Continuation of the Direct marketing Mistakes series from Friday the 13th:
Mistake #2: Assuming You Know What Products Your Customers Want The Most
This is one of the most costly errors you can possibly make. And one of the most common errors made by companies of all sizes. Although smaller companies and start-ups are more prone to this type of critical error, the big guys still make this mistake with regularity.
Look at the “New Coke” of a few years back. I doubt that little, if any, test marketing was done. It was more a reaction to the competition than a true desire in the marketplace. And the results were a swift, spectacular flop.
If you’re going to be successful in direct marketing, it’s absolutely essential that you have a product that your customers need. And it’s even better if they need to replenish their supply regularly.
How do you come up with such a product?
There are two key ingredients. The first is to develop only those products that your market demands. This is so simple, you’d think it was obvious, but based on the problems my clients present me with on a daily basis, I can assure you there are very few market-driven products being developed today.
Here’s what you must do to make sure your products are of real value to your market. And, as a logical consequence, produce the kind of profits you really want. You must connect with your typical customers and find out from them exactly what kind of problems plague them or what vital goals they’re burning to achieve.
There are many ways to do this. Call up some of the people you do business with on a regular basis. Go visit a few more, and get to know exactly what their needs are. Mother excellent technique, and one I’m particularly partial to, is the short questionnaire.
Here’s what you need to make sure your customer questionnaire succeeds in gathering the critical information you need. Create 5-8 simple questions. True/false or multiple choice where you provide specific choices are the most effective.
Mail this questionnaire out to a couple hundred of your customers. Offer them a special discount, free booklet, or some other incentive for responding.
Then listen to what your market has to say. Develop new products based on the common themes that are revealed by your customers’ answers. Create products that solve their problems or help them achieve important goals. This is the critical first step to ensure that your products generate sizable sales.
The second key ingredient is to test carefully and prudently. I’ll never cease to be amazed by how many companies bypass the testing phase and go straight to full-blown production. This makes no sense at all – and it can be dangerous to your financial health.
Once you’ve developed your product based on your market’s most critical needs, the next step is to invest as little as possible in developing as few pieces as necessary to test market. Forget about the money that might be saved by producing in volume at this stage. You’re testing your product’s marketability. No amount of savings on 5000 units can possibly be justified if you only sell 100 of them.
Savvy direct marketers get rich by starting with small tests and increasing volume in stages. Here’s a working rule of thumb:
Never increase your next stage quantity by more than 5 times.
This means if your starting quantity is 500, your next production run shouldn’t exceed 2500 – - unless you have signed orders to support a larger quantity.
