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Reality Check: Drive Future Sales
October 02, 2007
Edited by Stacy Straczynski
Even Bruce Cotterman from the Bass Group has warned both small and large fast-growth companies that "in the $20-50M size range, it's a new game requiring a host of new management skills quite different from those entrepreneurs who founded them… to lay the groundwork for the next round of growth." So it's important to remember that the SMB culture and modus operandi that worked in a company's early growth stages can actually hinder its future.
The Company and Situation:
Such was the case for a successful, family-owned national metals distributor, aluminum finisher and metal fabricator. Atlanta-based SAF had a solid history of an aggressive sales track, doubling revenue every five years since its post WWII founding—it grew from $12 million in 1995, to $15 million in 2000, to $25 million in 2005. But then the company hit a wall while planning how to reach their 2010 sales goal.
But why? Well, a funny thing happens to companies as they grow.
When publicly held or venture capital funded companies are keyed for growth and operating with external funding, closely held or family businesses owners like SAF grow from hard-earned, internally generated profits. These profits come from a culture of long hours of dedicated work and a cost reduction management style as growth investment opportunities are considered too risky. The situation is compounded as owners "wear more hats" to sidestep hiring critical marketing and sales employees to "grow the pie." The trick for a small business is to identify the critical point where the potential for profit growth justifies switching modes.
"Walk the talk on customer service and sales will follow" works to a point. SAF had always earned the respect of its customers, vendors, competitors and communities in which it operated in a substance-over-style mode. However, adjusting operations alone was not going to be enough to double sales to $40 million by 2010. SAF moved its marketing to front and center. They received outside expertise from beyond their ranks, but from a familiar ally.
Challenge:
SAF VP Penn McClatchey—charged with marketing among many other management hats—was challenged to streamline the creative process to begin a new year's marketing campaign. The blog-like responses from distracted stakeholders were not helping to move in a meaningful and creative direction forward.
Solution:
Penn decided to take the advice of Emil Walcek of EJW Associates Inc—their marketing agency for more than a decade—and formed an internal SAF Advertising Council to play a more formal and active role in marketing decisions. Instead of reacting to a never-ending flow of individual likes and dislikes, face-to-face group meetings provided an ideal forum to elicit valuable customer insight and fresh creative. In record time, the council approved an award-winning ad campaign and a revamp of the company's website with online admin and ordering.
The concept of an outside resource was given even more of a boost when Walcek recommended the services of Outside Looking In (OLI), a marketing consulting group comprised of three experts in strategic marketing, tactical marketing and creative processes for successful marketing demand generation. A half-day head session with literally all key SAF family managers and department heads revealed substantial opportunities for strategic SAF business realignment and customer focus.
Afterwards, Bob Scaringe, a founding OLI member, with Bruce Cotterman and Emil Walcek, conducted an in depth customer satisfaction survey focused on SAF's most profitable customers. Armed with results from a Customer Profitability Survey, more new doors were opened for profitable company positioning, customer support and sales growth.
"All companies think they know their customers," says Scaringe, "but how many ask them 'what they are doing well for the customer and what they can do better?' Even if they did, would they get as candid an answer?" Few such businesses have the expertise to conduct a statistically projectable survey. It's a question of "knowing what you don't know" before proceeding with a reliable evaluation of a company, its products, and services in a competitive market.
Multiplying the benefits of important survey information, SAF was quick to hire Bob to present survey findings to sales groups who, in turn, used the feedback to positively shape product offerings, channel operations and sales approaches.
Results:
Two years into their five-year goal, SAF is on track to reach their $40 million in annual sales in 2010. Even today, the created internal council is proving a positive force to:
1. Gain the undivided attention and focus of vital team players on marketing.
2. Share ownership of timely marketing decisions.
SAF is now convinced that outside resources can provide substantial depth and experience to help transition them to the company they need to be for profitable customer acquisition, retention and management as they grow.
Take Away Points:
1. The proverbial 2 x 4 to the head may be necessary to achieve new growth. Ask what will it take to grow versus how much can we shave operating costs.
2. There are outsiders with vision and experience. Start your search with referrals from those you're working with now.
3. Schedule planning time away from day-to-day operational distractions.
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
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