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Using marketing mix to create a sales team
Dear Small Biz Adviser:
How can I develop a sales department for my business? My main concern
is finding out the crucial topics in relation to a sales department.
Thank you,
Cesar
Dear Cesar:
Congratulations on having sufficient capital for the startup of
a sales department. Most small businesses simply don't have that
luxury. Typically, and especially in small service organizations,
the entire staff (owners included) constitutes the sales department.
The starting the point is the same whether you are
a small business or a major corporation. Begin with market research,
specifically marketing mix. This is the examination of four basic
elements that result in an advertising and promotional strategy
for a company's products or services. The steps are:
1. Define
your products and services. That sounds simple, but most
people misunderstand what that really suggests. Don't write down
"lipstick" on a piece of paper and consider that sufficient.
What colors, sizes, customer support services and other characteristics
accurately describe your product? Remember, there are many sellers
of lipstick; what is so distinct and unique about your product?
2. Define your target customers.
In the case of the lipstick, don't be content to simply state
"women." Are your products more in tune with young girls,
adults or baby boomers? Are there any characteristics in your
lipstick that would make it more attractive to minority women,
blondes, thin bodies or anything else that simply would make it
more appealing?
3. Define
where your product or service is sold. In the case of the
lipstick, don't be content with simply stating "retail outlets."
Not everybody goes to Burdines or Saks. And some shoppers, regardless
of resources, refuse to be found in a dollar store. (Remember,
I have two young daughters who rule my house.)
4. Define
your pricing structure. Will the lipstick be sold at a
discount, customary or prestige price structure? Naturally, that
impacts where the product is sold. You can't apply prestige prices
to an item sold in a discount store.
While this may seem a primitive approach to the development
of your sales department, the information learned from the steps
above will affect your sales operation.
The four marketing segments must be part of the orientation
for the sales personnel. You can't sell something about which you
know nothing. Furthermore, the sales personnel must know how to
promote your product or service, including successfully defining
to customers what makes it stand out from the competition.
Developing the marketing mix also will assist you
in developing sales projections. These projections will be impacted
by the number of sales representatives you have and the geographic
markets they cover.
Likewise, capital devoted to salaries, commissions
and other sales department resources will affect gross margin (gross
sales). The more you add to selling expenses, the more you reduce
the amount of gross sales that can be applied to paying for overhead
and leaving the company with net profits. Believe it or not, ownership
first looks to the cost of sales, or cost of goods sold, when trying
to cut expenses. I'm not saying that is always right.
In the end, you must justify all expenses by demonstrating
they will directly result in sales that cover those expenses and
add additional income to the company to cover operating overhead
and leave a profit.
Finally, make sure the person in charge of your sales
department is qualified to sell your type of products or services.
I also encourage you hire someone with a team-oriented management
style. Teamwork management will more likely keep employee turnover
at a minimum, assuming working conditions and compensation are fair
and competitive.
There is no magic formula in all of this. Simply combine
the right personnel with some good old-fashioned, sound business
management and marketing techniques.
I wish you well.
-- Posted: Aug. 9, 2001
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