Tax Relief For Research and Development

R&D tax credits were first introduced in 2000 at a relatively low level but in recent years the rates have increased significantly to incentivise companies to claim. The Government objective is to use tax incentives to encourage technical firms to invest in developing their own innovative products, and make the UK more competitive in the global market.

HMRC figures published in August 2014 showed:

  • Since the R&D tax credit schemes were launched in 2000‐01 up until 2012‐13, over 100,000 claims had been made and more than £9.5 billion in tax relief claimed.
  • By the end of 2012‐13, more than 28,500 different companies had made claims under the SME scheme since it began in 2000‐01, and over 7,000 under the large company scheme, which launched in 2002‐03.
  • The total number of claims rose to 15,930 for accounting periods ending in 2012‐13 an increase of 26% compared to 2011‐12

What Are R&D Tax Credits

If a company is taking a risk by innovating, improving or developing a process, product or service, then it can qualify for R&D tax credits. They can apply even if company has not made a profit.

The tax credit allows companies to deduct up to 225% of qualifying R&D expenditure when calculating their profit for tax purposes. The tax deduction is usually claimed against corporation tax but in certain circumstances SME’s can surrender a tax loss to claim a cash payment. This can be a valuable source of revenue for early stage technical companies.

How they work

R&D Tax Credits work by reducing taxable profit (sometimes, all the way into a tax loss) and thereby reducing Corporation Tax. However, even if little (or no) Corporation Tax is owed the scheme can deliver cash in exchange for surrendering some of the tax loss.

As an example, if an SME incurs expenditure of £100,000 on qualifying R&D (see below), it can deduct £225,000 when calculating its taxable profit for corporation tax purposes. The £100,000 will be accounted for so the balance of £125,000 would be an additional deduction from the taxable profit giving a tax saving of £25,000 (at a Corporation Tax rate of 20%).

It is often possible to make retrospective claims but the tax credit is only useable after finishing at least one accounting year.

How to qualify

One of the greatest hurdles when considering whether to file R&D Tax Credits is figuring out if the business qualifies The answer is not straightforward and it is always best to ask a specialist (disclaimer – we are not that specialist)

HMRC do (in principle) offer advice but unless the case is straightforward the advice can be contradictory and the response can be simply ‘submit and we will evaluate’. The two key criteria in determining who is eligible for R&D tax credits are ‘innovation’ and ‘uncertainty’.

If the R&D is associated with something that has been done many times and is common knowledge it is highly unlikely to qualify. However, if it involves uncertainty as to whether the desired outcome or new product could be achieved and there are technical aspects to be explored and overcome then it is probably a qualifying project. In many cases this still applies if the project is ultimately unsuccessful.

The value of the project is also a key consideration. If it is less than GBP(£)5K then it is unlikely to qualify but once in excess of GBP(£) 25K there is more chance of success.

Although the latest HMRC figures (above) show an increased take up in R&D tax credits they are still under used as a source of valuable revenue to technology start-ups and to reduce the tax liability of larger organisations. They are worth evaluating with the help of qualified specialists.

How To Use Growth Hacking to Grow A Tech Start Up

The term growth hacker and the latest hack for x,y or z seems to be everywhere but exactly what is a growth hacker and how can their skills be used to grow a tech start up business?

What is Growth Hacking?

Sean Ellis, who was instrumental in the rapid growth of Dropbox, is credited with first using the term Growth Hacker back in 2010. Their role is to grow a user (or customer) base from a low (or nil) base into the thousands and beyond. Growth hackers are marketers but they are completely focussed on one metric and one metric alone and that is growth.

The term growth hacker is now, like most buzzwords, overused to the point it is starting to get annoying but it was originally a term associated with start-up growth, particularly for start-ups working on internet based products. Many of the techniques used by those involved in growth hacking are long established and used by traditional marketers on a regular basis, but with a twist

In his 2012 post  Aaron Ginn defined the three key characteristics of a growth hacker as creativity, data and curiosity. Growth Hackers tend to be unusual as two of their key characteristics are from two different ends of the spectrum. A creative person is not usually also associated with a talent for numbers, detailed analysis and experimentation.

