Why Customers Buy

Customers buy solutions to problems or solutions for outcomes they need to make their business or lives better. While pricing is important it usually ranks 3 or 4 on buyer’s criteria. Too many businesses rely on the assumption in the era of digital self-education that the most important thing to a customer is price. But buyers and consumers are moving away from the traditional purchasing funnel to a more enlightened decision journey that uses the Internet to change the way they research, value and buy products. If sales and marketing plans have not changed in response to the new buyer-driven decision journey, it better start soon.

So why do customers buy?

Before we answer that, the first thing to understand is that every customer has a “decision journey”. This journey has pre-purchase and post-purchase steps. The pre-purchase journey can be described as Awareness Consider Evaluate Buy.  The post-purchase journey is Reflect Feel Decide.

In this article we will discuss the pre-purchase customer decision journey. Understanding the customer journey and its steps as to why customers buy can speed up the sales cycle improve conversation rates and drive revenue.

decision-journey

Awareness.

They say the goal of marketing is to reach potential customers within a specific market and influence their buying choices by making them aware of their brand or products. Today, buyers are so well informed and knowledgably thanks to the explosion of social media and digital channels, they can create a buyer “consider list” without the company ever having a sales conversation or contact.  Marketing has to align itself to the awareness part of the decision journey. To raise awareness companies need to focus on buyer-driven marketing of which the internet is at the core. Pushing out brochures, advertisements or media buying as part of a company-driven marketing plan is still relevant but buyer-driven marketing is about creating digital properties that pull buyers towards the company, digital properties like whitepapers, product specific informational web sites, content marketing, customisable content, free product interactions, social selling, tools to engage people on social conversations about your industry and products, comment posting and world of mouth interactions, context marketing, etc. So buyer-driven marketing is about raising awareness to buyers who are already most likely engaged on the internet for your products and services.

Consider.

This is the part of the decision journey where consumers and buyers narrow down their buying funnel and start to consider what companies, brands or products they would contemplate purchasing from or not.  Has the buyer-driven marketing plan got the business into the consideration phase of the journey? This can be measured by trigger events like web traffic, sales leads, inbound enquires, white paper downloads and via social media channels like twitter and Facebook. This is where marketing, sales, customer service have the tools to cover all the buyer touch points to make it easier for the buyer to move to the Evaluate step.

Evaluate.

This part of the decision journey is where buyers add and remove companies or brands as they further narrow (and qualify) their buying funnel. General evaluation leads on to active evaluation where information gathering, sales conversations, meetings, presentations, proposals come into the mix. Research shows during the evaluation phase buyers look for ease of use, ease of implementation, product offering and ease of connection to company (multiple touch points). This is also where buyer-driven marketing pays off as buyers now start to “pull” information from the internet, information like product reviews, white papers, and previous buyer ratings while also pulling insights into the company and product via free trials, proof of concept, face-to-face, phone or web interactions, customer references and company policies.

Buy.    

Commitment to buy. Where the buyer selects a brand to do business with and makes the decision to purchase. This is where the company ensures all steps are kept to a minimum, whether its clicks, paperwork, compliance, set-up, downloads, configuration and payment.

Smarketing – integrate all customer-facing activities

The shift in buyer-supplier selling process and the buyer decision journey means that marketers and sales leadership must adopt and view this change as an opportunity to be in the right place at the right time, giving buyers the information and support they need to make the decisions. Sales and marketing have to be one where every touch point from customer facing activities, web sites, PR, leads generation, customer awareness and sales is everyone’s responsibility.

Consider and Evaluate – connect the dots for the buyer

What the buyer is looking for during these steps is Value. If a buyer cannot see the difference between two products, then price wins. If sales and marketing do not address the customer question “How will I benefit from this product or service?” in their buyer-driven and connect the dots for the buyer then the buyer will remove the company from the decision journey or go for lowest price solution.

