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  • BUSINESS GROWTH 101: How To Diagnose The Problem of Low Sales
 
Tito Philips, Jnr.
Monday, 25 April 2011 / Published in Marketing, Thought Bank

BUSINESS GROWTH 101: How To Diagnose The Problem of Low Sales

Last week I began a series on business growth where I discussed about what to do when business is slow. In that article,

How do you tackle the problem of low sales in business?

I mentioned that the first strategic action to take when business is slow is to diagnose the cause of the problem. If you are just joining us in this series, click here to subscribe, also, you need to read the first article to have a good grasp of what I will be sharing in this unusual article.

Business Growth series [Part one]

In this second installment of the series, I will be going in-depth to look at the necessary steps to take while diagnosing the problem of low sales in your business.

Enjoy!

1.       Do a survey

The first step towards diagnosing the problem of low sales is to ask questions. You have to speak to the appropriate people to find out what could be responsible for the low sales. There are two categories of people you should direct your questions to; your employees [internal survey] and your customers [external survey].

  • Internal Survey [employees]

The best place to start is from your employees because they are the ones closest to the customers. Talk to them to find out what they have been noticing, ask them if the customers had been laying any complains, are there any issues or trend you need to be aware of, and are there any competitions nearby?

These and many more are possible questions you should ask your employees as regarding the customers. Don’t be a one-sided physician by focusing only on what your employees think about the customers; also find out if your employees are experiencing any challenges on the job. Their ability to meet the needs of the customers is directly linked to their own needs first being met. Meaning, the satisfaction of your customers, largely depends on the satisfaction of your employees. There is no two ways around it, if they are not satisfied, your customers won’t be satisfied, period.

So talk to your employees, find out what challenges they are facing on the job. If they lack certain skills, make sure you provide adequate training; if they are understaffed, make sure you take in more hands; if they feel they are underpaid, make sure you increase their pay; if they lack morale and are not motivated to work, make sure they are in positions and doing the work that they love.

In summary, this is what you want to find out; are your workers effective and how efficient are your business operations?

It will not be easy having to call on all your employees one after the other asking these questions, that is why using a survey is very efficient. Simply come up with these questions as a printed questionnaire and send it across to them. Be sure to cover both sides of the coin, there side and their views about the customers.

  • External Survey [customers]

Having conducted a survey internally, the second set of questions must be directed to the ones who suddenly stopped buying –the customers. This is often referred to as ‘customer satisfaction survey’. The objective is to find out from the horse’s mouth what exactly is wrong with your business and the products/service you offer that has made them to reduce patronage.

Your concern is to uncover their level of loyalty to your business or brand. You want to know if they are still yours, going or gone. Depending on how well you have been meeting or exceeding their needs, will determine the quality and quantity of feedback you will get. One great way to increase their participation is to offer certain incentives or rewards for their time taken to answer the questionnaires.

As much as possible, make the questions a combination of both closed-ended questions and open-ended questions. This is not about you, it is all about them. So, be sure to highlight the key areas that are of paramount concern to them such as; product/service utility, customer service, order-to-delivery time, price, quality, packaging, communication and so on.

2. Competitive analysis

The second strategic action to take after doing a survey is to find out what is happening in your industry or niche. This is known as competitive analysis. You want to be sure your business is still relevant among its peers or has been left behind.

Are there any competitions just entering into your line of business? Are you up-to-date about current market and industry trends? Are there any major policies from the government affecting your industry? What are your competitions doing that you aren’t doing? Do you know why they are doing what they are doing? Does your business have any competitive edge compared to other businesses in your industry or niche? Is your perceived competitive edge still relevant?

Your objective is to uncover any major changes that are taking place within your industry and in your competitions businesses. You are not doing this because you want to simply duplicate these changes, you are doing them because you want to find out why and how they relate with the low sales you are experiencing.

You must never forget to link all your findings back to your problem of low sales. Not everything that happens in your industry or competitions businesses is potentially capable of affecting your own sales. So always ask yourself this; “how is this finding affecting my business in terms of patronage?”

3. Environmental scanning

After the competition comes finding out the changes occurring in the larger environment such as; economic, cultural, religious, political, infrastructural, natural disaster, war, and other major societal changes that can potentially affect your business.

Environmental scanning will reveal much larger changes than competitive analysis. Perhaps a classical example is the current economic meltdown sweeping across the world. It is already obvious what the outcome will be; low patronage on the part of the customers as they have less purchasing power.

