Andrew Birol

Thursday, 29 April 2004 06:25

Golf, growth and guffaws

I am tired, humbled and sore. I traveled 4,000 miles and paid a lot of money to feel this way.

After a week of basic training at a golf school in California, I could barely lift my arms to type. My hands were raw, my shoulders ached and I was hunched over the keyboard. Growth always comes with pain.

I can already see a change in my swing and my overall golf game. After hitting about 500 balls daily, we ended the week with a team tournament. Although I would grade my round a "D" (on the generous curve), I pulled off a handful of shots I didn't know I had in me.

This "tear down and rebuild" process reminds me of growing a business. I have a renewed appreciation of how my clients must feel at the end of our early work together -- a little beat up, overwhelmed and anxious to see how and when improvements would manifest.

As individuals, we employ different strategies to get through pain and change. I find humor to be my strongest support. In that vein, here are some golfing guffaws:

* When my patient instructor took away all but four of my clubs to help me focus, we dubbed him the "Golf Nazi," known for shouting, "No clubs for you!"

* The square-jawed scratch golfer we named "Judge Smails" (from Caddyshack), who with his spouse, "Golf Barbie," clearly ran the week at camp, pushed us outcasts into forming our own Island of Misfit Toys. When it rained, the misfits played while the pros stayed in.

* After lecturing me on how I was doing everything wrong, a fellow golfer demonstrated the "right way" to tee off. His graphite driver break loose and narrowly miss destroying a picture window.

When it comes to growth and guffaws, remember to connect the two. Too often, business owners are hunched over the "right way" to grow their businesses, grimacing and squinting and trying to force a solution.

If you're a golfer, you know what happens when you grip the club too tightly -- you end up stuck in sand traps or searching for your ball among the trees. One of the most important lessons of growth is that once you set your stance and settle your grip, you need to relax your shoulders and have some fun.

Golf school taught me to play the game better, but also reminded me that growth is growth, whether you're practicing a game or scrambling to fill the largest order your company has ever had. Andrew J. Birol (abirol@andybirol.com) is president of Birol Growth Consulting and helps owners grow their businesses by growing their best and highest use. Reach him at (440) 349-1970 or www.andybirol.com.

Thursday, 26 February 2004 08:57

Racing on after the handoff

Your company has changed hands, the next generation is in charge, the business has survived and family dinners are still pleasant.

All's well that ends well, right? Wrong. Just like the relay team whose last runner has successfully grabbed the baton, there is still a race to be won. And while only one runner can lead the field at a time, it is up to his teammates to support and cheer him on.

If you are the predecessor in a succession plan, here are your keys to success.

* Step off the track without colliding into oncoming runners. Complete your transition of power, accountability and ownership of assets and liabilities. Don't drag your feet, or you may hinder your successor's progress.

* Cheer on your team. Encourage your new leaders. Become a mentor, not a backseat driver.

* Run another leg when asked to. If a member of the new team runs into trouble and your successor asks, agree to temporarily do this job. While it may not be your ideal retirement, in a crisis, your trusted hand can be a great source of confidence to employees, vendors and customers.

As the successor, what are your keys to success?

* Power past the handoff without colliding into other runners. Complete your transition of power, accountability and ownership of assets and liabilities. It is your race to win, and if you falter, your predecessor did the best he could.

* Accept coaching and cheering from your team. While you have the baton now, it can be lonely leading the pack. Accept their counsel. You make the decisions now, but don't have to do so on your own.

* Shuffle your team if you are losing the race. If a member of your new team runs into trouble, and your predecessor can, ask him to temporarily do a needed job.

Succession is the toughest challenge facing a family business. Much like in a relay race, where individual stars must work together for collective results, the management handoff is the scene of great success or spectacular defeat.

Whether you are giving it or taking it, make sure the company's baton is firmly in one's hand at all times, then run as hard as you can. Andy Birol is president of Birol Growth Consulting, a Solon-based firm that helps grow businesses by growing their best and highest uses. Reach him at (440) 349-1970 or at www.andybirol.com.