Remember, people buy because they have needs, a problem needing solving, a goal that needs fulfilling, a situation that needs to be remedied, something that affects their life or  business, and needs solutions.  In the Consider and Evaluate steps buyer preferences usually fit into three main categories, known as PPI:

Productivity – efficiency, ease of use, outputs

Profitability – ROI, making money, increase revenue, improve profit margin

Image – brand, style, reputation, approval, desirability (this is mainly consumers)

Buyer-driven marketing is focused on the buyer priorities with messaging on Productivity, Profitability or Image. Buyer-driven marketing also answers the question “WWFM or what is in it for me?” So why do customers buy?, most likely because a company and its people understand the customer decision journey, created an awareness link to the buyer and then sales, marketing, customer service and product working in unison took the buyer through the Consider and Evaluate steps with a systematic approach based on insights and relevant information

Marketing Plan

A marketing plan is a series of tactics that deliver agreed goals for the business

First thing for any small business to note is that marketing plans do not have to be a complicated fifty page document. Marketing plans and go-to-marketing strategies may get more advanced and complicated as a business grows but for the vast majorities of companies a simple, effective marketing plan will suffice. Do not write a marketing plan to please an investor or bank manager, write the marketing plan as your best bet to get customers interested into what you are selling.

marketing-plan

Most small businesses will usually find one key marketing tactic that produces a consistent return on investment (ROI) plus two or three secondary tactics which when added together allows the business to grow revenue. The key marketing tactic can range from trade-shows, SEO, PPC, inbound marketing, social selling to advertising. The key marketing tactic selected is the marketing foundation and it needs to be solid, deliver consistent results and removes any fear of the marketing plan failing.

Don’t panic if your business is new or it has not found one yet, please read on.

A great tip to identify what type of marketing plan is right for a business is to ask this question “What is the lifetime value in profit of a customer we sell to?”

I suggest you then assign your business into one of these three customer lifetime profit value categories

  1. Sub €200 profit
  2. Sub €2000 profit
  3. Above €2000 profit

This is important as it defines your cost of customer acquisition (what it costs a business to get a customer to buy from them) and how much a business can afford to pay for clicks, traffic and a sales lead. The business should also figure in customer churn, do not over calculate how often or how long a customer will stay loyal to a business. Depending on the business model, the marketing plan also affects cash flow, because you pay for marketing upfront with a lag over weeks or months to get an ROI on the tactics.

  1. The lifetime value (profit) of the average customer is LESS than €200.
    The products or services sold may cost €50 to €200 or higher AND as a business if you sell to that customer two, three, four times over a three year period, the profit on that customer would be less than €500. An example of this could be an online florist. A bouquet of flowers costs €55, but the customer is probably going to buy two or three times a year means the likely profit from that customer is less than €200.
  2. The lifetime value (profit) of the average customer is LESS than €2000. The vast majority of businesses fall into this category. The premise here is that the product or service costs an amount that will generate a €2k profit, OR the average customer buys more than once over a period of time with the total purchases adding up to more than €2000 profit. An example here is an online SaaS software company. The average monthly subscription is €50. That is €600 a year over three years = €1800. With a 60% profit margin this comes to €1080 for the lifetime value (profit) of the customer.
  3. The lifetime value (profit) of the average customer is ABOVE €2000.
    This category usually applies to large one of consumer purchases or a B2B sales environment. The calculation here is that the sale or number of sales over a period of time (36 months) will generate in excess of €2000 profit for the business.

So, now that you have assigned your business to category 1, 2 or 3, here is some suggested key marketing tactics as the foundation to drive the business growth.

If a business is a 1 – Referrals/Local/AdWords

The key marketing KPI here is can you generate leads/traffic/enquires for less than €1 and the cost of customer acquisition (getting a sales or purchase) is no more than €10. A simple marketing metric is the business sold to 100 customers in a month and spent €100 on marketing, so the cost per sale was €1.

Maybe distribute flyers door to door with special offers, advertise locally online with free samples, and optimise your website for local target keywords. Ask customers for referrals to add to your email marketing newsletters. Send OUT newsletters to your existing customers. Attend local events and business organisations. Find one key marketing activity that generates enough customers where it costs the business as little as possible to get a sale.

