WARNING: You Cannot Rely On Market Research Alone

I talked to a entrepreneur today who, buoyed up by initial feedback from market research, was ready to set up a new business line, create a new web site, sign up customers and start offering discounts.  Halt I cried, you cannot rely on market research!  You're going to need more than positive feedback to build a successful business.

While listening to the market, and specifically your customers, is vital. the ability of traditional market research to accurately predict buying intensions is patentently limited.  I know this from 10 years selling the market research services to industry and projects involving more than 20,000 interviews with international business buyers and consumers.

When I urge caution in how market research is interpreted for making decision, I am not talking about issues of statistical validity, or reliability.  I am talking about the fact that just because a buyer tells you that he is interested in buying and you tick the appropriate box on the questionnaire, does not mean that the buyer will in fact buy when your product, or service, when it is launched.

Now it is not that the interviewee is deliberately deceiving you.  It is just that market research questionnaires and real world buying scenarios are two very different things.   I would much prefer to base my decisions on sales calls than questionnaires. 

There are of course things you can do to get a more accurate picture:

1.  The first is get face to face with the customers - telephone interviews and postal or online questionnaires can only do so much.  Next make the call more of a sales call, presenting the customer with more information, including prices, sees visuals/demos, etc. - the things that are essential to him/her making a considered opinion.   

2.  Even if you are at concept stage, create a visual, or prototype, however simple, that will enable your customer to give a more considered and informed reaction to your product.  People have limited time and attention, so make it easy for them to get to the nub of the issue - whether they want your product, what features they really need, etc.

3. Ask the right people, at the right time and in the right way.  For example, if you want to ask people about domestic appliances, then the best place to do so is in a electrical retail outlet - after all the people there are potential customers and are in 'the buying zone'.

No matter how accurate your picture of the market is, the interpretation is everything.  Most importantly scenario-based sales forecasting is key and in particular the assumptions you make about the percentages that are actually going to do what they said in the questionnaire and the implications of the same for your business.

What should your sales plan look like?

No manager wants to spend days writing a sales plan, and no rep, manager, or investor wants to spend hours reading such a plan either.

Everybody agrees that a plan is required, but how to keep it short and at the same include all those key elements that will ensure the sales team stays on course for the year.

Here are some of the key ingredients included in the best sales plans:

1. Too many sales drives stumble at the first hurdle, that is lead generation. So you plan has to include a target and budget for lead generation from multiple sources over time.

2. Activity gets results and for many managers getting the level of sales activity up (e.g. getting in front of more prospects) is a key priority. However, targets and plans in this area must be balanced with the need to improve the level of sales effectiveness. Quite simply, it is a lot better to do 10 meetings and convert 20%, than to do 20 meetings and convert just 10%.

3. Too many plans are short on specifics, in particular those metrics and KPIs that can be used to track progress on a weekily, or monthly basis, including number of meetings, conversion rate from lead to meeting, from proposals to orders, etc. then track them.

The precise form of the KPI will vary depending on the particular managers priorities, but here is a good example.

A start-up company set an assumption regarding conversion or success rates and then set a target for the level of activity required – that is they needed to meet with 7 target companies every month for the first 12 months. That provided the manager with a clear measure against which he could benchmark sales activity and sales effectiveness.

4. Set a target for new and existing revenues, set target for up-selling and cross selling. Outline targets for growing revenue in key accounts and key account management and customer service priorities/policies.

5. Focus on a number of campaigns, around which you can centre your activities. Don’t have one plan for marketing and another for sales, but an consisted and integrated campaign arranged on a quarterly basis for example. Agree the message for each, the target list / target list profile for each, etc.

6. Help individual sales people put together a 2 page plan for themselves. Nobody is more committed to a plan than if they write it themselves. In addition, this an ideal opportunity to coach them towards achieving their full potential. Your overall sales plan is the summation of all the individual sales plans of your team.

7. Don’t beat around the bush, exactly how many leads and meetings will be required for each sales person per week, or per month in order to achieve target.

8. In your overall plan focus on this/next quarter in detail, relating it to the individual sales plans of each of the sales people and the overall campaign set out. Include an rigorous validation of the pipeline, that is related to the key stages of your sales process.

8. Focus on the issues of sales process, sales systems, sales structures, etc, Identifying opportunities to ensure the smooth running of your sales organizations/sales team.

Click here if you would like to read more on why you're going to need a plan, or the questions others are likely to ask regarding your plan.

Now more than ever you need a plan…

Do you have a game plan for how you will see out the market slowdown? Is everybody clear on what needs to be done, when it needs to be done and what it will cost?

With so much talk of a slowdown there is a fair degree of panic among sales people and their managers. How to keep your head when everybody around you is losing theirs? Well, by putting an action plan together and then putting it to work.

No more than ever you need a plan. With the economic slowdown taking effect it is vital that you respond to the challenge in a proactive and thought-through manner, focusing your limited sales resources clearly.

The Chinese saying warns that 'planning without action is a dream and action without a plan is a night mare'. So, let's be clear about the type of plan that is required - an action plan, including priorities, tasks (over 30, 60 and 90 days), budget, responsibilities, timeline, etc.

Brian Tracy suggests that every minute spent planning saves 10 minutes in execution, as a result giving a 1,000 percent Return on Energy. Well, I am not sure about the maths, but I sure do believe in the necessity of planning.

Click here if you would like to read more on what should be in your plan, or the questions others are likely to ask regarding your plan.

Planning for growth - the objections managers hear when they present their plans and how to avoid them

Here are the 7 most common objections managers hear when they present their plans and what to do about them:

1. Overly optimist sales forecasts, with time to market/revenue and cost underestimated as a result.  Most people will flick to the end of the plan to see your numbers, make sure they stand up to some stress tests.  Make sure the investment in sales and marketing supports your ambitious sales targets.

2. Lack of objective market or opportunity validation, that means not just quoting reports (which is important) but providing direct feedback from potential customers.  Getting some external objective input to the document will very important.

3. Too much technical / product information for the audience in question, causing the overall message about why the company will be successful to get lost

4. Not enough detail on sales and marketing, including stuff like who the customers are going to be, what number of customers, the cost of acquiring customers, the advantage over competitiors, the marketing programme, the lead time, who will do the selling, etc.

5. To much generality and not enough details of what actions will be undertaken and when, a good plan should incorporate a project plan with key dates, actions, dependencies and milestones.

6. Not establishing the credibility of the team  - here are our successes to date, here are our customer and partners, here is our management team and its track record, etc.

7. Not keeping the audience in mind - what is it they need to hear?  Summarise the plan in 2 pages with the audience in mind, using their language, addressing their key concerns, etc.  For example if it is an investor audience then the return on investment and the exit strategy are the key items should be highlighted on page one paragraph one.