Friday, 25 April 2003 12:12

Manage vs. consult

Do you have the right staff solving your customers' problems?

As an independent entrepreneur guiding your business through this economy, you may ask, "Do I have the right people?" "Are they doing the right thing?"

And, do you wonder whether to send staff or to solve your clients' tough problems yourself?

If you run a service business, one question is, "Do I need more customer managers or more customer consultants?" Both serve different roles, and as an independent entrepreneur, you need to know which to send when your customers call with problems.

While most consultants were once managers, and many managers act as consultants, the skill sets are different. Customer managers must be great administrators, excellent people managers, strong collaborators and organizational players, methodical executors and cost conscious people.

Customer consultants must be great salespeople, driven individual contributors, self sufficient, entrepreneurial players, creative problem-solvers and driven to success regardless of cost.

So when do you need a consultant and when do you need a manager?

Customer managers solve problems that are routine, recurring and definable. They are best at tackling problems that can be documented and probably avoided in serving future clients. And they're capable of handling those that occur in business with more standard services and products and don't involve business judgment and in-depth knowledge of a customer's operations.

Customer consultants solve problems that are one-of-a-kind and unpredictable; that have to do with how individual customers must modify your company's service to make it work in their business; and occur in companies selling customized services or job shop products. They are also best in environments that involve business judgment and in-depth knowledge of a customer's operations.

If your business requires both, you probably need consultants and managers. Consider dividing your customers, their needs and the staff you have into the predictable and the surprising.

Chances are good that in doing this you can train your managers and your consultants differently and better; drive your costs down while increasing the service you provide to your customers; better match your staff talents to the jobs they do and in turn create more satisfied employees; and free up more of your time to manage your overall business instead of constantly fighting fires.

Most customer problems business owners face are predictable, even those that are unpredictable, because they are expected. Creating two kinds of service within your team helps you to divide and conquer. Andrew J. Birol is president of Birol Growth Consulting. He helps owners grow their businesses by growing their best and highest use. Reach him at (440) 349-1970, abirol@andybirol.com.

Monday, 22 July 2002 09:49

Self-reflection

In the spring of 1997, I left corporate employment and started a traditional one-person consulting business. Motivated as much by fear as by purpose, I created a service around a specific process tailored to help business owners focus on their best ways to find, keep and grow more customers.

I invested in basic promotional and technological tools and networked to find clients. Fortunately, I was successful and my business grew.

But last March, business slowed because my sales funnel was too empty after two major client relationships ended. Embarrassingly, I had forgotten to keep practicing what I preach. Even worse, I saw that my previous efforts were antiquated, random and disorganized. It left me two choices: stop growing or rebuild.

Over the last four installments, I’ve outlined a process for helping a company focus on its best ways to find, keep and grow more customers.

Much had changed since 1997. I’m now part of a new industry I call Entrepreneurs eXchanging and Providing Expertise through Relationships and Technology, or the EXPERT Industry for short. As a result of corporate downsizing, the Internet, easy-to-use personal technology, business owners’ needs for more specialized knowledge workers and everyone craving more independence, control and quality relationships, a new form of business has emerged. More than just corporate refugees, we knowledge workers have a unique network and work style

In Northeast Ohio alone, there are hundreds of individuals who are in the EXPERT business. Business owners are also part of the EXPERT Industry, as they seek scarce human resources, which ultimately may change their approach to business.

With that in mind, I set out to refocus my firm, much as I do for my clients. Twenty years in corporate America taught me that conventional sales, marketing and customer service efforts often fail to really find, keep and grow more customers.

Many execs are frustrated with the results of their investments and seek unconventional assistance. I was no different, and once I realized it, I was able to take the necessary steps to change my business approach.

First, I defined my best and most profitable use — what is it that I was good at. The answer required a bit of self-reflection, but it was right there in front of me: the ability to synthesize and refine complex problems and then help force the implementation of simple solutions.

