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Unsatisfactory sales growth - check here for the solution
[Newsletter #21]
How to Think Better
 

Maximize Selling Efficiency By Minimizing $PACE
($ Per Active Customer Established)

Introduction

In Newsletter #20, the 7-step ladder to successful sales growth was introduced. The critical step in the ladder is Step 4:

4. Contact ALL prospects Contact ALL the market niche customers once - Play the percentages. Do it in such a way they will want to talk to you.

This is the step where many companies are weak. However it is not easy. All those potential customers out there are stressed for time. They do not want to be badgered by another salesperson. Yet you want to get their attention and get them to act. How do you do that?

Even more, how do you do it in the most effective way. $PACE ($ per active customer established) is a useful parameter to evaluate alternative contact processes and choose the most effective. This Newsletter explores this concept and suggests how to get the best value.

Sales Contact Processes

There are many ways of contacting prospective customers. In some cases, the nature of the product or service may influence the effectiveness of any given method. For example, if you are buying a car, you usually want to see the car. However for many products and services, there are many processes that can be effective.

Some of the most common are:

Direct-mail packages
E-marketing
Telephone marketing
Face-to-face visits by sales representatives
Public relations
Trade shows
Listings in Trade Directories
Outdoor advertising
Paid media publicity

In practice a combination of these methods is used. Ideally a process should directly produce sales. Occasionally there may be secondary effects. Having a booth at a prestigious trade show may produce valuable free publicity in trade journals.

 


Of course, purchasers do not always buy on the first encounter. The oft-quoted rule is that it takes 6 contacts with the potential customer before the sale is made. In this complex marketing / selling mix, where do you put your effort? How do you spend your marketing dollars?

Times have changed

You can be assured that the world has been changing dramatically and this will continue. The relative effectiveness of different selling processes is very different now from what it was 5 years ago. The Information Technology revolution (largely the Internet but with many other facets) is changing the way people run their lives. The more affluent customers have access to very sophisticated ways of handling information.

It is important to actually measure the effectiveness of different selling processes. Out-of-date measures of effectiveness or gut feel may well lead you astray. The term people use for such a measurement is a "metric". What measurement of effectiveness or metric will you use? You should be keeping records to learn from what is actually happening. If you don't learn from history, you are doomed to repeat your mistakes.

Which metric - ROI or $PACE?

Some people push the notion of the ROI (Return on Investment) for different channels or ways of contacting the customer. ROI in this context is the lifetime value of a customer versus the costs of creating and growing the relationship with this customer. This measure is so theoretical and complex that not surprisingly it is mostly just a talking point. However some measurement must be made if choices are to be made logically. $PACE is a practical measure that works.

$PACE ( $ per Active Customer established ) is calculated for any sales contact process as follows:

$PACE = [ $ cost ] / [ Number of active customers established ]

This measure is simple but measures what is important. If $PACE is minimized, then the maximum number of customers are being created for the least cost.

Primary versus Secondary Effects

$PACE measures only the Primary effect of a sales contact process, that is how many active customers are established. Sometimes there may be useful Secondary effects. Having a booth at a trade show may produce only a modest number of customers, but give extra publicity through trade journals. Making physical calls on customers may give interesting competitive information.

These secondary effects can be valuable, but they should not influence the choice between alternative sales contact processes. The tail should not wag the dog.

How to minimize $PACE for an e-marketing solution

As discussed in prior newsletters, a major impact of the Internet is on purchasers' power and their ability to get information. Purchasers are in the driving seat. Purchasers are increasingly using electronic means to get information. Purchasers can block information from sources they do not believe to be valuable. It's a Permission Marketing world. Effective sellers are forced to include e-marketing methods in their approach. Without this, they may well find their competition is stealing market share away from them.

If purchasers prefer e-marketing solutions then the $PACE for these are likely to be significantly lower than for traditional approaches. The advantage of e-marketing solutions is that the costs are in general much lower than for traditional approaches.

Having a good sales representative "on the road" is costly for the number of active customers he or she is likely to establish. Instead an e-marketing force can cover many more potential customers and filter down to those who are likely to purchase now. Depending on the products and services supplied, a traditional sales representative may then be required to seal the deal. However in many cases, purchasing may be possible via a section of the selling company's website.

As was said, the cost of such e-marketing solutions is usually modest versus other processes. So the top line, the numerator, of the $PACE metric is attractive. The problem comes up with the bottom line, the denominator - the number of Active Customers Established. Prospective purchasers are trying to avoid too much information, particularly from unknown sources. To maximize the denominator ( and thus minimize $PACE ), the following steps are important:

For any e-mail communication sent to prospective customers:

Have a solution to a problem the prospective purchaser wants to solve
Get the purchaser's direct e-mail address
Ideally get their permission to send them an e-mail communication
Have a message that will not be deleted by anti-spamming filters. Important steps include

- Send the message from a person
- Send the message to a person
- Do not put certain problem words in the Subject ( Free, Limited-time, $, �)
- Send a text message rather than an HTML message

Have a message that will likely be read by the recipient, not deleted.

- Have a subject that the recipient will want to read
- Personalize the body of the message
- Keep the message short.
- Include a URL where the recipient can get more information
- Include a simple process if the recipient wishes to block such communications from you

If the company website is part of the marketing process, then the website must perform. If someone has taken the trouble to visit your website, there is some interest there. Don't lose them now. The website must have good useability for the visitor, to use a current jargon term. Make it easy for the visitor to interact with you. Include simple feedback forms and request for information forms, with the minimum number of required fields. Newsletter #17 gave some important features for a website, which will retain visitors and move them towards commitment.

The importance of measuring $PACE

One real danger in this area of e-marketing is that the technology can be quite stunning. You may be really proud of some leading-edge gizmo. However any communication is probably much less important to the receiver, than it is to you the sender. Flashy graphics or sound waves are likely to irritate more prospects than the number attracted by them. If it is taking too long to download, click - another fraction of your potential market is lost. If in addition, they must download the latest Flash 6 version before they can see anything, then you've probably lost most of them .

This does not need to be an area of judgement. It is always possible to measure results. E-marketing can give some very sophisticated measures of which parts of the process are most effective. Sometimes by setting up alternative approaches and measuring the results, a precise comparison can be made of the alternatives. This measuring approach should be at the top of your mind right from the start.

Conclusion

There are no blinding revelations in the above. It is rather a call to get a great many small details right. SMM will be happy to assist you in building your selling efficiency and minimizing your $PACE.

If you wish to use this approach, SMM will be happy to work with you. Our help can be configured to meet exactly the needs you have. Our strengths, experience, creativity and practical common sense can complement those of your company. So write us a Fast Message today, , on what you're looking for.

Barry Welford

Feedback

So do you agree or disagree? Is this message right? Could this metric work well for you? Is there some part of this where you have a problem? Would you have liked more information on any of the issues? Whatever your reaction, please give us your feedback. In this way, we can tune the contact of future Newsletters to better meet your needs.

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Unsatisfactory sales growth - check here for the solution
How to Think Better
 

 

 
 


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Copyright 2002 Barry Welford, Montreal, Quebec, Canada
Added to site 5 November 2002