Applying To The Tech Start Up

Although growth hacking is most often associated with businesses involved in internet based products, services and Apps their rationale and methods of working may be specialist electronic component from a high tech start upapplied to any high tech start up. However, a pre requisite is the marketing person involved must have a detailed knowledge of the internet, generating traffic (paid and organic), analysis tools, nurturing campaigns and (crucially) how people and information flow online.

As a first step they must be able to identify the best opportunities to achieve new customer growth. With this in place they must then be able to break down the steps required to capitalise on those opportunities into actionable steps, each with a defined start, end and closure point. Finally, they must be able to put the required analytics in place to measure success (or not).

The best growth marketing process for a new technology start up may not have been tried before so experimentation, with data to back up the results, is key. Market disruption is important for any technology start up and the same applies to the marketing process. Often, Tried and trusted will not work and a seat of the pants type approach is the best way forward. This can be both scary and high risk but the risks of failing using something more tried and tested are also high.

Experience based on experimentation, the data obtained and the workings of the internet is key. Porting a process that works well for one business to the next is unlikely to work but the data obtained in one assignment is certainly important to the next. Finding the right marketing person (or to go back to our original definition – Growth hacker) can be difficult but given the high risk nature of their work and the dramatically increased chances of start-up failure if they do not succeed it is of vital importance. The problem is that outside of the U.S.A such people are in very short supply.

The Value Of Customer Input To Your New Product Idea Process

Asking your most important customers what new products on solutions would be of benefit to them may seem to be a logical approach to your new product idea process but there is a problem

Steve Jobs said: A lot of times, people don’t know what they want until you show it to them. Henry Ford said: If I had asked people what they wanted, they would have said a faster horse

and that is you are unlikely to receive the answer you need or expect

Customers Don’t Know What They Want

In most medium sized B2B businesses there are several key decision makers. So who is best to talk to about potential new products? Probably not purchasing or quality so engineering or project management may appear to be a better bet. The problem is they are undoubtedly focussed on the latest project or task rather than looking ahead to what they may need in future.

Even if engineering and project people had time to look ahead the value of their input may be limited. In many medium sized organisation most employees operate within their own cells and very few have a complete picture of what is coming along in future or even where their current project fits within the overall whole.

Customer New Product Ideas Are Bad Ideas

When it is possible to engage in a potential new product discussions they often tend to centre on the obvious. What do the competition have that you do not? Or minor adjustments to existing products rather than true new product concepts.

This problem is exasperated if sales are entrusted with the new product discussion as their focus is also short term (rightly so) and competitor focussed. Returning with a message that everything will be fine if the business simply copies the competitor products is a common (and lazy) sales response.

Few businesses have limitless resources so it is unlikely that it will be possible to identify any common new product themes from the relatively small number of customers it will be possible to survey on new product ideas. Each response returned will often therefore need to be researched further as a stand-alone item.

Improving The New Product Concept Process

A better approach may be to first develop some potential new products concNew product conceptepts in before engaging with customers. These may often be initial ideas with little detail on how they may be implemented but simply designed to solicit a response and to start a dialogue.

Fuelling the process with some potential ideas often leads to increased customer engagement and a better response that is less focussed on what is available now. Many of the concepts introduced will be complete non-starters but may at least deliver feedback on why they will not work that may be filtered in to the next set of concepts.

Marketing should be tasked to customer discussion rather than sales. This has the advantage of allowing sales to concentrate on the short term and ensure that the conversation is turned away from existing competition. With marketing in charge of the process any customer input can be fed directly into the new product screening process. Sales may then brought back into the process at a later point when new product concepts have been screened and developed to a point they may be taken forward.

