Revenue growth focused posts

Alex Lee, longtime president of OXO, the maker of well-designed cooking tools and housewares, told the story of how they created their iconic liquid measuring cup.

No one had ever seriously complained about measuring cups.  Some people thought that glass ones are too heavy and that they tend to break, but that was really it.  OXO started to study how consumers use measuring cups and noticed one striking commonality that was more impactful. It’s something you’ve probably done yourself at some point.

Photo source: http://www.cas.muohio.edu/scienceforohio/Jello/L.html

Do you see it?  Using a traditional liquid measuring cup, you need to lean over to read the measurement.  It’s annoying, But we thought it was normal.  Well, we did think it was normal until OXO designed a better way: a measuring cup you can read from the top, with no leaning over required.

Photo source: http://flickr.com/photos/jisou/512193478/

This new measuring cup sold two million units (!) in the first year.

This is a powerful idea: studying how consumers behave can transform your business.  I apply this maxim to pricing research, a topic that has been popular with a number of my clients.

When thinking about how to suggest a retail price, many brands, both big and small, start with their cost.  Then they add on the profit they want to earn, account for expected distributor and retail margins, and get to a suggested retail price.  Or someone suggests a key price in their category and they go with that.

But it’s critical to take the consumer’s point of view into account and understand her willingness-to-pay.

There are three approaches I rely on:

  1. Engage with your retailer’s buying team
  2. Observe what’s happening in the market
  3. Use surveys to ask consumers about price directly

1. Engage with your retailer’s buying team

The team at your retailer customers might have some research or other experience in understanding their shoppers’ willingness-to-pay.  Ask them.  When you have a review meeting or some other opportunity to talk, ask what they are hearing.  Keep in mind, though, that many buyers are biased toward always lowering prices, even if it means that they lose penny profit.

One client of mine faced significant cost pressure, but the client’s largest customer simply would not accept a price increase.  We probed to understand her resistance, and she showed evidence that products in her portfolio suffered large declines in velocity when they were priced above $1.99.  We suggested a smaller pack size that could hit the magic $1.99 price point and make money for my client. She accepted the proposal, and this arrangement worked for everyone.

2. Observe what’s happening in the market

Competitive benchmarking: Where are your competitors priced, and where do you fit on the continuum?  Are you priced comparably to competitors whose products realistically compare to yours?  Are there any magic prices that are working well or toxic prices that are failing miserably?

Natural elasticity: if your product sells at different prices at different retailers during different weeks, or at a discount during a price reduction, measure the effects. Equivalize sales across retailers by measuring units sold per store per week (or per million dollars of store ACV), and see if one price works much better than another.  For a frozen food item, I once found that promoting it at $2.49 produced better unit movement than at $2.29.  It was a no-brainer to make the change.  You can obtain this data directly from your retailer customers or from syndicated data sources like SPINS, IRI, and Nielsen.

3. Use surveys to ask consumers directly about price

There is a wide range of tools available to affordably survey consumers about their willingness to pay for your items and other topics.  I have found Google Surveys to be very affordable for certain use cases, as low as 10 cents per response for a single-question survey.

From easiest to hardest, some pricing survey techniques include:

  • Gabor Granger: Identify the highest acceptable price by asking about purchase intent at multiple price points.
  • Van Westendorp: Identify bounds of acceptable price ranges by asking what prices would be too cheap, cheap, expensive, and too expensive.
  • Conjoint: Identify utilities of product attributes, including price, by having respondents choose from among multiple product/price combinations.

* * *

Ultimately, the most important thing is to get inside your consumers’ heads.  Any technique you use to get there will involve a wide range of trade-offs, but it’s important to start somewhere.  And the evidence you learn to support your objectives will go a long way toward building trust with your retail buyers, sales team, and beyond.

(You can see a video of Alex Lee’s presentation that inspired me on the Gel Conference’s Vimeo channel.)

 

Contact Scott if you’d like help thinking about your products’ prices — and how your customers perceive them.

A version of this post originally appeared in Specialty Food Resource’s Food Entrepreneur Magazine.

 

SharpSpring users now have access to a new social media and calendar features.

  • Content Calendar: A bird’s-eye view of your social posts, email sends, and blog articles.
  • Social Posting: Post directly to Facebook, Twitter, and LinkedIn without leaving SharpSpring.
  • Social Listening: Monitor social media activity with customized listening feeds.
  • New Trigger/Filter: Create automations based on when leads interact with your social media accounts.

SharpSpring has updated Lead Scoring and the Life of the Lead to now include social interactions. SharpSpring will be releasing to all clients in a few days.

Ready to learn more? Contact us for a guided walkthrough of these new features.

Financial Advisor Marketing

Financial Advisor Marketing

Financial Advisors are an amazingly difficult prospect to engage. They are incredibly busy and already have a wealth of resources already available to them – do they even need to engage with wholesalers? The best way to convert financial advisors to customers is to build your marketing automation program around them.

Lead generation starts with effective segmentation

Before focusing on key strategies, Sales and Marketing must have defined a set of engagement personas and customer segments. Marketing has had personas for a decade but only since the advent of marketing automation software have engagement personas become empowered and brought to life.

Defining financial advisor segments for lead generation

Creating clarity with Sales is a two step process:

  1. Lead scoring – a measure of how active a financial advisor on your digital properties
  2. Lead grading – a measure of how profitable the financial advisor is likely to be

 

Advisor Marketing Focus

 

It may take several iterations to get lead scoring and grading optimized, however, the process should be fruitful for Sales and Marketing. The process crystallizes Marketing and Sales perspectives around which advisors are most profitable and which digital behaviors are believed to be most relevant to a sale. Some marketing automation vendors have one score that represents profitability and interest. However, being able to separate advisor behaviors from profitability factors simplifies discussions by clarifying customer segments by profitability as seen in the above graphic. As an example, Pardot applies a numerical value for an advisor’s lead score and a letter grade (A-F) for an advisor’s expected profitability.