If a business is a 2 – Inbound marketing/PPC/Social Media

In this category the sales cycle could be longer or need sales intervention. The business will need to generate a high enough volume of leads to generate the ROI needed to be successful. SEO work can be critical here but this should be part of an inbound marketing tactic. The use of social networks for social selling and content marketing to influence buyers should be considered. A good email marketing solution and a resource to work on social media campaigns is probably a must. Budgets permitting, Google Ad Words will deliver the quickest bang for your marketing buck alongside social media tactics.

If a business is a 3 – Inbound marketing/PPC/Social Media/Events/Sponsorship

Depending on your market segment, where customers generate a profit north of €2000 usually involves more lead nurturing, heavier buyer influence, bigger social media reach and plans for a more guided sales cycle. I have seen companies successfully use events as their key marketing tactic even if the sales cycle and cost per lead required more investment. The biggest success tactic from a marketing activity now used in this category is content marketing. Maybe consider putting a lead generation person on social selling to generate customer interest. A business needs to invest in resourcing the writing and publishing of well executed articles and whitepapers to set the business as a thought leader in their industry. While the cost per sales lead and cost of customer acquisition can be higher, the marketing plan tactics needs to deliver more solid leads or higher qualified customers as the marketing investment in this category can seriously impact the cash flow of a smaller business.

social-media-planning

Regardless of 1, 2 or 3, the key to making a marketing plan work is to be: CONSISTENT.

Plans take time, for a plan to work it must be implemented with both the heart and the head.  Every marketing plan has to have KPI’s and metrics. Implement, stick with it and adjust where necessary. Do not adopt the “give it a whirl” approach or alter course before the data supports the decision. In a digital world, social media marketing has overtaken sales and even brands as the core business driver. The buyer-supplier relationship has moved on, fast, the marketing plan needs to address how to deliver a consistent return on investment (ROI) via a key marketing tactic plus two or three secondary tactics which when added together matches the business strategy for growth.

Business Consultant

What does a business consultant do?
A business consultant works with a company or small business to review the existing practices in the areas of sales, marketing, product or finance amongst others and then to work with the management to make recommendations for improvements. Most business consultants specialise in one or two areas of business management, such as sales. For example, a software company might hire a sales and marketing consultant to help develop its market reach or customer acquisition strategy.

business-consultant
A business consultant brings expertise, experience and knowledge to help a company improve performance metrics or key performance indicators through the thorough analysis of existing business problems. The business consultants then develop plans for improvement alongside the management team. A business may consider engaging the hire the services of a business consultant for a number of reasons, for example, to get an external view on the business, to receive objective advice and recommendations, to tap into the business consultants expertise, or even as a temporary resource to help with aspects of the business where hiring a permanent employee is not needed.

A business should expect due to the business consultants relationships with numerous markets and industries, the consultant can transfer knowledge and insights that will be beneficial to the company’s growth or profitability. A consultant may also provide organisational change assistance to up-skill existing staff, coaching to staff, business strategy development, or improvement services in a department. A business consultant usually brings methodologies, templates and frameworks to uncover the identification of opportunities and then to act as the basis for recommendations for more effective or efficient ways of performing the business task.

The term “Business Consulting” is overused and can refer to a very broad range of services. There are numerous areas of specialisation with business consulting, in the area of IT (information technology) consulting, HR (human resource) consulting, Sales (sales and business development) consulting and others, many of which overlap like marketing. Business consultants range from the large diversified consultancy companies offering multiple services right down to owner run ’boutique’ consultancies which specialise in one or a few of areas.
The work of business consultants is also becoming more popular in non-business related organisations as well. As the need for professional advice and specialised knowledge grows, other industries such as government agencies, charities, universities, and other not-for-profit agencies are now turning to consultants to uncover opportunities that have helped private industry for years.