That’s useful for any business, because it’s imperative to break down problems in order to develop ways to expand a customer base. Furthermore, the EXPERT Industry requires a unique set of skills, such as a high preference for independence and facts over administration, bureaucracy and politics.

Next, I defined my target market: businesses that sell their expertise or market a customized product to other businesses. I recognized that the service those people needed was development of a clear focus and process to grow their company’s top line.

Then, I distilled the crucial intersection of the three PACER circles into one concise statement that described what my business did: PACER Associates works with companies who need to focus on their best ways to find, keep and grow more customers. We work with businesses that sell their expertise or market a customized service to other businesses.

Finally, I set out to reconstruct my sales funnel.

Regardless of the funnel stage, all my efforts were centered on building awareness and relationships, using technology wherever possible. This is something I remained true to, in spite of having too few prospects in the funnel.

I defined my suspects as any business that sells expertise or markets a customized product to other businesses. I marketed through articles, speeches, seminars and my Web site, targeting presidents or business owners who were familiar with me through someone they trust and, independently, read about or saw my work. I also produced a free e-mail newsletter for more than 600 subscribers, and set out to develop referrals through clients and others in the EXPERT Industry.

Interestingly enough, the best sources of referrals turned out to be those EXPERTs who went through the PACER Process. This led to another development — the PACER Referral Network — where business owners can register their businesses online. This exposes people to the PACER process while they exchange free referrals with other EXPERTS.

The net result is that I reinvented my business and put safeguards into place to ensure I’d continue to practice what I preach to clients. The experience taught me that regardless of the size of your company, using the PACER Process was an intensely investigative and personal experience that results in a deeper understanding of one’s business, marketplace and customers.

And, I found that doing so in light of the emerging EXPERT Industry would certainly help almost any provider or buyer of business products and services. Having a carefully focused message and a stable process for finding, keeping and growing more customers is the reward for the effort.

Andy Birol(pacerassociates@worldnet.att.net) is president of PACER Associates. He can be reached at (440) 349-1970 or www.pacerassociates.com.

Monday, 22 July 2002 09:46

The relationship equation

In the early 1990s, contact management software was popular among sales people, who used it to keep organized. It spawned an industry known as sales force automation.

Around the same time, business leaders heard the cries of marketers demanding that customer data be extracted from accounting systems on the company’s mainframe. That led to database marketing automation, which also enjoyed success.

Today, almost a decade later, most companies with very large customer bases, sales forces or complex integrated marketing programs have invested in automation. Smaller companies have been more cautious and less successful.

Now there’s a new trend — sales, marketing and customer service automation have converged into “suites” of formerly stand-alone products. These suites are marketed further up the organization to senior executives of middle-market companies instead of the traditional target of IS managers in Fortune 500 companies.

The reasons are twofold: Senior executives make these decisions in smaller firms; and hardware, software, database and Internet technology suppliers need to convert the corporate middle market in order to maintain sales growth. This repositioning has also brought about some repackaging — defining these products more in terms of the benefits promised than the features offered. It’s called customer relationship management software (CRM).

CRM is being marketed as the tool a firm needs to take a systematic approach to finding, keeping and growing customers. But does it work?

Companies with less than $100 million in sales face automation choices that are more confusing and riskier than ever. Has the time for CRM come and has it come for your company? Will this latest “hot thing” catch on or become obsolete? Did the last “hot thing,” CRM is expected to replace work, help or pay back?

The answers are a lot less complicated than you may think. First, assess CRM on your own terms. Recently, I attended the DCI and Ziff Davis Customer Relationship Management Shows in Chicago and Atlanta. At both, I saw a dizzying array of products, services and ideas.

Some looked crazy and others looked extremely practical. CRM technology is more advanced than the needs of most mid-sized (less than $100 million) businesses. Specifically, few organizations have the resources or needs to use the features and functionality of some of today’s hottest products.

