Leverage Your Customer IQ for Successful Expansion

July 10, 2006

In a recent Wall Street Journal article I read about a really cool ergonomically-designed pen called the PenAgain. The article profiled two thirty-something entrepreneurs who have built a successful niche brand and are taking the leap into Wal-Mart distribution. With just a 2% chance of being selected, PenAgain became one of 200 new Wal-Mart vendors last year. Their product hit the mass retailer's shelves in June: 48,000 pens in 500 test stores.All good, right? Not exactly. The challenge for PenAgain--and for any company making a leap in distribution--is driving sales at the retail level. Wal-Mart provides the shelf-space, inventory management, and sales tracking by location, not the marketing. If you're lucky enough to expand your distribution, you have to be smart enough to drive plenty of buying customers the retailer's way to make your product a hit - and get them to order from you again. In other words, you need to leverage your Customer IQ. You need to maximize the use of you current customer data to execute the most effective marketing strategy possible. In the case of PenAgain, according to the Journal, the entrepreneurs have 30 days to achieve an 85% sell-through to be considered for wider distribution throughout the chain.Here are some guidelines and tips that any company can use to leverage their customer IQ and manage expansion risks.Rally sales and word-of-mouth from your current customer base. Repeat buyers have proven their loyalty. Engage them in your business growth, and then go one step further: ask them to spread the word to their constituencies. If you've done your homework all along, you'll be able to reach out to these networks on your own. PenAgain has plans to "market virally, reaching out to their national fraternity headquarters and consumer groups that have already shown interest in the PenAgain."Identify segments within your customer base for targeted marketing. PenAgain has detailed information about their customers including a promising segment of "doctors, patients, and medical organizations, for whom the PenAgain design has a lot of appeal." This is a lesson for any business: don't skip over this type of key information. Identify promising prospects like your current customers and get highly targeted messages out to them. PenAgain's next step should be to work with a list vendor like Donnelley or Experian to identify doctors and medical organizations in the test markets, and send out cost-effective postcards or flyers with a relevant message ("Doctors--PenAgain can help your patients write easily - again!"); they could test online click ads for target organizations, online newsletters, interest-group blogs which would build product awareness exactly as the product gains wide national distribution. And that's just one segment - with some additional, simple analysis of their 10,000 regular customers, PenAgain can discern other key customer segments that would lead to other targeted groups, list purchases, and targeted messages.The point is that the entrepreneurs need to do the best job they can at identifying promising prospects to market to, so they can drive sales of their PenAgain at Wal-Mart - and the best chance they have of doing that is by understanding their own customers and modeling their target prospects based on that understanding. Customer Intelligence is the key for any business managing a growth challenge like this: understand your current customers first, and you'll have the information you need to expand quickly by targeting the right prospects with the right message.