Rifle vs. Shotgun Marketing and Optimizing your Business
This concept is the Rifle vs. Shotgun marketing approach that combines industry segment growth rates and gross margin for each segment to help determine the highest value segments. This leads to a focused marketing/sales strategy that can yield more high-value customers.
- Examine your product lines, market segments and find the segment(s) that have the highest potential segment volume.
- Make a list of the combined scores from highest to lowest. The highest value segment has the highest potential company financial return.
- Focus the marketing and promotion efforts and expenses in that area. This will give the greatest return on the investment and higher value probability.
A little fun with learning optimization
Concrete Truck Monitoring System
Everyone has a GPS system today, but 15 years ago, GPS did not exist for the common applications. For the example application, we will learn from today, it was for a concrete company. Tell me what a concrete truck driver does after the load in delivered?
- First and foremost, the truck needs to be washed out or it will be twice as heavy in a years time.
- After the truck is washed what happens next? Typically the driver would go to the coffee shop for a break.
A locator device costs $6,000 per truck but it could track trucks and result in one more load per day delivered. So if you owned a company with 100 trucks, how much would it take to outfit all of the trucks? ($600.000)
Most concrete companies did not have $600,000 cash to purchase the locator device. The company in this example was selling about $20,000 per month or $240,000 per year.
I was able to help the company devise a Break-Even Calculator so the owner could determine the ROI and Break-Even for the project. A local bank came on board to provide financing.
The business owner would supply the revenue from an eight-yard load, the cost of the load, the cost of labor, and the number of trucks in the fleet. How long do you think the average project Break-Even was for the project? (Between 25 and 90 days!)
In the normal capital budget process, a project with a Break-Even less than two years is considered for the budget. In my example, there was such a short break-even, that almost all customers wanted the locator device.
With the calculator and bank association, the company improved sales tremendously. In two years, the company sold for $20 million!
Rifle vs. Shotgun Marketing, Business Valuation: Dan, Florida, gained ideas to optimize his company
Rifle vs. Shotgun Marketing, Business Valuation: Dan Bigelow, Florida, gained many ideas to optimize his company from key business concepts from Dale Richards’ presentation on Business Valuation Principles – How to Increase Your Business Value, Financially, Operational and Strategically.
Learn more about Business Valuation Principles by Dale S Richards https://successbiznow.com/books/business-valuation-principles-by-dale-richards/