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Making the tough decisions Featured

9:40am EDT July 22, 2002
It happens too often. You launch a new product, service, sales initiative or marketing program with fanfare and the best of intentions.

But as soon as the kickoff is over, your eyes turn to results. At first, sales trickle in. Then, the trickle becomes drizzle. But that’s where it stops. The downpour never comes. The program is neither a success nor a failure.

Once again, the market response to a new initiative does not meet expectations and these questions remain unanswered:

  • Do we have the right product or service?

  • Have we positioned it correctly?

  • Are we packaging, promoting and pricing it correctly?

  • Do we have the right market?

  • Are we selling it the right way?

While your staff will answer these questions with the best of intentions, you, the owner or profit center manager, are left with the same dilemma: “Do I fish or cut bait? Should I reinvest to find out if the initiative can be successful? Or should I just cut my losses now?”

Financial analysis can only help so much. Sure, break-even analysis and return on investment are important tools, but their assumptions will kill you because there is no historical data. So it comes down to your judgment: “Do I kill the effort, or do I let it ride?”

Here are five steps to evaluate any new product, service or program initiative:

Reconfirm the objectives and sales or marketing process of the initiative. Are they realistic? Many initiatives in business fail because expectations weren’t set, agreed on and met.

Sales and marketing efforts often fail due to forecasts based on market ignorance or underfunding based on the need to limit risk.

If the goal is finding, keeping or growing customers, clarify this. If the tactic is creating more leads, reorders or referrals, make it clear. Otherwise, results are hard to predict or see.

Require the champions and the implementers of the initiative to demonstrate a model. Too often, the visionary on your staff who developed the idea is not as experienced in implementing it. Or vice versa.

In fact, it may not even be the same person. Demand a clear model for success.

Establish probabilities of success to ensure the initiative can be successful. This is where judgment, intuition and previous experience converge. Bring your team together and agree on the probability of expected results.

Set up a field “test kitchen” to demonstrate the required success. Stack the deck in one of the following ways: Pick a great sales territory, simple product version or traditional sales tactic. Then test your initiative.

If it is not successful, let it go. Be ruthless in preventing “scope creep” of the test and stay committed to seeing it through.

Pick a drop-dead date or event for your decision. At a certain point, you will know when you need to make a decision. It may be a moment in time or a reaction by the marketplace.

Tests like this always force a decision. They should not take longer than two or three months, and in Internet time, can occur much more quickly.

The burden of the questionable initiative is that it saps the financial and human resources of an organization. It creates dissension and finger pointing within a company. Sometimes it may even be preferable to cancel a promising initiative than to let it linger.

Too often, the idea is not the problem. It’s just not right for a given organization at a given time.

Andy Birol (abirol@pacerassociates.com) is president of PACER Associates Inc., a Solon-based consulting firm that works with companies who need to focus on their best ways to find, keep and grow more customers. He can be reached at (440) 349-1970 or www.pacerassociates.com.