Scanning the environment reveals a general trend that affects everyone irrespective of the industry or niche they operate in. It is much broader than competitive analysis as it factors in other forces that can affect the sales of almost every business.

Another example is the ongoing electoral process going on in my country Nigeria. There seems to be an unspoken code that is making everyone hold back on making major capital expenses until after the election.

Following these 3 critical steps can help you better understand the reason your business is experiencing low sales. Without taking these 3 steps, it is possible that the solution you seek to correct your problem of low sales is inappropriate for your peculiar situation.

So, ensuring you fully grasp the cause of your business’ low sales will help you in formulating an appropriate solution that will better address the problem.

This brings us to the end of the first strategic action you need to take when business is slow – diagnose. In the subsequent 3rd installment of this series, I will be covering other strategic actions you need to take if you really want to effectively tackle the problem of low sales in your business.

Until then, over to you, I want to know how you have been able to put these 3 steps to use in your business and what were the resulting impact they had on helping you combat the problem of low sales?

Kindly share your story, experience or suggestions in the comment box below. And for you who is just joining us in this series, make sure you subscribe by filling the form directly under this article to ensure you never miss out on the rest of this exciting series.

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17 Comments to “ BUSINESS GROWTH 101: How To Diagnose The Problem of Low Sales”

  1. Jk Allen says :Log in to Reply
    April 27, 2011 at 12:35 am

    I tell you Tito, your hitting on something here…[as UNusual]!

    I love the survey ideas, and in corporate America – where I play – they are a staple of the busienss model. Current and prospective clients are asked to take surveys, which are used to “better” offerings. And assess the effectiveness of sales aids and marketing efforts. On the employee level, surveys are condcuted to identify bottlenecks and areas that can use improvement.

    Competitive analysis is highly important, espeically when business is lacking. It just makes sense to see what your business peers are up to, and why or why not they are experiencing different affects.

    And environmental scanning is brilliant. Of course the concept isn’t anything new, but it is a new term for me…and I like it. Understanding what is going on, and what trends are impacting businesses in what ways.

    Great job on this Tito – very good job.

    1. Tito Philips, Jnr. says :Log in to Reply
      May 1, 2011 at 6:59 pm

      JK,
      Diagnosing helps to uncover a lot of hidden things in business and that is the more reason why we shouldn’t wait for sales to be low before we put these 3 strategies to use.

      Thanks buddy.., much appreciated.

  2. nazimwarriach says :Log in to Reply
    April 28, 2011 at 7:57 am

    Hello Tito,
    Diagnosis of any problem is a very important step to rectify and then remove the problems.
    Thanks

  3. Christian Hollingsworth says :Log in to Reply
    April 28, 2011 at 4:06 pm

    It’s crazy to me to see how often it’s just a simple, little problem in your system that isn’t working quite properly. In my own eCommerce experience I noticed that just by changing a few graphics and enticements – sales increased ten fold.

    It’s also important, I’ve found, to be clear. That’s where the surveys are important. Sometimes people don’t understand what you’re offering, the process by which to attain a purchase, etc…and they drop the sale only because of nervousness or confusion.

    1. Tito Philips, Jnr. says :Log in to Reply
      May 1, 2011 at 6:51 pm

      Thanks Christian for dropping your feedback, much appreciated.

  4. Patricia@lavender oil says :Log in to Reply
    May 16, 2011 at 2:15 pm

    Hi Tito

    Another well-written and informative post. Here in Western Australia we are blessed with lots of natural wealth and so the global recession hasn’t really affected us in the same way. The mining industry is propping up our economy. Although alongside that is the retail sector that is doing it tough.

    So for those of us with online businesses, have to be innovative and know our customers needs. I did a survey when I first started my blog. Gave an overall view of one group of visitors. Now I think it may be time to do another as when I started my blog I didn’t have my products up there. Also have a few changes to be made now that my blog is established.

    Patricia Perth Australia

  5. Mike Jones says :Log in to Reply
    May 26, 2012 at 5:09 pm

    Hello Tito,
    Diagnosis of any problem is a very important step to rectify and then remove the problems.
    Thanks

    1. Tito Philips, Jnr. says :Log in to Reply
      May 26, 2012 at 9:16 pm

      Thanks Mike!

  6. Philip says :Log in to Reply
    August 9, 2014 at 7:45 pm

    Hi Tito,
    I enjoy reading your articles as it gives me more insight and probes me to think out of the box. Please continue the good work of sharing your knowledge.

    God Bless.

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