A small business consultant such as The Bitter Business will focus on helping smaller business and growth focused companies to improve their operations in sales, marketing and go-to-market strategy. While a consultant may specialise in a specific area they usually have insights in all areas of the business functions. The overall goal of a consultant to the smaller business is to help make the business stronger through identifying opportunities, addressing problems and recommending solutions for implementation.

The practical role of a small business consultant involves communicating with management and staff, reviewing strategy and process, watching the day-to-day business activities to understand what problems exist and why they exist. The small business consultant will work with the business owner or team to create viable solutions to problems, use analysis and research to present findings to the business owner. Also the consultant should be hands on, has the business skill to work closely with all the business stakeholders and staff to gather information which will be used to assess what changes need to take place to improve business performance, improve the business results and reach set goals. Once the gathering and analysing of information is complete, the consultant may develop the actual plans for the business detailing resources, actions and programs to be put in place

Some of the common business consultant’s tasks are:

Analyse and evaluate the business strategy against competitors and within the market.

Recommend strategies and tactics to increase business opportunities.

Create action plans and identify gaps in the business model.

Identify and implement business actions.

Conduct market research and information gathering.

Document findings and then present findings together with options.

Identify business requirements, resources, partners, channels, and routes to market.

Perform sales and marketing analyses and make reports.

Drive process improvements and efficiencies in sales, business development or social marketing.

Implement plans while evaluating the business prospects, goals and objectives for growth.

A business should not wait until it has problems to engage with a business consultant, rather a small business should be proactive in using their knowledge as an external lever to uncover how to make the business better and more successful.

Marketing Plan Template

             Marketing plan template and guide

                           The Bitter Business

A marketing plan will help a business identify the markets, product to market fit, customers and competitors which underpins the strategy selection to make a business sustainable. This marketing plan template courtesy of The Bitter Business can act as a guide through the process of creating a solid, well thought out marketing plan for your business.

marketing-plan

Download the marketing plan template for free here. Marketing plan template and guide

Why every business needs a marketing plan

A good well thought out marketing plan will help the business stakeholders to answer key questions about the business, and act as a reference document to help the team execute the marketing strategy. It will also help develop a structured approach to creating services and products that satisfy the market and customers’ needs.

When writing a marketing plan,  always be clear about the marketing objectives and how the business is going to achieve them. This free marketing plan template can be a guide in setting those realistic and measurable objectives, budgets and action plans with ability to allocate resources.

Business Strategy in a Digital Marketing World

The future of business is digital, so when business leaders start to formulate a business strategy they need to understand that customers, products, business operations and competitors are now digital. Is business strategy being replaced with digital strategy? And do companies have the sales and marketing skills to compete in a digital marketing world?

A business strategy of viewing digital channels or methods as tactics is no longer valid. Instead businesses should see their company as an online ecosystem that connects digital resources both internally and externally to customers in order to compete. To stay competitive a business must harness digital technologies and channels, not just to deliver sales or superior customer experience but to drive operational efficiencies across all aspects of the business.

digital-world

One big question facing business leaders today is “Is our business constructed to thrive in the digital marketplace?

Digital disruption may be the only possibility for future business success as the barriers to market entry are being blown wide open. Competitors both large and small are rushing in grab a share of the market, so every business has to have a strategy in the digital marketing landscape. Bye now, most businesses know that digital is changing the way we do business. Every business must evolve and have a digital strategy that can take advantage of new sales and marketing platforms, data tools, and digital technologies that can get a business closer to customers.

The adoption of digital channels by the markets means a business must change and ensure that agile adaptation can be delivered in all levels of the company, both strategic and tactical. A business strategy for a digital marketing world may be the only option for some companies to survive and move towards a profitable future.

The market is pulling these business changes as the markets or countries with knowledgeable populations, high standards of living and education are demanding companies face up to the challenges in the digital landscape for communication and commerce. The reality is that digital advancement and the associated challenges will accelerate rapidly in the few years. Business leaders must grasp the straw and realise that innovation, flexibility, and speed of execution will be core to thriving in a digital marketing powered world.

