Within the first month of a start-up company’s operation, the prices for the initial product fell by 42% thereby severely limiting the growth potential. To combat the danger of a one-product company subject to commodity pricing issues, the company needed to look at other products to add. The goal was to identify the highest revenue-generating products with the greatest market growth potential.
After investigating the vertical market segments from raw material production, supply, pricing as well as looking at potential consumer sales, the company determined viable product niches.
For example, Polyethylene Terephthalate (PET) was used primarily in carpeting; however there were changing consumer demands such as the use of hard wood or laminate flooring and housing starts that affected the market. Coupled with the increase usage of PET in clothing, customer bottles for new food applications as well as product substitutions made this a wider market to tackle.
The next step was identifying potential suppliers and end markets. This phase took the company to China, Hong Kong and Mexico to develop these contacts. One of the toughest issues for the company was understanding the international trading requirements, negotiating International Letters of Credit and container shipping documentation to make this a financially successful venture.
Within 18months, the company grew to $1.5 mil in annual sales and 10 products in 2 niche markets and developed an international reputation for providing high quality products at a fair price.
A new web-based software service was developed, tested and ready for launch. With a price tag of $100,000, it had one major flaw: with no compensation for a sale; it was not on the radar of any sales associate. This web-based system, sitting on a company’s Intranet, allowed simultaneous global users (one company had 8000 users), was controlled by a central administrator and was designed for online sales.
Since the commission program was already established, it was imperative to create excitement for sales outside the confines of commissions. Using a 3 prong approach of 1) installing the software on each global sales associate’s laptop; 2) employing a PR strategy with early adopters; 3) Utilizing internal sales support campaign to assist in all sales calls drove sales closes.
Sales associates found that using their laptops to demonstrate the system as well as the company’s entire suite of solutions was quite useful. They were able to generate reports and show how easy and safe credit decisions about potential online customers could be made in less than 5 seconds. Live demos with Sales, Engineering and potential customers were used to answer any questions and/or objections from the customer’s IT department to ensure compatibility, security, and most importantly, no customization requirements across the global enterprise.
How did we surmount the commission issue? By applying commissions on usage pulled through the service. Plus we captured 50 large global customers in the first year. This service continues to generate revenue.