Back to Back Issues Page
Small Biz Ezine, Issue #001 -- Marketing with high profit-impact
January 19, 2005

-------------------------------------------------------

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

--------------------------------------------------------

 January 20, 2005                                        Issue #001

 This months ezine focus is on 

-----------------------------------------

  1. Profit-Impact marketing strategies
  2. Small Business CRM

-----------------------------------------

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:

https://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.

  1. 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.

  2. 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.

  3. 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..

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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:

  • 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)

  • Marketing & Selling cost/ Sales leads - is your marketing campaign cost effective?

  • 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.

  • Actual Average Sale/ Required Average Sale

Some things to keep in mind in implementing your marketing strategies:

  1. Be Careful of the high cost of inventory - in attempting to increase sales, inventory levels invariably increase, this reduces your profitability.

  2.  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.

  3.  High cost of funds - cost of borrowing increases as more funds are required.

  4.  Product mix - selling more of a low profit product will bring down overall profits - so check product profitability

  5.  Customer mix - service only 'profitable' customers - look at our CRM articles for more pointer on this..

  6.  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:

  • Why do customers defect?

  • Serving customers profitably

  • Customer service excellence defined

  • How to achieve service excellence

  • Customer satisfaction management

  • Customer focused selling and marketing skills

  • 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?
Id 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

 

--------------------------------------------------------

Please visit our small business network of websites

One-stop website for all Business planning tips n tools
http://freebizplan.org

Small business advice on all issues
http://small-business-advice.org

Small business forums post UR small business problems here!
http://freebizplan.org/phpBB2/

Business strategies in detail (technical)
http://freebizplan.org/business_strategies/index.htm 

Business financing for all businesses
http://www.small-business-advice.org/financing/index.htm

Small eBusiness
http://www.small-business-advice.org/e-commerce/index.htm 

--------------------------------------------------------

Back to Back Issues Page