We will talk about a little more tactical items as opposed to some of the more strategic and conceptual stuff that we’ve been discussing. Today, we’re going to talk about how your sales and marketing process is designed. Typically, in most businesses, the sales and marketing process is designed into three separate stages.
Advertising
The first stage is called advertising. This is where you’re sending your message out about what you do, etc. What does your product do? What sub-industry you are in and trying to get attention from the customers who don’t even know about you.
Marketing
The second stage is marketing. This is where you’re providing customers with a little more information about what you do, and you’re also looking for customer engagement or customer responses. So this is your marketing.
Sales
Typically, when a customer walks into your store, environment, or ecosystem, that is your sales meeting. And that part is called sales.
What Businesses do
The issue I see with most Indian businesses is that, traditionally, there has been a difference in how Indian people have done business versus how business has evolved in the West. When I talk about how Indian businesses have evolved, I will be talking about the post-independence era because there were 200 years of oppression before that. Before that, we don’t know how Indians were doing.
Many people say Indians have been great at business from the old times, but we don’t have much-recorded history. So we don’t know. Since the post-British era, what has happened is that India has been a growing economy. So demand has constantly been growing because India was an impoverished country when it was recently liberated and got its independence. Because they were poor, the only way to go was up. Slowly the standard of living kept rising, and then internal demand inside the country kept growing.
When it comes to doing actual industrial level business or any business on a large scale, what typically happened was that Indian companies used to have one or two big customers in the West. I’m talking about manufacturing companies, and then you have Services Companies like IT companies. They used to have one or two big customers in the West, and then, they would build a supply line from India. So, typically we were on the supply side, and we did not need or have a lot of experience creating demand.
Most people say, well, our community or our state or people are good at business. You’ll see certain people saying, oh, we are good at business. My family is good at business. My communities are good at business. They have mostly been good on the supply side. So, people who were in the retail store business, or people who have been in the restaurant business, or people in the garments business, etc., have been more on the supply side. So people have been figuring out how do we get better quality garments from Thailand? Get them over here and sell them at a premium. The people who have built industrial level businesses or large businesses have also been on the supply side. They’ve typically dependent on one or two big clients. Their whole focus has been on providing the supply rather than creating the demand.
Why people don’t understand the sales and marketing process
I gave you the example of when I was doing export consulting in 2007. I had a bunch of clients from the Pune industrial area, which is called Pimpri, famous throughout India as a very robust manufacturing hub. Even if they were of the scale of 100-200 crore rupees a year revenue, most of the people had two major clients; it was either Tata Motors or Bajaj or maybe TBS. Their whole business was structured around what do those guys need? And those guys will tell us what they need. Then we’ll go out and buy the machinery, set up the equipment, do the workforce training, and start producing machine parts, machine tools or gears for those big one or two clients.
From my experience, when I work with Indian clients, they’d don’t understand the sales and marketing process very well. Maybe at a certain point, that will come and bite us in the wrong place because when you look at the thought process abroad, they are visionary people and know how to create demand.
Create a Demand
So, when you look at marketing gurus like Steve Jobs, who created a demand for a premium smartphone when you can get the same functionality in a 15,000 rupee phone. They’ve created a demand where everybody wants to buy their 80,000 rupee phone. That’s a Visionary.
Back in the 70s, you had these big computers that would take up your entire house. And if you ordered a computer, it could take upwards of $1 million to order one computer. Then you would have to get a truck and a lot of people to shift that computer into your house. You can’t shift it into your house. You have to shift it into a factory or someplace where people could use it. The only people who could use it were scientists. The only use for a computer was for big companies or governments. When Bill Gates said that my vision is to get a computer on every desk inside every home, people said, you need psychiatric help because not only can you not get a computer inside a home, who would be able to afford it for a million dollars? And why would somebody need a computer in the home? Because anything that a computer did was useful only for companies. Normal computers did not have the functionality that a normal people person could use. But that’s where the vision God created.
Their focus was on how to create this computer smaller, faster, and cheaper. They created a demand for that, so everybody started wanting and needing more computers. So, if you don’t understand this demand creation, you will not be successful in the New Age businesses.
Even the old age business, who’ve been throughout the three generations of people, have been running. They are suddenly starting to feel the heat because the old market is now changing. As consumer demand shifts here and there, it’s up to grab who’s going to survive, and who’s not going to survive.
So let’s just get back to the point. Another thing that most Indians in the business community do not understand is the difference between advertising, marketing and sales. That is where most of the potential is in the market because that is the most nimble and flexible form of setting up a business. So, in the down market, those are the businesses that gain the biggest because they are nimble and flexible. But if they don’t have the understanding, that’s a problem.
