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January 20, 2005
Issue #001
“Your problems, our solutions!”
This ezine hopes to provide you with innovative solutions to the day-to-day
problems faced by small business.
Your problems are the raw materials that I use to manufacture my products which
solutions that I provide-
So please send me all the raw material that you have!
If you find this ezine useful please forward it to your friends and
colleagues with similar interests - Thanks
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January 20, 2005
Issue #001
This month’s ezine focus is on –
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- Profit-Impact marketing strategies
- Small Business CRM
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Profit-Impact Marketing strategies
Many visitors to the website complain that the page dealing with
profit-impact marketing strategy is not very easy to understand.
Page is at:
http://www.smallbusiness-marketing-plans.com/profit-impact-marketing.html
I agree that a lot of number-crunching has gone into creating this page!
So I will summarize the most important factors that I have gone in to
developing profit-impact marketing
strategies that you can use it to develop your own system of
monitoring profitability of marketing strategies implemented.
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Concept
of ROI (Return on Investment) or ROE (Return on Equity) is very important
– it is a measure how much have you invested in your business and the
profit that you are earning from it. For example if your investment is
$10,000 and your ROE is 10% it means that your profit for that year is
$1,000. What should the ROE be for your business? - check publicly available
statistics or trade associations and always try to achieve the highest
possible ROE - this will motivate you to aim high.
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In
this model (it's called Pro-IMS) I have used marketing channel as the basis
of determining market strategy profitability but you can replace this
with whatever suits your particular industry.
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The
potential market is the total demand that there is for your product
or service - identify the size of the market through market research. If you
are catering to a smaller segment of the market (also known as a niche
player) you should be careful that you do not overestimate the size of the
market, since this adversely affects your ability to convert sales leads.
The poor sales conversion is due to lack of focus on your niche customer
requirement or not catering to a particular niche requirement..
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Once
potential market has been recognized ensure that all sales leads are
being logged as this provides invaluable information on customer wants. Also
ensure that leads are being generate cost effectively.
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Sales
leads conversion ratio (how many real sales are made from sales leads)
needs to be checked continuously and reason for any decline in lead
conversion needs to be explained early.
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All
attempts should be made to increase average sale value per customer
for this item alone a separate market and sales tactic needs to be
formulated.
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There
is a technical point that the Pro-IMS hinges on is the sales mix among
channels/ strategies is based on contribution cost ratio of each. A
larger portion of sales effort is directed at the channel/ strategy with a
better contribution cost ratio.
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The
chief advantage of the Pro-IMS model is that you are able to achieve target
ROE at a lower than target sales level - which is a lower risk strategy.
It
is crucial that the following ratios be assessed monthly/ weekly:
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Sales
leads/ Potential market - if the leads are low then
advertising/marketing campaigns need to be reassessed or the potential
market needs to be re-evaluated (especially if it is a niche market)
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Marketing
& Selling cost/ Sales leads - is your marketing campaign cost
effective?
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Marketing
& Selling cost/ Sales - this could also be used as a means of
measuring the selling effort.
-
Sales/
Sales Lead - If this ratio is low then selling techniques need to be
reviewed carefully. It might also be a problem with the selling proposition
- does it meet the requirement of the (niche) market.
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Actual
Average Sale/ Required Average Sale
Some things to keep in mind in implementing your marketing strategies:
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Be
Careful of the high cost of inventory - in attempting to increase sales, inventory levels
invariably increase, this reduces your profitability.
-
High
interest cost of debtors - level of debtors will increase if more sales are made on
credit - think 'outside the box' on ways of making more cash sales.
-
High
cost of funds - cost of borrowing increases as more funds are required.
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Product
mix - selling more of a low profit product will bring down overall profits -
so check product profitability
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Customer
mix - service only 'profitable' customers - look at our CRM
articles for more pointer on this..
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High
salary cost of employees - maybe outsourcing or automation is an option.
I hope that the above points gave you new perspective on marketing
operations. I hope to rework the much disliked number-cruncher page to something
more user friendly before the next ezine reaches your computer!
Small Business - Customer Relationship Management (CRM)
I have added a few pages on Customer Relationship Management (CRM) since it
seems to becoming one of the more important sales and marketing systems that
will be used in the future.
I have looked at the following in my articles:
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Why
do customers defect?
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Serving
customers profitably
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Customer
service excellence defined
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How
to achieve service excellence
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Customer
satisfaction management
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Customer
focused selling and marketing skills
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Using
new technologies for customer - service and the ten most important customer
service factors
The link to the website is below:
http://small-business-advice.org/crm-index.htm
For more information on software that you can use for CRM please visit:
http://smallbizcrm.com
Comments? Ideas? Feedback?
I’d like to here from you
Please reply to this e-mail!
Hope you enjoyed reading this ezine!
Best Regards
Asif Nazeer
info@smallbusiness-marketing-plans.com
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http://freebizplan.org/business_strategies/index.htm
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