Unraveling the Strategic Planning Process for Small Businesses – Part II

Here’s the final part of a two-part series designed to help small businesses understand the strategic planning process.  This first part focused on the BIG picture or visioning process as it’s often called.  This second part focuses on the steps taken annually to develop and update an organization’s marketing plan. 

Both articles are written in everyday language and hopefully provide practical ideas for your small business.  My mission is to explain the variety of terms employed in strategic planning that are also used in budgeting and other planning processes.  I’m relying on common definitions, explanations and examples of the most frequently used terms.  As previously mentioned, if you read a variety of books on strategic planning, you’ll find authors using and offering varying descriptions of these terms.

As we switch gears to the annual planning process, we’re talking about goals, objectives, strategies and tactics.  Here’s a quick overview of these four terms based on definitions found in Barbara Findlay Schenck’s highly recommended book Small Business Marketing for Dummies.

A goal is a sales or professional target set for a specific time frame and employs the use of numbers or percentages.  A goal answers the WHAT we want to achieve question and is measurable. 

An objective is a measureable result to achieve a goal; one goal can require two or more objectives.  Objectives address HOW to meet a goal.  Action words such as introduce, gain or improve are put to use.  An objective statement often includes the use of a verb, a noun and then a precise description. 

A strategy is a plan for achieving each measureable objective; it should be flexible to respond to external forces.  A marketing strategy generally addresses one of the four P’s of the marketing mix: product, place, price and promotion.

A tactic is the specific ACTION you’ll take to enact your strategy.

At the first level of annual planning, we start by setting our goal or goals for the year.  Webster’s offers this definition: a goal is the end toward which effort is directed, or the AIM.

Let’s think of a small business’ goal or goals as the one or two financial targets you really want to achieve, whether net profit or some type of unit goal.  And yes, you may establish more than one goal for a year!  Also, one should have a tracking system in place to measure these goals.

In The Successful Marketing Plan by Hiebing and Cooper, the authors discuss how goals vary by industry. 
• If a manufacturing entity, you’ll probably focus on dollar and/or unit goals.
• In retail, focus on dollars and transaction goals, or unit goals.
• If a service provider, the focus is usually dollars and persons served.
• Non-profits are likely to set a goal for funds raised to support their programs and the number of volunteers involved or volunteer hours contributed.

They also point out that dollar sales goals should be set to provide a profit to the business.  If you set a gross sales goal, you may meet it but you may not have enough money to pay for expenses and earn a profit.  If you solely focus on units, transactions or persons served, you again may meet the goal, but may not earn a profit. This doesn’t mean that you won’t track or set goals for gross sales, but that net sales or revenue is a more meaningful goal.

Here are examples of goals.
• Increase net revenue by six percent
• Increase occupancy by four percent
• Achieve an average $2000 net profit per month
• Increase membership by five percent

After establishing your goals, you’ll now want to establish objectives to meet these goals.  (Please note that numerous business planning authors discuss the need for setting objectives but may not have both goal and objective setting steps.  Additionally, if you refer to dictionaries and thesauruses, the terms goals and objectives are interchangeable.)
I favor the establishment of both goals and objectives (similar to Ms. Schenck) so one has an opportunity to break down each goal based on measurable categories within our business, such as new customers and existing customers, residential and commercial customers, dining-in versus take-out.  At this stage, we can focus on target markets; a target market is a group of people or businesses with a set of common characteristics.

And just to reiterate, both goals and objectives should be specific, quantifiable, and measurable, such as related to a certain time frame (i.e., quarterly, annually, etc.).  If you’re just starting your business, you may want to set gradually increasing goals and objectives.

Here are examples of objectives.
• Increase the number of new customers by four percent or acquire 200 new customers
• Increase the average sales per customer by 1.5 percent
• For a spa, retain 95 percent of your existing customers by ensuring they visit your store and make a purchase (services or products) at least once every three months
• Purchase a new truck for a service route with an outlay not to exceed $20,000
• For an insurance agent, increase from six to ten the number of monthly presentations to new prospects.  If you offer both car and homeowners insurance, the agency could have different objectives for these two types of insurance.  They could also establish objectives for year 1, year 2 and year 3.