What is advertising?
It is when you get your message out to the market, and by message, I don’t mean your conceptual message that we’ve been discussing. What I mean is whatever information about your products and services is in the market.
And then you could have things like Facebook ads and WhatsApp broadcasts. So that is basically your advertising, or you could have a website and then pay Google to send a lot of traffic to your website. So that comes under advertising.
What are the differences between marketing and advertising?
There are huge differences between marketing and advertising. The difference is that marketing starts when a customer has initiated the contact, or we call it permission in the new business terminology. If a customer has permitted you to contact them or otherwise expressed interest. So if you have a pamphlet that comes to your house that says 50% off on pizzas, the store has opened up, and you give them a call to ask about what options they have. What you’ve done as a customer, you have expressed an interest, and that’s where the marketing starts. Before that, it was advertising.
If you have a flyer and you have to book an appointment for yourself, call this number and then you call that number. That is where the marketing process starts or when people say come to my webpage and put in your email address. They will send you offers, and that is where your marketing starts.
When you go to a store, and they take your email address and phone number, we never ask why do you need my email address and phone number? But as soon as we give that email address and phone number, it is assumed that you have permitted them to contact you. And the next day, you’ll see these SMS every day saying 15% or 20% off. So that is where the marketing starts, SMS marketing or email marketing.
What is a Sale?
The sales process is where a customer has expressed interest. They have said, I’m interested in your product and service. Tell me how it can help me order the pricing. So it is an express discussion about features, benefits and pricing. They already know what your product does by then.
A huge issue with business houses is mixing up these three items, advertising, marketing and sales. The first thing you should do is understand the difference between advertising, marketing and sales. They try to sell at the very first stage.
Point number 1
The only goal of advertising is to get the customer to marketing. The only goal of marketing is to get the customer to sales. And the only goal of sales is to get the customer to buy. So, if a customer shows up to your store and says that I saw your pamphlet, and I don’t know what it’s about. Can you explain to me? So I can figure out if I want to buy? Tricky Question. What stage is that customer in? If they want more information or are coming for information, they are not in the sales stage. They’re probably either in the advertising state or marketing stage. That is very important to know what stage the customer is in because that will help you decide the course of action. If a customer says, I saw your pamphlet, and I’m interested in your product, which cost 10,000 rupees. If they say, they’re interested, what I would typically say, so give me the 10,000 rupee cheque? And they say no, I want you to tell me more about your product. They are definitely not in the sales stage. They are either in the advertising stage or in the marketing stage. And if they are in the advertising stage, what is my only goal? Is it to tell them about the pricing and try to ask for the cheque? No, if they’re in the advertising stage, my only goal is to get them into the marketing stage. That is my only goal.
If I try to sell at the advertising stage, I will fail. If I try to sell at the marketing stage, I will fail. If I try to sell at the sales stage, I will fail about 8 out of 10 times, but at least the customer and I are both on the same page that the goal over here is that you have enough information. All I need to do is provide you with the feature benefits and pricing, and you give me the money.
Let’s just get back for one step and just make this simpler. Typically, if you try to sell in the advertising stage, the conversion rate at the advertising level is 1:100,000 to 1:10,000. It also depends on what kind of product you are trying to sell. Where should you try to sell it in? How should you try to sell it? Because otherwise, you’ll be wasting a lot of time, and you’ll go out of business. In the new market time, the focus is going to be of the essence because if you’re doing the wrong thing at the wrong time, the thing won’t work, you will blame it on the post-pandemic slowdown, and you’ll go out of business instead of getting smarter about it.
What are the conversion rates at the marketing level? If somebody sees my ad, they call me, and they are at the marketing stage. If I try to sell them then and there, the conversion rate is 1:10,000 to 1:1000. That means I’m going to get only one sale out of 1,000 people.
If you’re in sales, it’s not a one-shot process. What I recommend to people is that you have an Express Highway approach. If you follow this approach, your conversion rate otherwise could be 1:200. But if you follow this approach, your conversion rate could become 2:10.
What is the goal? What is the number one rule of sales and marketing? The goal of any one stage is to take the customer to the next stage. It is not to get the money out of them. It is to reach them to the next stage. So, point number one is, the goal of any one stage is to reach them to the next stage, not to make a sale. Imagine if you were trying in the advertising process to sell something to a customer and the conversion rate is 1:10,000. Your product would need to be at least worth 10,000, and your flyer would need to be rupee 1 or less. That means to distribute the flyers, you would probably pay the newspaper vendor, newspaper distributor one rupee per flyer. Don’t expect anything from that flyer because it’s a lost item. It reaches every house, but sometimes they fall out. Then you would expect every owner of the house to read that flyer because sometimes the servant takes the flyer out of the newspaper, or maybe the dog picks up the newspaper. All the flyers are all over the house.
