Friday, June 21, 2024

What To Do When It’s NOT Raining Money

How the marketing group can add value in the eyes of investors.

Despite the tumultuous and unpredictable state of today’s capital markets, marketers have plenty of ways to increase the value of their organization and help to raise funds for their companies. Here are a few ideas that offer particular promise in the current economic climate. Some represent new marketplace solutions and others offer new twists on time-tested strategies. But don’t get us wrong—we are not suggesting that you overlook traditional marketing strategies that are working for you.

vestment community is clear about their expectations today. They want real products with real customers buying or ready to buy, who will pay real money for the privilege. They want revenue and business models that make sense. Models whose assumptions about conversion rates from prospects to customers have been proven. Proof that they can rely on to predict how the business will scale; proof that lends credibility to the “hockey stick” projections upon which their investment will be based.

Paying customers

One of the most important marketing tasks is to attract and retain customers while incurring minimal costs. You need to attract customers as efficiently and cost effectively as possible. You need to demonstrate to the financiers that you can convert leads to paying customers and get those customers to buy more, more, more. You need to demonstrate that you can convert those customers at rates and costs that support your 5-year growth assumptions.

The message is simple: get new and current customers to spend more every time they come to buy and get them to buy more often. Spend as little money as possible to get that customer buying as soon as possible.

Start by reviewing your “target” customer’s underlying need for your product. Once you have a clear understanding of their need, you may find additional ways to meet their need more completely.

Entice the best customers to visit frequently by offering specialized treatment through access to new and exclusive products, relevant content or product discounts. Premiums, loyalty and incentive programs are also valuable tools to getting customers to purchase additional product.

Another marketing strategy is implementing upselling programs. Done correctly, upselling can be a value-added service that builds customer loyalty and increases revenues. Common upsells may include upgrades, refills, accessories and other related products. If you don’t offer your customers upsells, you literally may be throwing revenue away. A good upsell program can easily add 20% to 30% to your average order size. Another version of upselling is to consider a variety of product/service packages — entry, standard, and premium. The entry level pricing gets the customer in the door and many are attracted by the price of the economy model, but leave with the silver or gold product, since they see the value of the premium features and benefits.

A good example of this is the PDA market. The Apple Newton was clearly first to market and feature rich but priced at $600 to $1,000 per unit. Apple never brought a $199 or $299 price point product to the market even though they could have positioned last year’s product at those price points when they introduced their new models. They never got the volume. Palm brought out products with entry prices way below $500 and also premium models at the level of the Newton. They got the volume and the Palm OS has achieved a 75% share and maintained that position over the last 3 years.

Depending on your business, you may want to consider a strategy to recapture lost customers.

Minimize Costs- Increase Gross Margins

Most investors look at gross margin as a key-operating statistic. With economic downturn comes opportunity to fatten your margins. You need to find the opportunities. You need to go back and renegotiate with ALL your vendors and suppliers. Do not underestimate your ability to renegotiate business terms on everything from give-aways to radio advertisements. Ideas include converting payments into payment plans, requesting additional discounts for repeat orders, co-marketing efforts, etc. Your vendors may need your business more desperately than when you originally negotiated terms. You may even want to re-open your contracts to bid.

Remember, the investment community is looking for a quick path to profitability and fat gross margins. Demonstrating your ability to pro-actively decrease your cost of sales and marketing will only make you and your company look more attractive.

Database Collection

You know you need to keep an accurate database of current, potential and lost customers. However, make sure you are collecting all the data you need from your leads and paying customers to gain repeat sales. For example, you may want to ask questions at the point of sale such as “may I have your email address and permission to use it?”

Investors will be impressed to see that you are collecting additional information that will help you make targeted follow-up offers to your customers. This strategy will help you demonstrate to investors that you are developing a long-term stream of revenue from a single media (database) investment.

It is Act 2 of the new economy. It is going to be an interesting ride for marketers in these gut-wrenching economic times. The winners will be the marketing professionals who batten down the hatches and run a tight ship.

Rita Ferrandino
Managing Director, Boston Office
The Lyra Group, 781.639.2624
The Lyra Group is a consulting company specializing in growing
company revenues. Services include high-level business development,
marketing, sales channel development, strategy, and fund raisers.

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