When a company's market niche and prospects are not precisely defined—which is the case for many start-up companies—the company is forced to "test the waters" by running ads or publicity releases in a wide variety of trade journals in order to generate a lot of initial inquiries.
With this first round of inquiries in hand, the company can then narrow its focus, and eventually refine its market niche, via progressive qualifying of prospects and measurement of response from various media.
An example of a very successful campaign accomplished on a tight budget is Protek System's introduction of a new CAE software product. The company had been started with "bootstrap" financing from the owners and friends. There was little money available for advertising and promotion, and the program had to be financed and sustained from sales revenues.
The marketing director and designer of the program began by advertising and running publicity in a variety of electronics industry trade journals simply to generate inquiries. Specifically, Protek System's effort to find their market niche and define the ideal customer profile was accomplished in six steps:
1. First, they ran one-ninth page ads (some black-and-white, some two-color) in seven electronic trade journals. They combined this with an aggressive, low-cost publicity campaign that involved sending out press releases and other new product information to a wide variety of trade journals. These combined efforts yielded 12,000 leads in the first year of the company's operation.
2. Next, they followed up each inquiry with a phone call to pre-qualify the prospect. Yes, they phoned every inquiry two or three times. This is very time consuming, but in the company's infancy they had few orders and lots of time. If the inquirer was qualified they sent them fulfillment package, which included a letter and a product demo disk.
3. The original inquiry included the name, company name and address, phone number, and date of inquiry. Each of these leads was loaded into a database so the prospects could be profiled and tracked.
4. The group followed up with phone calls to a sample of prospects that had been sent the lead fulfillment packages, so as to determine why they would buy or not buy, and offered to assist the prospects in ordering the product. This step allowed them to develop a profile of the buyers and the markets they represented.
5. They evaluated the effectiveness of the media and the message by constantly profiling customers and determining which publications they read. These profiles, coupled with the SIC code number of the prospect's company, allowed them to modify their advertising message and narrow down the list of magazines as they learned more about the potential buyers.
6. Eventually they designed a database containing the original inquiry; the prospects who received fulfillment packages; the prospects who received formal quotes; and the people who ordered the product. This kind of database allowed them compare orders to quotes and to the original inquiries.
The process developed into a ratio of inquiries, quotes, and orders. Since they knew the cost of each ad in each magazine, they could compare the costs to the generation of inquiries, quotes, and orders. As they sold more and more CAE programs, they had more money to invest in advertising and publicity
The results: In only two years, sales revenues went from a few hundred programs a quarter to 3,000 programs a quarter. At more then $1,000 per order, sales jumped from $800,000 to $12 million in a short period of time.
Protek Systems had to start with a general approach in order to generate enough inquiries to begin the process of finding their market niche. Through careful analysis and inquiry qualification, the company was eventually able to identify its customer profiles and market niches. This "general to specific" approach using inquiry generation worked very well for the software product.
A few years later, I found that the principles of the program above would also work on material handling machines. The company I was general manager had purchased a small pallet handling machine, but our sales reps were not interested in selling the machine.
I knew a little bit about some of the markets and customers, but I was going to have to find a way to market the machine direct from the factory, using only inquiries on a small budget.
Both markets and customers were only vaguely known, so the marketing effort was based on a lead generation program. The program began with shotgun marketing techniques using advertisements, product releases, and trade shows to generate leads from a variety of markets.
The secret to the success of this lead generation project was the follow-up and qualification of every inquiry. All leads were qualified by phone, and each inquirer was pursued with follow-up efforts of at least three calls. Over a period of one year, the results of the inquiry follow-up led to:
• Identification of 11 market segments from current quotations by SIC codes.
• Determination of the sales potential in each market in terms of prospects.
• Prioritization of markets.
• Purchasing some good industry lists, and hiring an outside firm to do the phone prospecting into each of the markets.
At the same time, we developed the literature and a video as our fulfillment package to send to interested prospects. We also developed a low-budget inquiry generation plan that included half-page ads, press releases, new product releases, and publicity stories.
A prospect database was designed in Act software that kept track of every prospect and the status of the prospect needs and potential projects. The prospect database could be easily connected to the quotation and order information. This made it possible to trace all leads to quotations and quotations to orders.
This information was then published in an annual summary report. The report allowed management to assess the costs and benefits of the lead generation program and to make annual changes in media used.
Lo and behold, 95 percent of the orders could be traced back to an inquiry over a period of years. It was seldom the inquirer who placed the order, because the information gets passed around the company. Sometimes I made field sales calls, but the entire marketing program was factory direct without the assistance of the sales reps.
As time passed, we became better and better at recognizing new market opportunities and began penetrating new market niches with new versions of the machine.
Results: The first year we sold about 10 machines for around $500,000. But as the program became more focused, we found more customers, applications, and market niches. By the fourth year, we were doing $3 million in sales a year and offered five different models.
This example proved it was possible to generate inquiries and sales with a small budget—but only if the factory commits to following up every inquiry, along with developing a spreadsheet to compare costs, inquiries, quotations, and sales.
Mike Collins is the author of "Saving American Manufacturing" and its companion book, the "Growth Planning Handbook for Manufacturers." To learn more about the author or these titles, visit www.mpcmgt.com.