Build an Informed Sales and Marketing Strategy Using the 5 Cs

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So your topline sales aren’t what you expected to see. It could be a slump (yikes) or maybe even an unexplained uptick — a great problem to have, but you’d still like your analytics team to find exactly what is happening so you can formulate an informed strategy to keep the momentum going for as long as possible.

Any given business model has a nearly endless number of variables that contribute to the topline sales numbers, and their own method of measurement. So how do you know what lever to pull to stay on track to meet your goals? You need a systematic method to find the interesting bumps in the data to build your sales and marketing strategy.

Let’s start with a big, uppercase C that underpins everything — CHANGE. We’re looking for significant shifts in pivotal facets of the business. When they happen in any of these 5 Cs, they can cause huge moves in the balance sheet. The pursuit of those anomalies is critical — and often points us directly at a specific strategy and set of tactics.

1. Customer Segments

While traditional segmentation has its strengths and weaknesses, there’s no question that examining the movement of these customer groups can help illuminate disparity from topline projections.

What segments are growing, and which ones are shrinking? What is the long term trend for the recent buyer file? The time frame to define “recent” is going to vary by industry. For consumer retail, we tend to think of this as the 12-month buyer file, while if you’re B2B or service-based it may be completely normal not to see a customer for a year. The key is to look for deviations from your typical sales cycle.

The recent buyer file is pivotal for any company. Watching it grow is encouraging, but if they are slow to repurchase, or place smaller orders, you can still see a shrinking topline. A growing recent buyer file with lower frequency points to a need for a concerted strategy to drive the second purchase. This could take the form of a multitude of tactics, which might include a special offer for a second purchase, a follow-up email series, box stuffer, or all of the above!

A shrinking recent buyer file must mean that you’re seeing growth in the lapsed buyer groups, which demonstrates the need for a few things. First, following the axiom of “Learn first, react second” it’s critical to understand WHY customer are lapsing, which makes it necessary to do some research. Meaning, ask them!

You may discover a larger problem upstream, like slow fulfillment, pricing strategy, message confusion, customer service, or a bad website. Fix these problems FIRST, then map out a reactivation strategy to win back your lost customers.

2. Category Sales

Dramatic changes in certain categories could mean an industry-wide shift or it could mean that a new type of customer has found you.

For example, several years ago, one B2B client noticed years ago that a small category — not a big part of the overall picture — was growing in a striking way, doubling year-over-year. Because they identified it early, and took the time to nurture this group with special attention via a dedicated digital campaign and given space in print materials, with messaging targeted directly to them, they were able to nurture this nascent customer group into a significant portion of their customer file and an important part of their acquisition strategy.

Another company in the gardening business noticed an aberration in their flagship category — they had a sudden and unexpected growth spurt! Obviously, they were thrilled, but it was important to understand what was happening so that they could predict whether it would continue. Customer research revealed that a new group of growers had found them — marijuana farmers! California legalization had inspired a new generation of growers, all who needed gardening supplies. Similar to the first example, this knowledge gave them a whole new customer profile, along with targeted messaging and possibilities for a prospecting universe.

3. Close Rate

We can talk about close rate in a number of different environments, but for our purposes, let’s say it’s the success rate at which you can move the customer from a higher point in the sales funnel to a defined goal — this goal could be to collect a name and email address (lead gen), it could also be a quote or it could mean a closed sale. In an e-commerce context, conversion rate is the percentage of website visitors that go on to purchase. A sudden change can indicate something as simple as a broken page or cart. For the purpose of simplicity, we’ll put aside the technical or usability issues a site may have and focus on the merchandise offering. Wherever it happens, a lagging close or conversion rate means could indicate that there is a failure to show value — there is a lack of agreement between the price and the service or product offered.

This means that the logical place to start is a thorough a review of how the value is communicated, from every step in the sales funnel. It’s possible that the value, and points of differentiation, while they exist, are not made clear to the customer.

Or, this could be an indicator that the pricing strategy should be examined in the greater context of the competitive landscape. Which leads to…

4. Competition

Certain brand bellwethers can tip you off that your competition is taking a big toll on your market share, or that your top-of-mind brand awareness is suffering.

The first of these, especially if you have a thriving online business, is your position in the results pages (SERPs), independent of any changes in your strategy. This was the early-warning sign for one client that Amazon and Walmart had started selling their category, and competing heavily for placement on Google’s first page. OUCH.

So what strategy can combat these juggernauts? EXCLUSIVITY. You must to bring something to the marketplace that can’t be found on Amazon or Walmart. One client’s response was to create exclusive packages by bundling popular items together in an easy kit at various price points for different experience levels: beginner, intermediate, expert. This unique offering kept people clicking, and kept them on the first page.

Direct website traffic reflects the number of people who go directly to your website via the address bar or bookmark, and it’s usually the most hyper-engaged segment and the best conversion rate. But it’s also a good indicator of how many people are thinking about your brand on a regular basis. A sinking direct traffic rate is a bad sign, potentially one that either your regular customers have started dialing up the competition, or that you’re not staying top of mind. So the answer is an awareness campaign.

5. Customer Spend

If you sell physical goods, this might mean AOV, but let’s face it — 4 Cs and an A isn’t nearly as catchy. A lowering AOV is usually easy to spot, but it can wreak havoc on the bottom line, so it’s important to monitor and react.

In a service-oriented business, you would look at customer spend over a given time period to track the trend over time.

One tech company saw AOV drop precipitously for a certain category. A merchandise analysis revealed that this category had seen a dramatic price shift — the new models that manufacturers were building were trending much cheaper! While the company was selling more units than ever, the industry-wide price shift made a dramatic change in AOV that made topline sales drop. So at a lower AOV, to make up the difference, they needed to find a way to sell more units. Unfortunately, this isn’t a product that one buyer could use multiples, so they needed to get creative. Luckily, the new lower price points did open up a new opportunity with home hobbyists as opposed to the typical corporate buyer. So in finding a new audience, they hope to shore up sales.

When there isn’t such a clear answer, we still have a multitude of tactics we can reach for to shore up customer spend: offers with price thresholds, add-ons, and incentives to get the customer to the next price point.

One more thing: As you might have already observed, these 5 Cs link, overlap, and affect one another. Noticing a drop in one can point to a problem with the other. A drop in category sales can alert you to a new competitor in the field, or a new product rollout by an existing competitor.

These 5 Cs give you a starting point to look for answers, so that you can develop a plan of attack from an informed position. It’s not going to fit every case. Maybe your close rate is dropping for none of the reasons we explored, but instead because your customers are undergoing a budget freeze, or because there’s a global economic downturn, but this is a good place to start looking; turning and slicing the data this way, and that way, until you start to get a sense of the size and shape of the problem. From there, you’ll be armed with the information that will help you find solid strategic ground.

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