Conclusion

Although the suggested approach is far from perfect for most organisations it is a more realistic approach than the approach undertaken by Apple and Ford of developing new products that are truly market disruptive. Although the returns from this approach can be significant the risks involved and the resources required are beyond most medium sized businesses

Sources of B2B Growth Support 2014

Although their approach may be far from perfect Government efforts to stimulate growth in the SME marketplace should be applauded. There are several sources of B2B growth support available, in this post we discuss some of the most popular options and the limitations to be aware of before allocating time and effort to the process.

Growth Support Options

B2B Business growth support optionsMany schemes are available that provide an element of funding to businesses with growth aspirations. These include the Design Council, Growth Vouchers Scheme, Growth Accelerator Programme and many local schemes controlled by local councils.

All tend to be focussed on small the small to medium sized business community and those businesses with potential to grow, either in terms of turnover or employees. A problem remains with the definition of what is, and is not, a high growth business but in general lessons have been learned from experience. Schemes like the Growth Accelerator Programme are generally well thought out, deliver generally good support and are far less wasteful than past business support programmes.

The Growth Accelerator Programme

Focussed on the financial and strategic issues holding a business back the growth accelerator programme (as the name suggests) is focussed on small and medium sized businesses intent on growth. One of the major benefits of the programme, which is perhaps less known, is the training, workshop and networking services it provides.

Part funded support is provided to help businesses with access to finance, business development or growth through innovation. A growth manager is usually the first to visit to assess a business priorities, the support required and eligibility for the programme. If there is a way forward they then appoint a growth coach to take the project forward.

More information on the programme, including qualification criteria can be found here

Support Delivery Issues

Although the above organisations control the process, delivery of growth support is mainly delivered by independent Mentors and Coaches. These individuals or organisations are usually vetted and qualified by whichever organisation is responsible for the allocation of support.

If the focus is business development or innovation then a experienced coach or mentor best able to support one or more of the three main business growth strategies will be suggested to a business but it is important to be aware that this will not always be the case.

The controlling organisations (tasked with delivering best value from Government money) can only approve a finite amount of coaches and mentors so to deliver a coach or mentor with specific industry expertise in every situation can be difficult. As a result the advice delivered can be generic rather than specific to a given situation.

Also, in reality, the amount of coaches / mentors tasked with delivering support by the growth managers tend to be only a fraction of the pool available. As in any business activity personal relationships are important and managers tend to have their favourites.

Variations In The Quality Of Growth Support

Most coaches and mentors approved to deliver government funded support are able to deliver a high level of expertise. Although they may not be able to deliver industry (or task) specific advice they can, in most cases, deliver the required result.

However, it is always wise to be cautious and to check credentials. If the coach or mentor is a supposed expert in social media, check out their activity on their own social media channels. If an SEO specialist, how does their own website show up in search? If a new product specialist then what case studies can they show and what industries have they worked in. It is not required to take the coach or mentor offered and always possible to ask for an alternative

Conclusion

More SME business growth support options are available today than have been available for several years with the Growth Accelerator programme perhaps the most successful. There is some evidence that support may be too focussed on new rather than established businesses and the quality of support can be variable but any growth support to SME in B2B markets should be welcomed.

How To Simplify The Strategic Marketing Planning Process

Although the importance of a periodic strategic marketing planning process is well established relatively few businesses actually have a strategic plan in place and fewer still utilize and implement any existing plan. We discuss the two main reasons the strategic planning fails to deliver results and a potential method to address these issues.

To survive for any length of time a business must be expert at whatever it delivers but this leads to a focus on today’s market and the short term that makes it difficult to step away and take a longer term view. Key staff often grow up with a business which blinkers their view of the market. The impact on growth (or even survival) of a short term view may be recognised but many businesses avoid market evaluation and long term planning for two key (and interrelated) reasons:

  • The complexity of the process and the time and resources involved.
  • The perceived usefulness of the finished plan to the day to day running of the business

The complexity of the planning process often generates information overload, a lack of clarity and a final plan which is difficult, if not impossible, to implement. Hence, if a strategic plan is produced it often sits on a shelf gathering dust. Kaplan and Norton research shows that >90% of organisations fail to implement their strategies.

