Expanding into a new market?
By John R. Graham
“We can’t figure out what
happened,” said the president of a company that had spent
two years trying to break into a new market. “Frankly, we
fell on our faces and we’re not sure why.”
Some of the confusion came from the
results of a survey they had done before they kicked off the
sales effort.
The survey results indicated that a
market existed and since they could overcome the limitations of
their competition there was room in this market for them.
“We thought this was going to be a
slam dunk situation sitting here and we’d be raking in
the money,” commented the manager of sales. “It was
almost too good to be true.”
As it turned out, it was too good to be
true. In fact, it was another case of the naïve belief
that if you build it, they will come.
What went wrong? The survey results
clearly indicated there was room for a new player and this
finding was bolstered by what appeared to be customer
dissatisfaction with the competitors.
Based on the combination of these two
factors, the company moved forward aggressively, believing
success was all but assured.
What they didn’t realize is that
the “better widget” doesn’t always win. The
salespeople spread out through the territory calling on the
prospects offering low prices and substantial incentives.
“We thought we were going to take
it all,” said the president. “We wrote a few
accounts, but nothing like we expected. It just didn’t
happen. And we couldn’t figure out how we could be so
wrong.”
On further analysis, it was found that
although buyers thought the products were in some ways an
improvement over what they were currently using and the pricing
was exceldent, they didn’t change suppliers.
Why?
First, they were reluctant to make a
change. A bad decision could have disastrous repercussions,
particularly for those who made the recommendation to change
vendors.
Second, they didn’t really know the
company. Aggressive pricing and product improvements
couldn’t overcome the fear — and that’s
what it was — of doing business with an unknown supplier.
There are a couple worthwhile lessons to
gain from this case history:
1. Conduct the right research.
Like so many others, the management of
the company made the assumption that because there was a need
for its services that the customers would come to them. Caught
up in their own enthusiasm, they made no effort to determine
what it would take to attract customers or to find out if they
would make a move to the new competitor.
Even when conducting surveys, it’s
easy to fall (almost unconsciously) into the trap of getting
the results we want rather than the results we need.
For example, many companies
“survey” their customers following the sale or a
service call. For the most part, these are self-serving and
customers are reluctant to tell the truth.
While this particular company uncovered
information indicating there was indeed a market for their
product, they failed to uncover what would motivate customers
to move from their present suppliers.
In the same way, they could have
discovered through a survey what those customers valued and
then developed a marketing program that focused on those
issues.
2. Create a buying environment.
More often than not, most companies
concentrate on “making sales,” as did this company.
And to the surprise of everyone, they hit a stone wall.
Even armed with attractive offers,
competitive pricing and a high level of technical competence,
the company was less than successful in penetrating the market.
If the company had used its research to uncover what it would
take to win sales, they would have led with an awareness
campaign that communicated the message that it was safe to do
business with them. They could have had a “starter”
program and performed customer satisfaction follow-ups.
In other words, they would have taken
time to build their case with the customers. All this could
have led to customer testimonials and other feedback techniques
that build buyer confidence.
Generally, it’s not the sales
strategy that’s faulty, although this can be the cause of
poor performance. More often than not, it’s the marketing
strategy that’s either absent or faulty. What is needed
is to develop a buying environment, one that taps into the
buyer’s needs and offers the right solution. When this
happens, the sales effort is successful.
If there were a basic error in this
company’s overall strategy, it is one that’s ever
so common in business today. It’s pulling the trigger
before establishing the target. It’s moving ahead before
knowing the right direction.
Deep down, it’s believing that all
that’s needed is a great idea or more to the point, all
that’s required is enormous enthusiasm for a great idea.
The result is unnecessary failure including wasted resources,
lost time and discouraged salespeople.
What is so confusing is that the scenario
is repeated time-and-again…often by the same companies.
Both consumers and business buyers are cautious — and
rightfully so. While they want good deals, they also want to be
sure.
When it comes to shortcuts to sales,
there aren’t any.
John R. Graham is president of Graham
Communications, a marketing services and sales consulting firm.
He is an author of several books, writes for a variety of
publications and speaks at association meetings. He can be
contacted by phone at (617) 328-0069. The company’s web
site is www.grahamcomm.com.
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