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Many management experts remind us to find the most important element to manage and stay focused on it! What is that “one thing” for increasing revenue?

I would argue that most important factor is the difference in the amount of revenue produced by the top sales person compared to the average salesperson during the first years of a product’s introduction.

Frequently for new differentiated products the “top 10 percent” salespeople will sell more than 2x or 3x the amount that the average salesperson sells. The early sales are critical for gaining market share for new products while the differentiation is high.  Over time, as the market and the other salespeople learn more about the product and the customer value delivered, the size of the revenue gap will decrease…but by then the competitors will have started to catch up also and the differentiating advantage decreases.

What does the average salesperson learn after the introduction and a couple of sales cycles that enables them to increase the amount of revenue produced, approaching closer to the sales levels of the top salespeople? If the firm provided that information earlier, would the average salesperson be able to produce higher sales levels earlier? The answer is yes!

Firms really can’t get much more revenue out of the “top 10%” salespeople, and trying to save the “bottom 10%” is a waste of time. But we can provide the information needed by the average salesperson to impact their revenue production by almost 2X.

77 Percent

77 Percent

Many so-called “Revenue Marketers” are writing checks that their companies simply can’t cash! According to a recent study by HubSpot, only 23% of marketers are exceeding their revenue goals. Yet, Revenue Marketing has become a ubiquitous concept and is getting tons of hype in today’s market. And rightfully so. No question – it’s the “holy grail” of today’s senior stakeholders.

Here’s the problem—all the verbiage around it was generated by companies and people deeply invested in its success. These include companies that are predominantly staffed by marketing automation technologists and solutions engineers, who are actually software people, not demand marketers. And all the talk isn’t limited to the marketing operations and automation folks who are making claims. There are also many strategic consulting firms and agencies that do the same, but they don’t have enough experience as practitioners to execute on the very recommendations they are prescribing to clients.

Don’t get me wrong, the modern marketing technology stack forms the most powerful marketing enablement toolkit I’ve witnessed in a nearly 25-year career. But it’s just that…an enablement toolkit. It’s a partial solution. You ALSO need effective buyer engagement strategy and execution or the monetization of your marketing investments won’t even come close to its potential.

Quite simply, revenue marketing can work—when (and only when) it’s driven by a worthy buyer engagement strategy. But the primary challenge, which we address in our new eBook entitled Exposed. The False Promises of Revenue Marketing., is all the confusion, misinterpretation and general lack of understanding that exists around revenue marketing and the buyer engagement strategies that are essential to its success.

These points of confusion include:

  • The fundamental deficit in buyer understanding that is killing marketing performance at most companies
  • What’s wrong with persona development
  • How messaging is largely missing the mark
  • Why most B2B content is lousy as it’s “domain-centric,” not “engagement-focused”
  • How most marketers are focused on all the wrong metrics
  • Why so very few marketers are capable of aligning all the requisite elements of a high-performance buyer engagement strategy

In the eBook we highlight these critical elements (and many more) that are too frequently being ignored, simply misunderstood or not fully embraced, but that are vital for true revenue marketing. In it we address 9 foundational principles that when used as a roadmap for marketing automation and social media propagation are the surest way to develop a sound buyer engagement strategy that transforms you into a true rock star of revenue marketing.

Download a copy of the eBook to discover 9 ways to exponentially increase leads, conversion, pipeline velocity and revenue impact:

 

 

Office

Improving the quality and completeness of sales messages delivers hard ROI. Here are three reasons you should review the content your sales teams are using and take a diagnostic approach to assess the effectiveness of your sales messaging:

Office

Three Reasons to Audit Your Sales Messaging:

1) Reduce the time required for achieving channel effectiveness: 

  • Channel effectiveness occurs when the average salesperson can cost effectively close the sale. Eventually the sales channels [and customers] will learn the value of the differential being offered, but while the market is still learning these values, the effectiveness of the sales channels is reduced. It is difficult to close the sale when the customer doesn’t know the value of the differential being offered, and the sales channels has not been provided with the values, calibration, and evidence needed to convince them.

2) Increase sales capacity

  • Sales capacity is the number of salespeople [or outlets] that are effectively selling your products and solutions. Retail uses a term “self ware” to refer to products that are sitting on the shelf but aren’t being bought. Having salespeople that are expected to sell the product but can’t/don’t is the channel equivalent of shelfware. Frequently this occurs when the skill required to sell the product exceeds the skill available in the channel. So the top 10% of the salespeople can sell the product, but the average salesperson can’t. Poor quality sales messaging is frequently the cause of product shelfware.

3) Reduces the cost of sales

  • Improved messaging increases the close rate and reduces the number of sales calls required to do so because the customer value being offered is clear and with evidence.

Use a diagnostic process for more consistent implementation

  1. Review the “top 10” sales messaging deficiencies to see if the issues are identified.
  2. Check the material being sent to sales people –  before it is sent!
  3. Use a checklist to ensure the quality and completeness of the information being provided.

Make certain your content and messaging is sufficient for the average salesperson to cost effectively close the sale. Would you like a copy of the checklist? Check out the 9 Sales Enablement Content Imperatives.

Here is another article by Bud: 10 Message Deficiencies.  Contact us to schedule a discussion.

This is a guest post by Bud Hyler – a member of the Revenue Architects’ expert network.