This article presents ten business development practices specific to the composting industry. When applied consistently, these approaches will result in increased sales and improved competitive market position.
The U.S. mulch and compost markets have decades of history; composting practices and approaches have been known for millennia. These products are useful and well understood. In the new era of sustainability, new markets are opening up and larger sales opportunities are available. But competition has risen to an all-time high. Each day we compete to gain new business and retain our valued clients. The question is, how do we achieve the best results growing sales and improving our competitive market position?
To quote business management guru Peter Drucker, “The best way to predict the future is to create it.” These ten techniques will help you create your profitable future!
1. Begin with the answer. (Strategic goal planning.)
Do you have clearly defined goals for business development, inventory management and positioning your product? Have you developed a specific plan (based on a realistic assessment of market needs) to reach these goals?
Mulch, soil and compost businesses often evolve from another enterprise in which the owner was involved. These “organically grown” compost firms have a tendency to launch without goal-based marketing plans, operational guidelines or business development strategies. In other cases, direct start-up firms are burdened with “get-it-done-now” activities and little time remains for goal-setting and strategic planning.
With a clearly stated idea of where you want to take your company and how you intend to get it there, definitive decisions can be made and action taken. Goal setting is particularly vital for the planning of promotional campaigns, merchandising, advertising and online marketing.
Yes, strategic planning takes time away from sales and operations activities, but remember the Chinese proverb: “Unless we change our direction, we end up where we were heading.”
2. Stop selling compost/mulch/topsoil. (Instead, sell your brand!)
Few industries in the world have existed as long as ours. Ancient translations from Chinese, Greek and Roman writings speak of the processes and uses for our product. In most circumstances you will be competing against suppliers who provide exactly the same products. Yes, there may be technical variances, but to consumers, mulch is mulch.
What can you do to distinguish your firm and its products? Build a brand! Brands are more than a trademark or snappy logo; your brand is you — your business credentials, service history, client recommendations and other intangible merits. If you view and describe your firm simply as a compost producer and marketing agent, there is little to distinguish you from the competition.
“People don’t buy for logical reasons,” said motivational speaker Zig Ziglar. “They buy for emotional reasons.” So get your prospects excited about doing business with you! Get new clients comfortable with your professional techniques. Build your brand. As that happens, your brand will sell for you.
3. Sell benefits; deliver features. (The value of your product and services.)
When describing a product in a promotional sense, it is important to highlight both features and benefits. Features are expressed in quantitative, factual statements such as, “This compost contains 10-percent organic matter.” Benefits are the qualitative attributes associated with the feature. (e.g., elevated levels of organic matter improve soil’s water holding capacity, pore space, friability, and cation-exchange capacity.)
When you have dinner, the steakhouse sells the “sizzle,” then provides the steak. When you buy flowers the nursery sells the fragrance and beauty, then provides the rose. When your clients buy mulch, sell the benefit: “confidence by the cubic yard; success by the 40-pound bag.” Then provide the bag! (These are benefit statements I use personally. Please, feel free to use them too. They work!)
The most important step: sell the results specific to your brand and products. When you do this consistently, short and long-term sales will improve. As Ted Turner famously quipped, “Early to bed, early to rise, work like heck and advertise!”
4. Think outside the bin. (Pick your playing field to win.)
Why play the sales game on a level field when you have your choice of competitive zones? Be innovative in how you view and segment your market. Often you can find niches where you enjoy a deep competitive advantage. Use them!
When you do find yourself on a level playing field, be creative; use innovative ideas and approaches to stand out from the crowd. An example of success in this approach: the owner of a garden center I managed never advertised during the peak selling seasons. His rationale: advertising during those times was a waste of money because his advertisement would be lost in the crowd. Instead, he used his advertising dollars to encase the front of his store with flowering annuals. A buying frenzy developed among in-store shoppers and the majority of that inventory was sold on the spot!
Another example of this client’s innovative positioning: he provided a nearby local television station with a corsage or boutonniere for the evening newscasters on special occasions and holidays. The class and elegance of this approach got him noticed by his customer base, particularly when the newscasters mentioned his products. The second outcome was even more profound: when newsworthy topics dealt with flowers, gardening, holiday decorations, first frost, etc., the media convened at my client’s shop for on-air interviews, weather shots and backdrops.
A large storefront leveraged for visibility and sales. A classy gesture yielding a public relations boon. These are but two examples of creating competitive advantage. There is a direct path toward innovative thinking. In the words of entrepreneur Seth Godin, “Don’t find customers for your products, find products for your customers.”
5. Set aside gorilla marketing and practice guerrilla marketing. (Small wins big.)
Gorilla marketing is a form of promotion that engages large budgets and broad media messaging (advertising). Although there is a specific target, gorilla marketing casts a wide net in hopes of reaching that intended target. Guerrilla marketing, by contrast, relies on the coordination of promotional programs that utilize time, energy and imagination (rather than a big marketing budget). The objective of guerrilla marketing is to match wits against budgets. The tactics are unexpected and unconventional. For example, engage with prospects and customers in unexpected places. Use approaches geared for the individual, not the masses. And make the experience memorable! (The TV-station flower-gifting idea is a brilliant example of this approach.)
Another example of guerrilla marketing, specific to the composting industry, includes product placement. Witness the use of Kellogg’s Garden Products in the Oscar-nominated (and horticulture-focused) film “Adaptation.” Although the scene was brief, actor Nicolas Cage was shown carrying a bag of Kellogg’s Amend soil over his shoulder while he tended to his orchids.
