in business during the year.

For example, you may do business with high school marching bands. During the school year, bands usually participate in an event every other weekend and frequently need T-shirts printed with special designs.

But before school is out, you should identify another market, perhaps 10K race directors, who will send sales your way during your slower months. By diversifying your target markets, you can fill holes in your production schedule throughout the year.

A TWO-WAY STREET

The success of any marketing plan depends on the communication between the marketing person and the sales staff. In small businesses, the marketing person may be the salesperson. But it's important that shops with a sales team provide them with the proper training and tools, and educate them about target customers and products. If your salespeople don't have a clear idea of what they're selling and who they're selling it to, you may end up with infrequent low-profit orders.

Salespeople must also be aware of any rebates, freebies or similar sales hooks that could increase sales. Make sure the salesperson tells customers about the incentive's value. Offering free digitizing to a first-time embroidery customer may have little meaning if the client doesn't know what digitizing is or why he needs it.

Communication between the marketing manager and sales team is a two-way street. The sales team should relay any customer feedback about sales and incentives to the marketing manager. They need to address any customer objections and explore responses or alternatives.

Sales and the marketing manager should also discuss pricing issues. If profits are down, they can decide if prices are too high, or if your business is losing money because prices are too low.

Further, these two groups can explore any perception problems customers might have about your products. For example, your company may present a package deal with prices set at $30 per jacket. But if your competition offers a similar deal, breaking down the garment cost, setup and artwork charges, the customer may perceive the cost to be cheaper.

As you collect information from salespeople, go back to Step One in The PROFITcycle: audit and review. Determine whether your marketing plan meeting expectations. By reviewing your marketing plan, you can decide whether it was effective and how you can improve future efforts. This process is invaluable because it lays the groundwork for possible changes.

With marketing, your goal is to help customers promote their ideas using decorated apparel?whether it be a product rollout at a trade show, an anniversary promotion or a grand opening event.

By identifying your target customers, reaching them, getting customer feedback from your sales force and evaluating your efforts, you can become an invaluable resource to your clients?which spells success for your business.

Greg Kitson is founder and president of Mind's Eye Graphics in Decatur, Ind. He is also the founder of the Apparel Decorator's Leadership Council (ADLC). Contact him at greg@mindseyeg.com or www.mindseyeg.com.


About the PROFITCycle

The PROFITCycle is a business model developed to analyze production management for apparel decorators. A specific topic will be discussed each month during 2003, addressing the cause and effect each business aspect has on every other component. It is the author's hope that decorators will be able to fine-tune their operations by understanding the relationships of The PROFITCycle.


PROFITCycle Topics

PROFITCycle: Audit & Review

PROFITCycle: Sales

PROFITCycle: Marketing

PROFITCycle: Art

PROFITCycle: Order Entry & Customer Service

PROFITCycle: Purchasing