At the third or strategy stage, we’re going to focus on different methods or ways to meet your objectives as we concentrate on affecting the behavior of your target market(s).  Here’s the chance to use more descriptive terms, and as Ms. Schenck mentions look to the four components of the traditional marketing mix. 

Here are examples of strategies.
• Find two new products for your home improvement line (product)
• Eliminate the three poorest performing products (product)
• Segment or categorize customers to identify their purchasing habits, if you don’t already do so (product)
• Undertake a study of customer satisfaction (product)
• Find one new distributor for your line of engraved baby linens (place)
• Extend delivery service hours (place)
• Develop a frequent buyer program (price)
• If a floral shop, increases prices by five percent over Valentine’s holiday and Mother’s Day (price)
• Offer quarterly seminar on a specific topic (promotion) 
• Market to one new zip code (promotion).
At the final or tactics stage, we’re getting down to specific actions for putting strategies into play.

Here are examples of tactics.
• Join the Chamber of Commerce by a certain date.
• Contact two customers each week; maintain contact log including whom called, issues discussed, action taken or needed.
• Take one customer out for lunch once each month; maintain activity log.
• Develop a tracking system of residential versus commercial accounts and review every two weeks.
• Locate a consultant to help with a customer satisfaction study
• Study competition to determine if and what types of seminars they offer
• Donate two products to the local PTO fund raiser.

Here’s a brief example for a gift / card shop in which I only identify one goal and one objective with related strategies and tactics.  Since tactics can involve very specific details, a marketing plan may just list high-level details or dates.

Goal: Increase net revenue by five percent

Objective: Increase the number of existing customer visits from once/month to twice/month at a minimum.  (This assumes you know the average number of times customers visit and you’re able to track visits by sales receipts or credit card/debit transactions.)

1) Conduct a six-week long sweepstakes for prizes in which customers complete an entry form when visiting your store; purchase not required.  (May be able to collect missing or important customer data on the entry form!)
2) Implement a frequency shopping card program which offers increasing rewards the more often they shop.  (May need to have a minimum purchase requirement.)
3) Offer mystery coupons over a two-month period (that differs from the timing of the sweepstakes offer) in a sealed envelope that are awarded at one-visit and may only be used at the next visit when un-opened envelope returned to the store.

1) Develop and print sweepstakes rules.
2) Design promotional program for sweepstakes promotion.
3) Design and print entry forms.
4) Train employees on sweepstakes rules.
5) Obtain on-site collection box for entry forms.
6) Evaluate sweepstakes promotion.
7) Develop and post card program rules.
8) Design promotional program for reward program.
9) Train employees on reward program rules.
10) Develop and print reward cards.
11) Conduct quarterly evaluation of reward program.
12) Develop and print mystery coupon program rules.
13) Design promotional program for mystery coupon promotion.
14) Train employees on mystery coupon rules.
15) Purchase envelopes for mystery coupon promotion.
16) Develop and print mystery coupons.
17) Evaluate mystery coupon promotion.

I want to close by encouraging the use of a marketing calendar which organizes and reminds what you and/or your staff should be doing on a daily, weekly and monthly basis.  If you attend the Chamber monthly luncheon on the third Thursday of each month, place that in your calendar for each month.  If you desire to contact two existing customers each week, post it on every Tuesday or whatever day works best.  If you want to visit a competitor’s location once a month, pick a day such as the 10th or 15th, and schedule it for the next twelve months.  The use of a calendar is a great way to develop positive habits.

In a perfect world we would be able to establish a year long calendar; but plan to enter as much as possible even if you start by just entering dates for starting the planning and execution of all details for each strategy, and then routinely updating your calendar!

If you would like to meet to discuss how strategic planning can be put to use for your business, please contact us at kgbmarketing@hotmail.com.