For example, if your firm doesn’t have a 100+ outside sales force, or several integrated marketing campaigns, many products will be overkill. Many suppliers sell products by the seat or user. If a smaller company wants to equip its sales, marketing and customer service groups, only 10 seats may be needed. This is not a profitable deal for many vendors.

CRM suppliers may be assuming that their prospects have clear goals, a long time to implement changes and ample in-house resources to help employees learn the latest thing. For the average $1 to $100 million company selling to other businesses, I urge extreme caution and suggest five steps for CRM success:

Ensure you clearly understand and have developed a process for how your business best finds, keeps and grows its customers. If you don’t, you will end up with an automated version of your company’s status quo. Your best practices must guide the development of a CRM system.

Make sure your existing customer data is useful and used to make decisions. While new systems can use existing information more effectively, only users can create new information.

Clearly outgrow your system (manual or legacy). There is no penalty for waiting a little longer. Whatever you buy will become obsolete, too.

Have your staff agree on what it needs to do and build a plan to accomplish it. Then talk to a technology vendor or consultant. If you don’t assess your needs, you are likely to buy what they are selling and not what you need to achieve your plan.

Recognize technology is a means to your goal of growing customers and sales, not the other way around.

CRM systems can integrate the functions, activities, tactics and programs that comprise a firm’s sales, marketing and customer service departments. They are generally reliable and technically will perform.

Now, more than ever, it is the responsibility of the buyer’s senior management to define what its process for finding, keeping and growing customers is and assure that implementation goals are set and met. Your company’s success depends on it.

Andy Birol (pacerassociates@worldnet.att.net) 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. Andy can be reached at (440) 349-1970 or at www.pacerassociates.com.

Monday, 22 July 2002 09:45

Joint effort

The economy is surging. It’s a daily struggle just to satisfy your customers’ demands. So why, in spite of providing ever-better service and quality, do customers suddenly change their demands and loyalty?

What I’ve discovered from my own clients is that customers move to suppliers who offer context in addition to content.

Content is the expertise or knowledge implicit in your product or service. Examples include:

  • Attorneys and consultants who offer experience, reputation and education.

  • Chemical companies that provide formulations, shipping, training and usage sheets.

  • Web sites and direct mailers exchanging valuable information with prospects who identify themselves and are open to hearing a sales pitch.

Context is how you apply your content to fulfill the needs of your customers. It is more than customization or consultative selling. Context demonstrates your empathy with the marketplace and how your services provide a breakthrough solution. If you can create a context based on your firm’s best and highest use, others cannot match you. Examples of context are:

  • Michael Dell, who uses traditional direct marketing methods to sell customized computers online.

  • Hallmark, which created “Bosses Day” to introduce personal relationship products into the workplace.

  • The U.S. Postal Service, which sells stamps through ATM machines.

In an episode of “Seinfeld,” the character of George Costanza unknowingly described context as “multiple, disparate worlds colliding.” When this happens, instant context is created. But what’s made it an even more daunting task is that content, by itself, is no longer enough to satisfy your clients.

Content has become a commodity, largely due to the Internet’s popularity. Knowledge is universally available. Libraries and Amazon.com offer “how-to” books so quickly that professional services firms have trouble acquiring new expertise they can sell at a premium.

Anyone with an anonymous e-mail address can get e-newsletters offering proprietary knowledge that is traditionally exchanged only after a sale is made.

There’s another factor at play, which is whether your business is content-dependent. The Internet has been called the world’s largest copy machine. Even if your company’s information is protected by a copyright, patent or secrecy agreement, your information is only a copier, scanner or “send button” away from worldwide availability. Your secrets cannot be the sole source of your competitive advantage.

Examples of content-dependent businesses in jeopardy include:

  • Distributors whose suppliers are leapfrogging over them to establish direct relationships with customers. For them, customer databases and years of relationships are no longer absolute barriers to competition.

  • Copycat Web sites which appear overnight and challenge successful Web marketers have eliminated any advantage of being first in or an incumbent player.

