MARKETING STRATEGIES: A new approach

To make progress in increasing growth in our existing product/market environments, we need to have a framework or theoretical model to identify and give guidance to the changes we might implement.

By understanding the basics of customer buyer behaviour, sales cycles, customer expectations and satisfaction, the fundamentals of sales lead conversion processes and brand image, we will have the foundation to understand and identify changes which will drive growth in a specific market.

With any prescriptive process, it is important to have a stated objective. Just stating that the objective is to increase sales is somewhat limiting as just throwing resources at the problem of increasing sales may well work.

If the focus was, say marketing effectiveness, this might be achieved by generating more initial sales which is a worthy objective in its own right.

However, would such a change be sustainable? I have decided to focus my attention on the post purchase evaluation which results in a repeat purchase or a positive referral, as this seems to be a very direct measure of customer satisfaction across the entire customer experience.

Repeat sales and positive referrals are strong characteristics of high growth firms and are a very critical measure of the quality of the marketing effort. This view is strongly supported by the work of Richard Owen and Laura Brooks in their work on the Net Promoter Score. (See their book Answering the Ultimate Question, Jossey-Bass (November 24, 2008)).

NPS is based on the fundamental perspective that every company’s customers can be divided into three categories: Promoters, Passives, and Detractors.

By asking one simple question – How likely is it that you would recommend [Company X] to a friend or colleague? – you can track these groups and get a clear measure of your company’s performance through its customers’ eyes.

Customers respond on a 0-to-10 point rating scale and are categorised as follows:

• Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fuelling growth.
• Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
• Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.

To calculate your company’s Net Promoter Score (NPS), take the percentage of customers who are Promoters and subtract the percentage who are Detractors.

In most industries, this one simple statistic explained much of the variation in relative growth rates; that is, companies with a better ratio of Promoters to Detractors tend to grow more rapidly than competitors.

We need to move to marketing and sales strategies which decrease the sales cycle, improve our lead conversion and generate better customer satisfaction levels.

Reducing the sales cycle has a dramatic effect on marketing and sales productivity as we have seen from the calculations above. What we will discover is that there are many places within the post-sale customer experience where improvements will have a direct impact on the length of the sales cycle.

What we will also see is that a carefully designed and delivered customer experience dramatically reduces the sales cycle of the repeat sale. The same applies to the sales cycle of a new customer who has received a referral or recommendation from a satisfied customer. There is a direct relationship between meaningful customer experiences and subsequent sales cycles.

Our sales cycles can therefore be gradually reduced over time as we improve the levels of customer experience and satisfaction. As these improve, so does the level of repeat sales and referrals and with it further reductions in sales cycles. Basically, our marketing and sales activities become more effective when we get it right.

I have worked with hundreds of entrepreneurs over the last few years and almost all of them have unrealised high growth potential.

By taking a high growth marketing approach, the changes they needed to make in their marketing strategies were relatively obvious and normally easy to implement.

Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia. A series of free eBooks for entrepreneurs and angel and VC investors can be found at his site here.