Strategic Marketing Analysis

To simplify the process and to provide clarity and focus it is worth answering some simple questions before diving headlong into the market analysis and planning process, they are

  • Evaluating strategic optionsWhat does the business offer?
  • Who needs what the business offers and why?
  • Which other businesses offer the same product/service that satisfies that need?
  • Given the above why should potential customers pick your business to service their needs?

Simple questions in principle but not so easy to answer in practice. In our experience it is often the last question that causes the most problems.

A brainstorming session can usually answer these questions in 40 minutes or so. Answering the last question often stimulates a re-evaluation of the answers to previous questions. A further 20 to 30 minutes can therefore be required to work back up through the relevant questions.

Identify Customer Needs

What basic customer need does whatever the business supplies satisfy? It is important to stop thinking in terms of products and services and to think instead about what customer problems are addressed. Fail to answer this question properly and any marketing analysis and strategy process will fail.

The natural next step is to define which potential customers (or groups of customers) may have this need and to profile and segment them appropriately. Unfortunately, in almost all cases, there will be other businesses attempting to satisfy this need and it is important to list them and their relative strengths and weaknesses.

When starting with needs and not product and services competitor analysis often throws up surprises. New potential competitors enter the mix and others that may have seemed a major threat may turn out to be less dangerous than previously imagined.

With competitor analysis complete it should be possible to answer the final key question and define what sets the business apart from the rest. It is the answer to this question that is the key and, once the answer is in place, an evaluation of which businesses may require what the business offers and competition is required.

Although the above short form method can be no substitution for a thorough strategic planning process it does give both some clues where to start and some focus to the activity that ensures the final plan has more relevance to the business and more chance of being implemented rather than just gathering dust.

The New Product Development Process – 5 Steps To Reduce The Risk Of Failure

The reality of the B2B new product development process is very different to what much of the standard marketing literature would like us to believe. It imagines a blank sheet of paper and sufficient company resources to develop new products without a driving customer.

Few, small and medium sized businesses are in such an enviable position and, those that are tend  to be concerned about the substantial financial risks associated with new product failure. However, the lead customer approach is not without its own set of problems.

As the lead customer often contributes financially to part of the development costs they can require specific modifications that make the product less applicable to the general market and impose restrictions on sale of the product to certain market segments. With the safety net of a known first customer marketing departments can be lulled into a false sense of security and fail to research and plan the new product launch and growth as they should.

Product Marketing Research And Planning Is Vital

In a recent post on product innovation we discussed the importance of a robust new product screening process. If a new product is customer driven this process may be less rigorous than it should be or overlooked entirely. This is one of the major reasons new product introductions fail or progress no further than the lead customer. The market should be segmented appropriately, likely targets for the new product identified and segment specific marketing plans assembled.

What worked in the past has a significantly lower chance of success today. A business with an established customer base could once rely heavily on a new product press release in a number of trade specific magazines, perhaps some limited product advertising and the sales force to beat on doors, set appointments with prospects and introduce the new product.

Switch From Outbound To Inbound Product Marketing

Today, many trade publications have either closed down or carry a fraction of the content they did in the past as the readership has collapsed and moved to the internet as a source of information. The decline in the impact of push marketing including telemarketing, advertising and, to a point, Email is well documented.

Inbound marketing by contrast is based on building marketing collateral and content and using this to build awareness, credibility and to support the sales process. This requires a significant amount of time and effort so content production must begin well in advance of the product launch.

Content should be produced (or existing information modified) to specifically match the requirements of the plan. Sales should be brought into the process at the earliest opportunities to ensure their lead prospecting and nurturing activities will be properly supported.

Delivery channels for content, be they online or offline, must be adequately researched and readied before the product launch. This is of vital importance and is a subject that is often overlooked, there is little point in talking if nobody is listening.