  • Professional services previously sold by the hour are now unbundled. Some are taken in-house, and what is outsourced is bargained down to a fixed price.

The bottom line is that if the success of your business rests on proprietary content, the power to control that information may be slipping away from you and into the hands of your customers and competitors. One way to combat this trend is to build context around your content. It’s not as difficult as you may think.

First, provide local, personal or event-specific information, such as showing your customers how they can make money using your services on Valentine’s Day. Recognize how your customers really use your products and create custom versions for them.

Instructions, warranties and pricing can all be customized to fit the context of the customer. Then, distribute and market your products directly to decision makers, not leaders. As an example, the receptionist/secretary in the smaller firm usually buys goods and services for the whole company.

For smaller companies, providing context is a matter of survival. Appealing to your customers as the low-cost supplier as your single point of difference is out of the question. You must find a way to beat the bigger company, and niche marketing alone won’t do it.

Be more nimble and smarter by applying your content in your customer’s context. The old adage is true: People buy holes, not shovels!

Andy Birol (pacerassociates@worldnet.att.net) 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. Reach him at (440) 349-1970 or at www.pacerassociates.com.

Monday, 22 July 2002 09:36

Mind your own business

You have started, purchased or built a business. It has survived the first years and multiple threats to its existence.

Your firm creates products, services and value for your customers. Employees, vendors and partners rely on you. In return, your responsibility to them has grown. As a result, your business has turned a profit. So why not relax and enjoy your rewards?

Because whatever your business, if you did, your costs would still grow, your competitors would surely gain and your customers would only demand more. And now, the Internet and the New Economy threaten to both help and hurt your business in mysterious ways.

Growth is critical

Putting your focus on your business and on growing it is essential. Doing so:

  • Earns confidence in a chaotic business climate.

  • Provides cash to solve other problems.

  • Protects it from threats.

  • Makes you likely to be in the right place at the right time.

Growth, however, is a vague term. It is an increase in the company's top and bottom lines. Specifically, growth comes from increased sales, profits and/or acquisitions.

Unravel complicated solutions

If your firm needs to grow, the ways to do it are not simple. Thousands of books, courses, seminars, consultants and specialists prescribe their best solutions de jour. But, in many cases, their solution was not designed for your company. Your situation is different because of several factors:

  • Size of your company;

  • Product or service it sells;

  • Level or lack of your company's growth;

  • Resources (human, money, time and knowledge) you have.

The key is learning how to apply that information to your company's situation.

Know how to grow

Every company needs to create, sell, produce and profit, but keeping it simple is the challenge. If you define your company's activities in terms of growth, you can keep it focused on growth. Here are four ways:

1. Turn your firm's best and highest use into a new product or service.

Understand what makes your company special and what your customers value. Produce more of it and make it better. Package it. Make offers of it. If your offer is too similar to a competitor's, change the offer or co-market it together.

2. Get more customers and business.

This confirms your business has purpose and is needed in the marketplace. Understand what turns a prospect into a buyer. Provide low-risk options for prospects to try you out. Determine what it means to create a stable, reordering customer out of a buyer. Turn your customers into advocates and champions. Up sell, cross sell and win back your customers to build more business. Get referrals and be referred.

3. Deliver what you offer. (Set, agree on and meet expectations).

Measure, assess and improve all that your firm does to meet your customers' expectations. What will make your customers grow the most? How do your products or services help? What is really valued by the customer? Does your costing really reflect your value? Which customers really pay for your overhead? Do you sell and price based on value to customers or by how your financial staff decides? Measure how well your company delivers as it is growing.

Looking at your business like this makes decisions to build capability or outsource simple. One option will always help the company grow more than another.

4. Profit and grow.

Assess your people, activities, functions and programs in terms of how they contribute to your growth. In a growing economy, access to capital is relatively easy if you make a convincing argument that investing in your company will make it grow. New initiatives for growth can always be created at Step One above.

