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Ask why many job-shop owners went into business, and "marketing" will not likely come up. Experts at finding innovative technology solutions, they may not make time for marketing. The practice of finding new customers often moves, and sometimes forever remains, on the back burner.
That's according to Rod Jones, president of Ada, Mich.-based Decision Technology. "When times are good, like now, many shop owners don't make the time to do the research." He emphasizes that the present, during the business-cycle upswing, is when to start a marketing program, to broaden the customer base and prepare for potentially tough times ahead.
F&M: What makes a business downturn so tough for job shops?
Rod Jones: We've done a lot of research and interviews with shops, and we've often discovered they have a rather narrow customer base. For many, 50 percent of their work comes from one customer, who tends to control their business. A 30-percent reduction in business alone is enough to drive many shops under.
F&M: What steps can shops take to find new customers and diversify their business?
Jones: Successful marketing involves several steps: finding new customers through networking and research; finding ways to contact that customer, be it direct mail, a phone call or other method; and defining the message, what you want to get across to them—in other words, define the value you can offer.
F&M: What are the first steps?
Jones: Any robust marketing program does take some investment. Yet before spending money, there are simple tools that cost nothing but time. There are many marketing companies selling information, and many of it may not help you. These free and low-cost steps ensure that, when you do make that necessary marketing investment, you spend money where it will do the most good.
First, build profiles of your current customer base. It doesn't do much good to pursue an unsuccessful company for new business. And if your current customers keep you busy, they are most likely successful. In the profile, examine the reasons why. How many employees do they have? How many years have they been in business? How have they grown? How do they conduct business?
With a good customer profile as a foundation, you want to "clone" those customers; find those with similar operations and business philosophies. The first step involves the low-hanging fruit: potential customers in the existing market(s) your shop serves. This involves tapping your current network and perhaps researching those outside your contacts, yet still in the same business.
To step outside your network dovetails you into the second step—finding new customers in new markets. This is a little more difficult, and outside the "comfort zone" for many shop owners, but it can be done.
First, try ThomasNet (www.thomasnet.com, previously Thomas Register). You can search by SIC (standard industrial codes), by type of products, components, geographic areas, and other elements. The negative is that the list on the screen can't be exported. You can look at one at a time, but you can't get, say, 300 companies downloaded into an Excel sheet. Nevertheless, to get familiar with who does what, it's a great way to start. (Note on SICs: Unless a shop requests it, that SIC never changes. This can create some inaccuracies if a business shifts focus; still, SICs remain a powerful marketing tool.)
Second, get Internet savvy. Do a Google-type search on names of parts. Consider the machine brands and model numbers in your shop, type those into your search engine and you'll see other companies with those same machines—and who often show the parts they make. (Some even list their customers on their Web site: not something I would recommend.) With this, you can begin categorizing those parts that you know is being processed with the same type of equipment you have.
Third, obtain repair manuals on products of interest. The parts list and diagrams can give you a very rough estimate of the tolerances and a good guess of the material and basic sizes. They also reveal correct part names that can be used for Internet searches, discussed above. This gives you a rough idea whether these parts match your equipment capabilities.
Once you identify those parts in new markets, ensure those markets are healthy and have a good future. This can come from general knowledge (most know medical markets are on the up, for instance), and through research. Also, read market-specific trade journals for general trends, and talk to equipment suppliers serving those markets.
Note, you get what you pay for. These free and low-cost methods can create a somewhat "hit-and-miss" methodology. They're inefficient and, if used exhaustively, can make your marketing program inefficient as well. Nevertheless, they provide a good initial step to jumpstart your new-customer search.
Editor's Note: This is the first in a series of articles on finding new customers and diversifying businesses. For more information on Decision Technology, visit www.scienceofcustomers.com.