Despite that, you would expect maybe one out of 10,000 people to make a 10,000 rupee decision. You’ll have to price your product to 10,000. Otherwise, you will be losing money on the whole thing. What are the chances in your experience that somebody who reads a flyer spends a cheque worth 10,000 rupees? Not very many, not in India, at least.
So the whole thing is a failing exercise unless you understand the rule. The rule is that if a hundred thousand or ten thousand people see this, my goal is to get at least 1000 people to a stage where I can market them. At least 1,000 people should express an interest to mean some form or the other for me to be able to take that process forward and start my marketing process.
Point number 2
It brings me to rule number two. This whole process of marketing and advertising is a two people teamwork. Two people have to work together on this; your customer and you. So if a customer shows up to my store and says they want to buy a 1 lakh rupee product. They’re not willing to listen to me, and they’re cutting me off, and they telling me no, just tell me this, or I just want to know this. They’re not being a team. What are the chances they want to do business with me? None. So why should I waste time with them? Should I waste time with them? No, if you try to waste time with 1,000 people trying to sell your product where they do not express enough intent to work with you as a team, your time will be wasted. And how much time do you spend working with a thousand people? Probably 20 years if you were to sit for one hour or half an hour to give a sales presentation, or try to give somebody information on the phone over 5 or 10 minutes. Ten minutes into 1000 people is 10,000 minutes. That’s like a hundred hours of your time. If you are working 8 hours a day, that’s like 12 13 days full of work. And what are the chances of conversion? Hardly any. Why would you spend 13 days giving information to people who’re not at the stage where they have a good chance of converting?
So always remember these two lessons. The goal of any one stage of this whole process is to reach the prospect into the next stage. The second thing is two people teamwork. At any point, if the customer starts behaving as if they are not part of this teamwork, you need to move them out of the system. There’s no point wasting time. I get a lot of calls saying, hey, I’m interested in your service but tell me this, and I’m like, let me just take a step back and walk you through the whole thing. They say, no, I’m not interested in that. I am a vice president of marketing in such a big company, and I just want to know your pricing. And I’m like, even if Bill Gates called me, it would be the same process. You have to go through the first stage. And when my team gets back to me that you’ve done all of this, then I’ll probably be giving you a call. Maybe I’ll give you a call, and we’ll talk about it. It’s a waste of my time, considering that you’re vice president and not the company’s owner. The chances are even lesser that you have the decision-making power. So I don’t waste my time, and I do them a service by not wasting their time. Some people think it’s rude of a business person who is in the market to sell their services not to be upfront with a customer, but I know it’s a waste of my time.
Where did I learn it from?
When I was in my medical career, I had lots of friends in the business communities running businesses that their parents had started. So they were second-generation inheritors of those businesses. We’d be just hanging around driving around or having a coffee. The customer would call them and say, I’m interested in this, can you meet me? And they’d be like, yeah, I’ll meet you in the office on Monday morning at 9:30, and they’d be like, no, I’m interested now. I want you to meet now, and he’d be like, well, I’m not at work now and then they’d be like, you’re being rude to me. I’ll just probably go and do business with the competition, and they’d say, sure, I can’t control that. I couldn’t understand it. I was trying to learn how to do business, sales, and marketing because I did not want to stay in my medical profession.
These are the people who inherited the business from their dad, and they’re not respecting it now. Why don’t you go? If a customer is ready, then you should go and meet them. They said, well if a customer is ready, they will come and meet me on Monday. It’s not that I’m not making it easy for them to do business with me, but we have a process. If they don’t follow that process, they are more than welcome to do business in the competition. And I’m like, well, the guy was probably going to give you 50,000 rupees. You just lost that money, and he’s like, yeah, sure my competition catches all these customers. And sure enough, five years down the line, the competition would be no longer there, and these guys would still be there. That taught me a lesson that if you spend 5001 rupees or 50,001 rupees charging for a 50,000 rupees of opportunity, you will be out of business.
So once again, the two lessons are the goal of every one stage is to reach the customer to the next stage and this whole process is two people teamwork. If a customer behaves like they don’t want to be part of that team, you don’t do business with those customers. You will waste your time, waste your money, and make losses in your business.