The bottom line is that growth is all that matters and all your firm's activities should reflect this priority. Place good bets, take risks and learn from your mistakes. Keep score, analyze, understand and act. Focus on and measure all four steps.

Remember, growth is a rising tide. It lifts all boats and will do the same for your company ship. Andrew J. Birol (abirol@pacerassociates.com) is a business development expert and president of PACER Associates Inc., which provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970.

Monday, 22 July 2002 09:35

Focus. Accomplish. Grow.

It's been three years since the Internet has really been "in the face" of most business owners.

Even for the traditional, nondot-com company, this has been a time of great highs and lows. Hopes and budgets have been raised and lost as firms have learned whether or not the Internet can help grow their businesses.

Looking back, what have we learned?

Sell what sells

Buyers buy products and services they already know. If your domain name, your company and your product are all the same, existing buyers will buy from your Web site.

Consumer and business sites like Dell, Staples and Schwab all enjoy brisk sales from existing customers who are comfortable buying the same products in a more convenient matter. If your buyers know your products or services well, then sell them online.

But don't expect your Web site to create brand awareness on its own.

Sell real things from real companies

A channel is not a business. If an Internet business is only a storefront for another company's products and services, it may not be a business.

Just as offline distributors are struggling to add value, so are Internet intermediaries. Any middleman must offer favorable packaging, service, value, warranty or terms. Otherwise, consumers will go to the source to buy. It just seems safer.

This helps explain the downturn of e-toys.com, and even, potentially, Amazon.com.

Don't expect sales from strangers

If you build it, they will not come. Few business owners can create an online market for their products and services. Without millions of dollars, your business will not become the next Ameritrade.

Web sites are not billboards along a highway; they are mailboxes on cul-de-sacs. Not many people will find your site without first knowing about your company.

Search engines return 10,000 or more responses to a query. How likely is it that your business will get random calls from interested parties? It probably won't happen often enough to cover the investment in a great Web site.

Sell your differences or sell to everyone

Provide information that makes your company invaluably unique. Look at www.gettyone.com/en-us/home/home.asp. It provides an easy way to buy stock photos.

How can you combine your company's products, services and expertise to really stand out? If you succeed, others cannot copy you. This is critical, because on the Internet, your competitors can and will copy your site overnight.

Sell it now or fuggedaboutit!

Set six-month goals for your firm's online sales and costs. Define how your site will help your company grow today. Will it increase your sales, leads, fulfillment or image?

Assume you will redo your site every six months. This will focus your organization to make your Web site pay off as soon as possible. The reality is that a Web site is like a child. Bringing it into the world is only a fraction of what it will cost to raise it into maturity.

Plan for recurring maintenance, complete overhauls and one big mistake along the way.

If you can't sell, serve

If it is clear you cannot profitably sell your product or service online, don't try. Instead, make your Web site a must-visit site for your prospects and buyers

Provide value, knowledge, service and other expertise and experience that will help your marketplace be successful. Link into a community if you cannot attract enough traffic to cost-justify more than a small Web presence. And sell, trade or donate your company's expertise to other Internet locations that can showcase your value.

Register with all the communities and content providers you can. Write, chat, join and deliver all you can to as many people in your target market as you can. Andy Birol (abirol@pacerassociates.com) is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970.

Monday, 22 July 2002 09:33

10 reasons to stick with the Internet

I was speaking recently at an e-commerce seminar with Tom Zych of Thompson, Hine and Flory on why businesses should continue to throw resources at the Internet despite the dubious returns most are experiencing.

One of the topics was, with the Great Internet Shakeout, why would an intelligent business owner continue to throw good money after bad into an e-strategy? Here are 10 good reasons to stay focused on your company's e-strategy.

10. The medium is established.

Web traffic continues to increase, as do the number of Web site visits and the amount of e-commerce.

9. There is no variable cost of distribution.

The Internet provides the ability to communicate with a million people as cheaply as with one person. With no variable distribution cost, the net cost to reach people becomes zero.

