Remember when every businessperson owned a Blackberry? Or when Blockbuster dominated video rentals? (Do you even remember going to a store to rent a video?) Or when Barnes & Noble superstores were putting independent bookstores out of business?
The point is, yesterday’s success story doesn’t necessarily make news today, or promise you’ll even be around tomorrow. The heartbeat of business is repeated sales—if it stalls, the continued health of your business is in jeopardy.
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Former CEO and entrepreneur Larry Putterman emphasizes the importance of continuous growth, noting on his blog: “Without increased growth, there is no means to build and sustain your business model.”
Of course, sales often flatten due to seasonal fluctuations or generally weak economic conditions. But if your competition is growing and you aren’t, you can’t blame the weather or the economy. Here are four key areas to consider when trouble strikes.
1. Customer Relations
Customer Relationship Management (CRM) software not only automates repetitive, customer-facing tasks such as email marketing campaigns and sales follow-ups, it also helps you manage customer interactions and analyze possible factors contributing to a sales decline.
For example, the majority of a business’s customer complaints express frustration about using the online ordering system, resulting in unfulfilled orders sitting in the shopping basket. That would call for fixing the online ordering process to ensure it is simpler and easier to complete. CRM helps you find these sorts of customer service blips so you can correct them and improve customer relations, and in turn increase the number of completed sales.
2. Market Positioning
Are you focusing on the right markets? Let’s say your sales data shows that while ordering in several market segments are down, one or two sectors show a slight increase. Such analysis might call for shifting marketing efforts to the sectors where there has been growth. At the same time, a survey to the other segments could provide a better picture of why they aren’t buying—is it a general issue, or is it something related to specific market conditions and needs?
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Take the market for Apple iPads, for example. Forrester Research shows that only 11% of total tablet purchases came from enterprise-level customers last year. Yet, enterprise purchases are expected to grow to 18% of total tablet sales by 2017.
Analyst Andrew Tonner performed a market positioning analysis on Apple to see how the technology company could boost sales of its slumping (though still market dominant) iPad line. He discovered that three markets were largely untapped for the company: enterprise sales, educational sales, and technological enhancements. Pursuing these markets could spark growth in iPad sales.
3. Pricing Structure
Pricing rarely remains static and can and should change as market conditions evolve. If, for instance, your product is first to market and in high demand, you can usually charge a premium. But if your competitors are coming out with “me-too” products that offer the same value, a more competitive pricing structure not only retains existing customers and encourage long-term loyalty, but also increases your chances of attracting new customers.
How can you compare pricing strategies? Some businesses perform A/B testing online. For example, Price A gets 1000 visitors and 25 buyers at $100 each. Price B gets 900 visitors and 60 buyers at $30 each. Here, Price A is the winner because $2.50 per visitor is more than $2.00 per visitor. A word of caution, though: running A/B testing should compare apples to apples in order for it be meaningful. You don't want to compare Tuesday's visitors to a website to Friday's if your website traffic varies significantly during the week.
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There comes a time when every product, no matter how successful, no longer resonates with customers the way it first did. Products must continually evolve to meet changing customer needs and expectations. What worked as little as two months ago may no longer be relevant today. Just ask Blackberry, which was the mobile device for email, especially for business—until the iPhone came along.
Blackberry thought its physical keyboard and high security were sufficient to fend off the innovations unleashed by the iPhone. Of course they weren’t, and when Blackberry finally realized that, it was too late.
Watch what your competition is doing, but don’t stop innovating—there’s nothing like introducing new features to make a good product even better to stimulate a declining sales curve. If you maximize your product’s value, you maximize your sales potential.