There’s no doubt that UK SMEs are driving economic growth. Research from the Centre for Economics and Business Research found that although high-growth small businesses represent just 1% of UK businesses and only 3.4% of the total UK economy, they generated 36% of UK economic growth in 2014 and created two in three new jobs (68%) between 2012 and 2013.
The key, however, is in making sure your company’s growth is sustainable. It requires a proactive and strategic approach to expansion, so you outperform market trends and smash the competition, but without overextending your resources or reducing the service levels you provide.
There’s no point in your sales team winning lots of new business if you don’t have the infrastructure to service and retain it. Research by Mintel revealed businesses that approach marketing by building the proper foundation see a 42% increase in effectiveness and ROI.
Follow these 6 steps to ensure you have the infrastructure in place to expand effectively and sustainably.
- Articulate your brand and proposition
Does what you say about yourself reflect your future business? If your company has relied on organic growth, chances are your branding hasn’t evolved to keep pace with the change. It’s very common for high-growth SMEs to have a logo, visual identity and key messages that are out of date.
The problem with this scenario is that your first impression (such as your website, brochure, etc) doesn’t reflect who you actually are. You therefore find yourself in situations where prospects will say to your sales people, ‘I had no idea you did all that from looking at your website.’ And there will be prospects who you never meet, or never know anything about, because your brand and proposition doesn’t reflect how you help customers achieve their goals or overcome their challenges.
In many cases, there will be new players that look and sound better than you, even though you know they offer an inferior product or service.
Thus, when you’re preparing for expansion you need to make sure your brand communicates the story you want to tell, so that you resonate with a target audience that knows nothing about you and is going to be comparing you to an incumbent or other potential suppliers. (For tips on how to make an impact on customers and stand out from the competition, download our guide, ‘Creating a Brand.’ )
- Define your universe of new prospects
To expand successfully you need to fill in the detail between knowing there’s a big untapped market out there and knowing who the specific companies and decision makers are that will help make that expansion a reality.
Let’s take an example of a Midlands-based manufacturer. You have a solid book of repeat orders for your widget and you’re selling them into the key Midlands OEMs, to the point where you’ve saturated the region. The next logical step is to expand beyond the Midlands, because you know there’s business to be had nationally. But who do you approach first?
This is where good market intelligence is worth its weight in gold. Rather than going for a scattergun approach, the right data enables you to target your sales and marketing resource to where the likeliest prospects are, so you can focus on those who will offer your business the greatest lifetime value. (For more information on defining your customers, read our blog, ‘4 steps to ensure you have the right customers.’)
Taking our manufacturer example, an analysis of registered companies and their finances might show there is a high concentration of OEMs taking on new projects in the North West, but that those projects are driven by public grants and have long procurement processes. As a result, you might be better off targeting smaller companies in Yorkshire that will be purchasing lower volumes, but will give you a lower cost of sale and more repeat business.
- Get a customer database
Once you know your universe, you need to have the IT infrastructure in place to track your sales and marketing activity. That comes in the form of a Customer Relationship Management (CRM) system. There are lots of systems out there with a range of functionality. The important thing is that you have a way of tracking the people you have contact with, and how they interact with your sales and marketing.
Think of your CRM system as a barrel. Once you’ve identified your universe, you get the contact details for the decision makers at all the prospect companies and put them in that barrel. You can target them with the right message at the right time, so that the greatest possible proportion of those contacts convert into customers.
4.Generate awareness of your company and your offering
The biggest problem SMEs have when expanding is that no one in the new market knows you. LinkedIn conducted research on the sales cycle and found that just 2% of sales are made on the first contact with a company, whereas 80% of sales are made by the 12th contact. This shows that there are a myriad of different touch points within the purchasing process, and you need to be there at as many as possible.
Those touch points could be reading a story about you in a trade magazine, reading a white paper from your website, or seeing a post on an industry LinkedIn group. All this activity helps position your company as an authority, which psychology research has found to be a key influence on human behaviour (and therefore purchasing decisions).
Once there is awareness in the market, lead generation activity becomes easier and more cost effective.
5.Put cost-effective lead generation activity in place
Once you’ve defined your universe, you’ll be able to determine the most effective lead generation channels for the different people involved in the decision making process. Do purchasing managers search for suppliers on Google? If so, you need to make sure you’re on the first page of search results. The number one position in Google’s search results receives 18.2% of all click-through traffic. The second position receives 10.1%, the third 7.2%, the fourth 4.8% and all others are under 2% (Slingshot SEO).
Do key managers spend lots of time away from their desk? In that case, email marketing may be more effective than direct mail or telesales.
The key is to think about all of the potential touch points and cover as many of them as possible, always measuring your activity so you can refine your approach and dedicate your resource to what is most effective.
6.Love your customers to death
The classic 80/20 rule says that 80% of a company’s future revenue will come from 20% of its existing customers. It is particularly important to nurture your existing customers when undertaking expansion, because you don’t want to expand at the expense of retention.
You need to make sure you have the infrastructure – be it distribution, customer service, logistics, production – to serve the customers your sales team converts. And then you need to keep them engaged so that they buy from you again.
From streamlining the quotation, ordering and deliver paperwork through to SLAs on queries and regular customer newsletters, you need to take every opportunity to show customers you value their business and want to be a long-term partner.
Taking the time to make sure you have the right fundamentals in place will ensure you are targeting the right prospects, appealing to your current customers, using the most cost effective lead generation channels and are ultimately on the right route to achieving sustained growth that will stand the test of time.
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