Regardless of B2B or B2C, buyers are now highly knowledgeable, tech savvy, and the Internet and social media is their go to source for information. Today, people communicate differently, buy through different channels and expect a different flavour of products and customer support. The result is digital is not an add-on but is a mind-set, a lifestyle, a way of doing business.

Here are some suggested digital strategy priorities.

Integrated digital strategy across the business

While business leaders see that digital is having a strong impact in the area of sales and marketing they should also review customer service, finance, supply chain and human resources. While most companies start the digital journey by adding-on social media (LinkedIn, Facebook, Twitter, Pinterest) they do not integrate these social tools into an integrated business strategy. While the focus on near term activities such as lead generation are positive, to fully maximise the customer experience and operational efficiencies that can contribute to a competitive advantage companies need to expand out the digital strategy to all departments.

Business model evolution

The digital channels have changed customer interactions and expectations, impacted on channels of communication and delivery has resulted in business reviewing their business models. Forward thinking companies see digital transformation as integral to their evolution. Business model evolution is used to innovate and respond to changing consumer preferences including introducing new business models, services and product offerings to drive profits

Develop partnerships

IP, technology lead and more traditional companies can benefit from developing partnerships with outsourced sales, channel partners etc.in order to compete with companies that have grown up in the digital landscape. For the companies that do not have the skill-sets in sales, marketing or social selling, nor the capacity to adopt a digital strategy, it could be more efficient and cost-effective to partner with a digital enabler in their market space or outsource it internationally.  Outsourcing a requirement such as sales via partnerships could speed up the digital strategy while a business is able to harness a partner’s strength while addressing the market challenges.

Focus on the customer experience

The digital channels have seen the rise of faster communication, social news and user generated feedback content. The ability of one to many communication platforms has meant the customer experience is now a critical element for a company to gain a competitive advantage. Relevant in both B2B and B2C companies, the focus in the marketing strategy to a customer approach for content marketing, information dispersal and updates is critical. Companies should strive to deliver excellence across all its customer touch points. A digital marketing strategy should consider what new and innovative services would enhance the customer experience.

Social media engagement

Social media or social selling driven customer engagement can be the disruption agent to drive a business forward. Digital marketing is not just a series of social media tools. While social media tools are a great vehicle to drive brand engagement, companies need to accept “business as usual” is over. The future buyers for products and services live in the digital space, and so will their suppliers. Social media engagement is part of the digital marketing strategy involving content, access channels, audience interaction and ability to influence remotely.

Digital distribution channel

Digital distribution channels need to be explored, defined and redefined as the “4P’s” of marketing are being rewritten. Can a business’s product be delivered or accessed in another way or format?  Digital distribution and ease of customer use may be directly related back to the digital acceptance of the company’s senior team and the company’s ability to execute the digital landscape as a strategic business priority to give it some competitive advantage. Across all regions and market segments of the world, digital disruption to distribution channels is here now. The growing influence of the “Internet Always” population and the impact of digital technologies on the way we conduct business requires business to rethink strategy.

Every business whether start-up or large corporate needs to have a business strategy for a digital marketing world which means to start with acknowledging the changes and then respond accordingly. Remember this phrase “When technology and society change faster than businesses are able to adapt, then the result is extinction” – Karl-Heinz Land.

Business Plan Template

Download these free business plan templates to help you formulate a business plan for your business.

business-planning

image with business planning options

Business Plan Template

Business Plan for a Startup Business

 

Business Plan for Growth

Devising a Business Plan and Strategy for Growth

Business plan and implementing a business strategy is more than simply achieving business goals. It inspires people to work hard, makes the team feel part of a purpose; it incites actions and ensures that activities happen. Simply constructed, effectively executed, a business strategy is a template for business success.

  1. Take Time to Think

A business needs strategic thinking before any strategic planning. Maybe the biggest strategic obstacle to any business is if they can out think their competitors.

