Chapter 16 Sell Direct to Connect with Your Market Flashcards
(40 cards)
What is the primary focus of billion-dollar entrepreneurs in terms of sales?
Sales and marketing strategies that offer positive cash flow with capital efficiency
This includes long-term control of the market.
Why do billion-dollar entrepreneurs prefer to sell directly to customers?
To control their rate of growth and the need for cash
Direct selling allows for better customer relationship management.
What assumption do technology-oriented entrepreneurs often make about their products?
That their ‘great’ product will sell itself
This is often a misconception; sales need to be actively generated.
What unique strategy did Mary Kay Ash use to incentivize her sales force?
Diamonds, vacations, and pink Cadillac cars
This helped build Mary Kay Cosmetics into a powerhouse.
How did William Wrigley promote his chewing gum?
By sending free chewing gum to people in the phone book
He targeted those who could afford a phone, assuming they could afford gum.
What was Jeff Bezos’s strategy to attract customers to Amazon.com?
Hired mobile billboards to roam outside Barnes & Noble
This was done to entice customers to find books at Amazon.
What promotional method did Roger Penske use for his company?
Entered cars into races like the Indianapolis 500
Winning provided advertising exposure he could not afford otherwise.
What did Michael Dell do to gain customers for his newspaper sales?
Sent direct mail offers to people applying for marriage licenses
He identified a target market based on life changes.
What are sales drivers?
Strategies to get sales
Examples include advertising, direct mail, and telemarketing.
Why are sales drivers important for startups?
Startups need sales quickly and in sufficient amounts to make a profit
They also need to show positive cash flow.
What two numbers in a startup’s pro-forma financial projections are often wrong?
Sales level and timing, and the cost to get sales
Misestimations can lead to missed projections.
Why do existing businesses have an advantage over new businesses regarding sales drivers?
They have historical data on the right mix and productivity of their sales drivers
New businesses often lack this critical information.
What percentage of Minnesota’s billion-dollar entrepreneurs chose direct-to-customer sales as a sales driver?
Sixty-eight percent
An additional seven percent controlled proprietary, exclusive channels.
What is a disadvantage of selling through intermediaries?
They control the relationship with the final consumer
This can complicate brand loyalty and customer connections.
What types of markets can entrepreneurs sell directly to?
- Businesses
- Local consumer markets
- National niche markets
- National mass markets
- Governments
Each market has its unique challenges and opportunities.
What is a potential issue with selling to governments?
Governments often value price or connections over value
High-value products may not be recognized and sold at lower prices.
What is the benefit of selling directly to customers when starting a business?
Lower initial investment and avoiding costs associated with intermediaries
This can help reach profitability faster.
Which marketing strategy did Jill Blashack Strahan use for Tastefully Simple?
Selling gourmet foods via home parties
This approach required minimal marketing money and leveraged social connections.
In the example of direct vs. indirect selling, what is the price to the consumer in option A (Direct)?
$10
This is the full price received by the company in direct sales.
What is one major disadvantage of the indirect sales method?
The ultimate vendor has the direct relationship with the consumer
This can lead to a loss of control over customer loyalty and brand strength.
What is a key disadvantage of indirect sales?
The ultimate vendor has the direct relationship with the consumer, not your company.
What is one benefit of selling indirectly?
You may be in more outlets more quickly.
What should you evaluate when deciding between indirect sales and direct-to-consumer?
Whether you need a coordinated campaign or if a direct-to-consumer model is better.
Who is Rechelbacher and what strategy did he employ for Aveda?
He took the best salespeople to become exclusive distributors to control sales and distribution.
