At the heart of every ecommerce business is the need to sell goods or services at a profit. In the past year, we at overstockArt have been considering how to grow our sales significantly without taking large risks or investing lots of money.
I wrote a series of articles in 2014 about the Theory of Constraints — see “The value of focus within The Theory of Constraints,” “Applying Theory of Constraints to our packaging process,” and “Theory of Constraints, for ecommerce companies.”
In TOC methodology, you identify the constraint in your business and subordinate everything to that constraint. We identified the market (or, our ability to sell) as our constraint. While our business has been growing, it is not growing as fast as we would like it to.
We looked at some of the changes that have been happening online in the past few years and how they impact our business. We also estimated where ecommerce could be heading in the next year or two.
Our analysis found that going the traditional route of ecommerce companies would not provide our target sales and profit growth. Google has been favoring larger brands and while we have been gaining ground in our organic search rankings, it hasn’t been enough. The per-click cost of AdWords is increasing. We do not feel that reliance on traffic from Google will help us meet our goal.
We decided to go after the professional market — to sell our art to companies. This approach is inexpensive and allows us to target large buyers somewhat inexpensively. It also provides an opportunity for tremendous growth.
Many readers may think that targeting the professional market is obvious. Perhaps readers wonder why we didn’t you think about sooner. While this is true, my experience is that whenever we find something that really make sense, it seems obvious and somewhat rudimentary. In fact, I consider the comment “well, this is obvious” as the best compliment to an idea.
Here is our process at overstockArt for developing the new professional market and the measurements to track it, to know if we are successful.
- Identified the right market for us. Focusing on one group — companies — helps us gain knowledge of the key points for success.
- Wrote a brief bullet-point plan that outlined our approach. The plan included how we will approach the market and who is responsible for each activity.
- Decided that our marketing process will use email, physical mail, and the telephone. It’s low tech and it’s out of fashion, but it works!
- Created a marketing campaign with key goals and activities. We didn’t wait for all activities to be completed prior to starting since we are speaking to new prospects. We will likely fine tune our approach.
- Developed a “success list” of what we hope to accomplish by certain dates. This list was key for measuring and monitoring success. At the start of every project, especially a business development project, things move slowly. If your entire measurement of success is sales, you likely will feel like you’re failing early on and neglect the project. Here are our success points:
- Find enough leads.
- Track number of replies from leads.
- Set appointments for an initial introduction.
- Conduct meetings with prospects to (a) determine the pain points, (b) identify what the prospects are looking for that they cannot easily find; and (c) ascertain the large opportunities.
- Describe our services and products to prospects and look for matches.
- Conduct internal meetings and anticipate some of the objections base on previous discussions.
- Identify real opportunities. “Real opportunities” are not actual sales. They are providing assistance, tools, or support to a potential client.
- Develop relationships. A few prospects will no longer think of us as just another sales staff. They will respect us and will be interested in hearing from us. This will happen if they value our information, advice, or what our product or service can do for them.
- Make a sale! This can be a tiny sale. But it’s good to get some real business done. We will celebrate the sale no matter how small it is. It’s proof of success. Someone from the new market is buying from us.
- Start measuring our potential revenue and revenue growth. We use a customer-relationship system that lets us input prospects and estimate the likelihood of success.
We started working this project about a month ago. So far, our investment has been very small — almost negligible. Our sales have been small, too. But those sales have produced incremental revenue for our business.
I wrote this article generically, to help others who wish to increase revenue via a new market. For questions or for more details, please post a comment, below.