6. Use blogs, email, and RSS feeds. (Technology meets an age-old industry!)
Engage customers, potential customers and groups through interactive marketing. Participate in blogs, industry forums and enthusiast forums (such as www.gardenerscorner.com). This form of Internet exposure is an effective method to build your market presence, brand and sales opportunities.
An email list or RSS (Really Simple Syndicate) feed allows you to receive information from your favorite websites or blogs in real time without having to go to each site location and search them individually. With an RSS reader/broadcast system, you can re-send the feeds to subscribers (also in real time). The approach can be applied, for example, to alert your customers of new and relevant information.
The results? A consistent stream of value-add information keeps your contacts engaged with your company. Your brand is developed beyond product/sales to the levels of industry-participant. The win for you is direct and long-lasting. The quality and consistency of your communication is leveraged by blogs, email and RSS feeds.
7. Differentiate and elevate perceived value.
“Perceived value” is the measure of benefit-expectation of a product, weighed against the selling price. There are several ways to increase the perceived value of your products:
1) Include testimonials on your website and proposals.
2) Provide product guarantees.
3) Communicate the relevant beneficial attributes of your services/products.
4) Use high-quality packaging to display the value of the product.
5) Use the U.S. Composting Council Seal of Testing Assurance or the Compost Council of Canada’s Compost Quality Alliance. Leverage the value of the ‘Seal’ in all promotions, advertising, print literature and marketing collateral pieces.
There is a consistently successful approach for differentiation I refer to as “marquee customers.” This is similar to a celebrity endorsement; however, instead of featuring an individual, the physical site grants the celebrity status. Examples might include city grounds, well-known locations (the local baseball field), schools, and for those with high aspirations, major facilities (professional sports arenas, state and national parks).
The key aspect to remember: Before you discuss price, create the perception of value.
8. Co-brand and engage in strategic partnerships. (Two sell more than one.)
Leverage the value-added opportunity created by the sale of complementary products. This approach can be utilized if a producer is supplying distinct products (compost and mulch / topsoil and container-mix for example). This approach is particularly useful in cross-selling circumstances. For example, lead with the most differentiated product to gain the client commitment, then backfill with the less differentiated products as part of a “one-stop shopping” value-add.
In implementing this strategy, companies may want to partner with you to hold a cooperative promotional sales event. One example is plants being sold in containers with Miracle-Gro branding imprinted on the pot. In a case such as this, the branded partner would supply the pot or pay some negotiated amount per pot distributed.
The key to strategic partnerships is not to focus on the size of your strategic partner. Instead, look for the largest win they can provide you.
9. Promotions. (Use the proper method to gain the intended outcome.)
There are circumstances that support a discount program as a viable and appropriate approach to increasing sales. BUT discounting should NOT always be the first, last, best or only answer. The starting point is to ask yourself this question: why are you having the sale? If the answer is “to attract new customers,” well-promoted price reductions may be an effective strategy. However, there are several potentially negative consequences to “price-reduced” campaigns (implemented for regular inventory).
One of the biggest problems comes with the customer who bought the same item two weeks ago at full price. In that situation, you have taught your customer an unfortunate lesson that will be long remembered: “If I wait, the price will probably come down.”
As a rule-of-thumb, your product or service should not be discounted unless you have purchased select product or products specifically for a discount promotion. If you have excess inventory or simply need to generate additional sales dollars, go for the less direct “buy three, get one free” or “five for the price of four” promotion. This approach is particularly effective for inventory reduction. And if your past customer stops by, invite him to enjoy the advantage of even more of your product with this special promotional offer.
To increase sales of an existing product line (without upsetting past customers or diminishing perceptions of cost-now vs. cost-later), consider attaching a separate but related product as the promotional offer. (This works best when the gratis promotional item is in over-supply.) For example, buy a bag of mulch, pick a pair of your favorite gardening gloves. The two obviously go together, and how many times have you had way too many gardening gloves in inventory?
10. Create your customers’ success (through your business power).
There is a noticeable trend in our industry: We are experiencing wholesale distributors and wholesalers who are less motivated by SPIFFS (“Special Payment Incentive for Fast Sales;” essentially additional rewards provided for the sale of specific products or product volumes), and are instead more motivated by direct economic reward. This circumstance provides you with an opportunity to leverage your business financial power to add to their success.
For example, if your cash flow is sufficiently deep, consider providing off-season or preseason invoice-dating programs. By giving extended 60-, 90-, or 120-day net-due terms, several benefits accrue for your customers. Delayed billing allows them to buy your product and sell all or part of it before they have to pay for it. This technique moves more of your inventory from your stockpile into your sales stream. This particular method does not adversely affect your company’s DSO’s (Days for Sales Outstanding) but does dramatically improve your customer’s cash flow (and their inventory turnover-ratios). Note: DSO is a financial tool that averages how long it takes customers to pay their bill and how effective you are at collections. (This is often used by financial institutions as one of many determinants for ascertaining credit worthiness.) The winning advantage here is your financial strength and credit worthiness.
So, when is the best time to get started on these ten suggestions to improve your sales and profit? A parable for our industry says it all: “The best time to plant a tree is ten years ago; the second best is now.”
David Hill is the founder of CycleLogic (www.mycyclelogic.com), a consulting and business development firm specializing in marketing analysis and program development within the environmental arena, based in Sarasota, Fla. He can be contacted at [email protected]