8. It turns technology into relationships.

Few technologies really humanize communication the way the Internet does. You can truly express who you are and what you are to somebody online.

7. It helps you turn relationships into value.

The Internet allows a visitor to indicate preferences, interests and opinions, which form the basis for interaction, and thus a relationship. And in business, it's all about relationships.

6. Pornographers are never wrong, and they're never broke.

Videotapes video stores and, quite frankly, VCRs, all owe their early success to the pornography industry. While it's a distasteful role model, it's important to recognize success when you see it: 60 percent of Internet commerce is still pornography-based.

5. Leverage, leverage, leverage.

In the era of knowledge businesses, what we know is often all that we are worth. Take your knowledge and leverage it online. Your articles, experiences, case studies and client studies are more interesting than you may think. Inventory them and make them easily accessible examples of your business.

4. It makes us them and them us.

As Paul Simon says, "One man's ceiling is another man's floor." Your roles as vendor, customer, peer and competitor can all be fleshed out and communicated to those who need to see you in those terms. This way, you can simultaneously extend all your critical relationships.

3. You have either inventory or information.

Long before the buzz words "supply chain" came into vogue, it was clear American distribution channels were contracting. The Internet gives you two choices -- convey information or carry inventory.

2. Your suppliers are online.

Think of everything your firm buys. How much of it do you -- and could you -- buy online? Chances are, most of what you need is waiting for you there. If your vendors are there, you should be, too.

1. Your customers are online.

How many of your customers are doing business online? If a majority are selling online, how often do they stay online and look for vendors? Are you at risk by not being there? Even though commerce may not be occurring online, impressions and preferences are being reinforced and revised daily.

Going back online is not too different from your plans for the weekend following the first party you went to in college. You swear you will exercise better judgment, but you have no intention of staying home. As the weekend beckons, so does e-commerce.

The key is to play the game intelligently and with greater forethought. Andy Birol (abirol@pacerassociates.com) is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970.

Monday, 22 July 2002 09:33

Think buyer share, not market share

Market share is one of the oldest measurements of success.

But for small- to middle-sized business, particularly those with sales forces, it is virtually meaningless for several reasons. Among them:

  • Only the largest businesses have the capacity to serve meaningful shares of most markets.

  • Small- to medium-sized businesses are, by nature, niche players. They can only serve smaller pieces, usually defined in their own unique way.

  • There is no objective data to determine a company's share of a niche it has defined. Sales forces instead focus on identifiable buyers.

So how can a business keep track of its market position? For the typical small- to mid-sized business, sales and growth are derived from tracking buyers and orders.

While the number of orders is useful, tracking the number of buyers is the best way for small businesses to determine their share. That's because:

  • Companies don't buy, people do. Buyers purchase one time, then can be grown into repeat customers.

  • The sales force (inside or outside) is designed to grow specific numbers of buyers and orders. It doesn't define market share.

That raises another question: How can your company quickly measure buyer share?

First, gather and define your existing buyers by general and specific characteristics, including title, role in their organization, role in your buying process and style and personality.

Then, add new prospect buyers to your potential number of customers by defining prospects in terms of those you now call customers.

Finally, track results and market share three ways -- number of first-time buyers, first-year purchases and expected lifetime purchasing of the buyer. Defining these numbers as a portion of everyone your company is aware of allows you to measure your firm's success in real terms.

By taking these three steps, you will have a meaningful share number that the whole company can understand. Specifically, the sales force and your marketing department will have targets they can agree upon. And, finance can tie actual and potential sales to sales and marketing efforts and costs.

The bottom line is that simplifying and expressing your firm's performance in terms of buyer share is a win-win proposition. Otherwise, your company is flying blind without true measurements of your market position. Andy Birol (abirol@pacerassociates.com) is president of PACER Associates, Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. Andy can be reached at (440) 349-1970 or through his Web site, www.pacerassociates.com.

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