Peter’s branded products business now needs to consolidate so he can take it to the next level. In addition to getting a business plan together, he really needs to focus most of his attention of pursuing the right customer. This means a tight definition of the profiles of his most desirable customers; documented. And each time he gets a potential new customer, he needs to check whether they look like the desired high-value customer profile. He has to ask his high-value customers for referrals to others just like them and follow up.
By Claire Heaney This article first appeared in The HeraldSun May 02, 2013
LIKE all entrepreneurs starting out, Peter Demetriou has got some things right and some things wrong.
But he faces challenges as he works to take his promotions business to the next level. Mr Demetriou, 27, worked at the Australian Taxation Office and overseas, before he found his way into promotional products. Having worked for another company, he felt he could do it differently and hopefully better. “I completed a Bachelor of Business entrepreneurship. I always had a passion for marketing,” he said.
He believed there was room for a player in the promotional space with a focus on quality. Mr Demetriou admitted he only “did a bit of a business plan”.
He funded the start-up of New Age Promotions two years ago with his savings and the help of a family friend. Mr Demetriou said he kick-started the business with a lot of cold calling and visiting customers. “I did search engine optimisation and dropped pamphlets and brochures in the city and business parks,” he said.
Early on, Mr Demetriou said he sponsored a business event which meant his name was in front of potential clients.
“While I am happy with where the business is going, I am at the crossroads,” he said.
His goods are currently online in a catalogue but there is no e-commerce. Mr Demetriou said there were thousands of goods, fluctuating prices and there were so many variables associated with colours and quantity with orders, that he found it difficult to contemplate an e-commerce presence.
“Also, by not being an online store we have a closer relationship with our customers,” he said.
One downside has been that he has opened himself up for plenty of tyre-kickers. Mr Demetriou said one of the ways he has tried to focus his time for genuine customers is by placing minimum order requirements.
“For a small company it is better to concentrate on a smaller number of clients and service them well,” he said.
“I worked out that 30 per cent of my customers were responsible for 70 per cent of my sales.”
Mr Demetriou said if he was to go online with sales it would cost $10,000 to $15,000 to set up and then a further $700 a month for six months to raise the Google ranking.
He also faces challenges when bringing goods from offshore. He said although importing goods offers customers a cost-effective option, the lead times can blow out with customs and manufacturing delays. He currently offers air and sea freight, however he is seeking a faster service to keep customers happy.
“It would be more costly and I would have to pass that on but I would be open with people,” he said.
Mr Demetriou said maintaining quality control was an important aspect of the business.
“I did not go into it too much. I did work on a strategy and from there I gave it a shot,” he said.
THE EXPERTS
John Downes, Director, acorro business advisers
NOW that the business is up and running and Peter is keen to consolidate and take it to the next level, he really needs to sit down and get a business plan together. It is so easy. You can do it for $30 in five minutes, using an iPhone app like the “5-minute business plan”. Do a Google search and you will find plenty to get you started.
But more than anything, he needs to pursue and get the right customer. He probably has an idea but he needs to figure out the profiles of his most desirable customers. Document it. It doesn’t have to be long, but he has to be clear who he is aiming for. Each time he gets a potential new customer, he needs to check whether they look like the desired high-value customer profile. Almost like a tick-the- box exercise. He has to ask his high-value customers for referrals to others just like them, and follow them up.
Peter needs to get his cashflow sorted. Ask for deposits up front. Ask for design fees.
Peter, and everyone else in business, needs to learn to love their customer and stay in touch with them.
Vito Interlandi, Director, Hayes Knight Melbourne
IF Peter had taken the time do do a business plan, it would have highlighted that there are some large players in the market. The market is extremely competitive and they all offer a vast array of products.
This type of business usually has two parts:
A CATALOGUE which includes pens, stress balls and the like; and
DIRECT marketing decals and product-specific, which is usually higher volume and there is creative input.
The online presence, along with optimisation, will all benefit and help lift the profile of the business. As to a return on investment, this would be dependent on the style of the catalogue and the follow-up on inquiries.
Either way, it will pre-qualify customers and make the sales process somewhat more efficient and will benefit the business. Quality and delivering what the customer wants is vital.
The online presence will help achieve scale and volume and hopefully, over time, lead to better buying terms with the suppliers.
Managing freight is always an issue for any small business.
Carolyn Tate, Director, Connect Marketing
THE worst thing any one can do in business is to attempt to be everything to everybody.
The only thing your competition cannot emulate is the quality and depth of the relationships you have developed and fostered with clients, suppliers, staff and so on.
The quality of your products and your customer service can easily be emulated by anyone. It’s very dangerous to hang your hat on these two factors alone.
I’d suggest that Peter look long and hard at the 30 per cent of customers giving him the bulk of his business. He needs to work out why they keep coming back, how he can add extra value and how he can attract more like them.
Mass marketing online in the space he operates, is an endless, thankless and low-return task. I’d be focusing my energy on building relationships with potential alliances such as sporting clubs, printers, marketers, designers and more. No matter what you sell, people buy from people they know, like and trust.
It’s important to spend at least 50 per cent of his marketing time offline and building relationships with customers that will return to the business.