“If today was the last day of your life, would you do what you are about to do today” Steve Jobs

  1. Ask and Answer Key Business Questions
  • The purpose of the business
  • Strength of the team
  • Current effectiveness
  • Financial resources of the company
  • Target market trends
  • Current market position
  1. Know the Business Why
  • Real planning and growth strategies are founded on “Business Purpose”
  • Vision: where the business is going in the long-term
  • Mission: the business purpose and reason WHY for existing
  • Values: Who and what the business stands for
  1. Business Mission
  • Think about the Business Mission
  • The business mission concentrates on the here and now. A mission statement defines the fundamental purpose of any business. It identifies who the company is, what it does, and who it serves.
  1. Why do Business Planning?

A business plan gives a business options, it can Die Quickly, Die slowly, survive or thrive. Doing nothing is not an option; a no business plan is the weakest plan of all.

 business-planning

  1. A business strategy to Thrive
  1. Start with goals – what do I want out of this business?
  2. Create a vision of what the business needs to look like in order to accomplish your goals.
  3. Create a business mission to guide you along the way.
  4. Develop strategies to get you from where you are now to where you want to be in the future. Strategies require investments – which mean budgets, resources and timelines.
  1. What is strategic business planning?

Strategic planning is the process of determining the primary business purpose (the “WHY”), putting in place goals and tactics, then adopting courses of action and allocating resources to achieve the selected goals and tactics.

What causes business success?

  • Has history shown us that the No.1 business killer is lack of market?
  • When a great business team meets a stagnant market, market wins. When an average business team meets a great market, market wins. But when a great business team meets a great market, then something really special happens.
  1. Ideal Growth Plan
  • Desirable products or Services
  • Big enough market
  • An economical way to target and serve it.
  • Note: Product quality will not create market size; Steve Jobs learned that lesson with his NeXT business.

business strategy options

  • Market Penetration – selling more of the same things to more of the same customers
  • Market Development – selling more of the same things to different customers
  • Product Development – selling new products or services to the same customers
  • Diversification – selling new products or services to different customers

Market penetration

Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets.

Market penetration seeks to achieve four main objectives:

  • Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling
  • Secure dominance of growth markets
  • Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors
  • Increase usage by existing customers – for example by introducing loyalty schemes

A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research.

Market development

Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.

There are many possible ways of approaching this strategy, including:

  • New geographical markets; for example exporting the product to a new country
  • New product dimensions or packaging: for example
  • New distribution channels (e.g. moving from selling via retail to selling using e-commerce and mail order)
  • Different pricing policies to attract different customers or create new market segments

Market development is a more risky strategy than market penetration because of the targeting of new markets.

Product development

Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets.

A strategy of product development is particularly suitable for a business where the product needs to be differentiated in order to remain competitive.  A successful product development strategy places the marketing emphasis on:

  • Research & development and innovation
  • Detailed insights into customer needs (and how they change)
  • Being first to market

Diversification

Diversification is the name given to the growth strategy where a business markets new products in new markets.

This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience.

For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks.  However, for the right balance between risk and reward, a marketing strategy of diversification can be highly rewarding.

  1. All Business Plans need Resources

Money – to fund cash flow, product, materials and resources

Information – Market and product research, market trends, market size, customer profiling, customer acquisition

People – The team needed to facilitate the growth plan, to execute the plan, to manage the costs

The success of a business strategy depends on the resources available to thee business. A good tip is to follow this 5 Step Planning Process

  • Imagine – what products or services
  • Dissect – data and customer feedback
  • Expand – market research and tasks
  • Analyse – results, information, investment
  • Sell – customer acquisition, marketing, sales

Every business should develop a “strategic hypothesis” and test it out making very small bets. Try to sell the idea to a customer before it’s built, look for a supplier, and ask a mentor or advisor who has some expertise in the new area.

10. People don’t plan to fail, they just fail to plan

A business plan for growth should be grounded in your Business Purpose, Mission and Core Values, a solid business strategy will help you develop a plan of action and maximise your likelihood of success in achieving your vision.

 

Sales Strategy – Marketing Services – Sales Consultant – Social Selling – Inbound Marketing – Lead Generation

I'm always available to have a chat on your business plans and any challenges in lead generation, social selling, marketing or sales.