Whoever is in control of sales to the end-user is the real one in control. A contractor can switch distributors and/or manufacturers instantly and likely not suffer much, but the “buck stops here” on the shelves of distributors if the ones who sell to end-users go elsewhere to buy product. That is why you see wholesalers and manufacturers going direct, to control and protect.
However, you can’t have your cake and eat it too. You plan your act and act your plan. Once manufacturers and distributors lose the trust of the contractors, they’d better be prepared to take on a complete reversal of their method of distribution. It’s also hard to get the contractor-customers back after stiffing them. The point is, he who controls distribution flow to the end can do a lot of things later. The development of customer base and/or credibility in a market region is expensive, painful, time-consuming and is to be treasured, not taken lightly.
Also, the development of this trust/value, perceived by end-users, can be utilized in at least three major ways that are all too often overlooked:
A. Referrals – As previously described in detail, you must pay to develop leads. Referral leads have the highest close rate and are the least expensive to generate. “Mr. Jones, since we have to pay to advertise, we’d rather pay you, our valued customer, than the commercial ad industry. We’ll reward you with a ____ for each customer that you bring us who buys a ______.” You have to give them an incentive of meaningful value. It’s the least expensive, most profitable way to generate income because you are using an asset that you have already paid for – your trusting customers. If you don’t do this, assuming that you are able, then you are costing yourself money that somebody else (who knows how to market) will eventually earn.
B. Secondary Markets – It’s the same story, once you have a network. It’s like a funnel that you can pour more goods and services through. If you sold them a widget, assuming that they are happy about the value, go back and sell them another kind of widget or a service contract for either a widget or for a totally different concept – whatever can fit your business style.
Some of the new types of services can be handled by sub-contractors. Again, you have lower lead costs and commissions, and you are building more protection by broadening your bag of tricks. Be careful not to over-extend and lose control of quality and service, because dependability is by far (according to the consumers) the number one criterion in contractor choice, over both price and product. Again, if you can and don’t, it’s costing you.
C. Premium Networking – Encourage other companies to offer a discount on your product or service as a premium for doing business with them. “Buy from us and get a 10% discount on __Company’s widget.” This gives you free advertising access to an established customer base and no effort to promote or close. Again, this kind of customer can be developed for referrals and secondary markets. Have your network partner explain that the customer can save 10% on your widget because of your savings on advertising costs.
Educate, justify, explain and offer a discount. If it costs more, explain why higher quality is worth more (justify); if it costs less, explain why higher volume allows for less cost (justify). Educate them as to why it costs more and they will appreciate the extra value. The value of anything is what somebody is willing and able to pay for it. The value is not the price you put on something, it’s what the market accepts; educate them as to why your “higher than average” price has superior quality and you will get your price and profit.
You must break the concept that it’s apples-to-apples in value against a lower priced equivalent in order to justify your price. Are there secondary products or services that you can sell to your existing customer base? Which other businesses can generate leads for you by offering a discount on your service – and vice versa?
D. Media Advertising – Once you have created the best possible ad, using the tools in this manual including the Market Research section, and then testing it on a few people, you need to find out which media is most productive. Later you will want to fine-tune to become cost-effective. But, to start, you need to run the ad on one medium. Radio is a medium that is easy to get quick responses from.
Assuming that you have a “direct response” ad as opposed to an “image enhancing” ad, monitor the responses. After monitoring the responses, change the ad a little and run it on a different radio station. Monitor the results again. Keep running your best ad to keep the business coming in, always monitoring and testing to maximize results. Don’t become satisfied with any ad until you know that it draws as much as possible. Watch other ads on television. If one gets repeated often, it’s because it works. Then, try your improved ad on other media – the Sunday paper, television, whatever your budget will allow. This approach should have been already budgeted for in any start-up business, or, for any individual campaign. Television is best used for products/services that have visual impact value.
The next step, after getting past break-even, is to test additional ways to generate business. Don’t wait for the bottom of a cycle to try something new. You should test during the good times in order to have a managed income condition. Panic is the wrong circumstance under which to look for something to do. If direct mail, e-mail or telemarketing are possible avenues for your business, test as quickly as possible.
E. Seasonal Campaigns – Be it Christmas, end of the tax year, weather or the Spring-Fall buying sprees, you need to prepare. If you fail to plan, you plan to fail. These are “pre-disposed” buying conditions. This is when “sale” or “special pre-season” offers attract the pre-disposed buyers. As covered in the “Promotions” section, you need to appeal to their sense of belief in your sensible offer. They don’t want to be deceived, but, they do want a truly good deal. All the studies and my own experience say that they will pay more to get more. It’s your job to make sure that you get in front of them and have the best “more” available.