Integrate Sales And Marketing

As mentioned above marketing needs to work closely with sales. It is important to consider which existing customers are most likely to be the early adopters (obviously one will already be in place) and how these opportunities can be converted. Positive customer experiences with the product should be used to build credibility with other potential customers. The impact of social proof (Dr Robert Cialdini) can be a powerful sales tool.

With early adopters in place where will the growth (and volume) come from? Targets should be identified and prioritised and marketing activity focussed to help. A plan should also be put in place to support any sales intermediaries. Our own experience shows it is unwise to leak or drip feed new product information to far in advance as it often causes confusion and a lack of control.

Plan The New Product Launch

There is only really one opportunity to launch the new product so it is important to get it right. Everyone must have agreed and signed up to the plan, appropriate content should be in place and online and offline promotional channels should be set up and ready to go. In B2B markets there are often exhibition and seminar opportunities and these should be ready to be exploited for maximum impact.

Plan Product Sales Growth In Other Market Segments

Given the reality of limited sales and marketing resources in many small and medium sized manufacturing businesses it will not be practical to attack all identified market segments at one time. New (and potentially lucrative) market segments could appear in time leading to a re-assessment of the priorities but it is important to have an plan in place  as a reference point to refer back to if priorities do change.

Conclusion

The New Product Development Process can never be risk free and it is perfectly valid to try and mitigate some of that risk by finding a lead customer before making a commitment. However, it is important to be aware of the risks of this approach and to take appropriate steps to deal with those risks.

A plan is of vital importance to address each market segment, to seek out the early adopters and to plan growth. Although there can often be some internal company conflicts and politics it is vital that sales and marketing co-operate and both genuinely sign off on the plan and commit to the way forward.

B2B Market Penetration Strategies

In B2B markets growth tends to be based on either new product introduction or attacking new markets. In this post we cover how to execute a new market penetration strategy with the aid of a case study.

Successful new market penetration depends primarily on the nature of the market and the existing competition. It is notoriously difficult to obtain any foothold in static markets but a growing market does offer some opportunities. Entrenched competition will often be at the top of the experience curve having learned from their mistakes over many years, whereas any new entrant must accept that it will take time to generate any meaningful results and gain traction.

Potential Marketing Strategies to Employ

Two potential, relatively low risk strategies, to employ are to only attack a small market niche and once established grow out from there and/or to collaborate (to the benefit of both parties) in some way with an intermediary with an existing foothold in the target market

Perhaps the greatest opportunity exists if the target market has an entrenched competitor that is either complacent or in a weak (financial, mismanagement, loss of key people) position. If a solid strategy can be put in place to deliver the highest levels of service at competitive pricing then a market presence may be established in a relatively short timescale by stealing market share
New market analysis.
If attacking a new market is to succeed detailed market research is vital. An experienced and flexible sales and marketing team is also required and in many organisations this can be a real issue. The best sales teams tend to be focussed on the immediate future and marketing teams are often competent in their own market but stretched when it comes to addressing something new.

New Market Penetration – A Case Study

What follows is based on a two real businesses operating in a high technology B2B market. The market exhibited slow growth but did offer high margins. To preserve confidentiality the company names and details of the precise market have been excluded.

A U.K based business had built a strong presence in the marketplace growing from a small start up to a business with turnover exceeding £20m. The business owner was a technologist focussed on longer term market and product development who, after the first few years of growth, had employed a managing director to run the business on a day to day basis.

The business was the dominant player in its market niche but was starting to lose focus for a wide variety of reasons. Top level management was not exceptional and this was starting to be reflected in a slow decline in levels of customer service. The new product development process tended to be based on small revisions to existing concepts rather than any real product innovation.

The new entrant was USA based but already had some exposure to the market as they were a minor supplier to the target customer base with a different product range. They chose a niche distributor to take on the UK based business, offering them excellent support and training and higher margins on each sale than they could expect from their other lines. The chosen distributor had excellent relationships with the target customer base.

The new entrant copied and manufactured a limited range of the most successful product lines of the UK business without customer orders at a considerable cost and focussed their efforts on specific projects. With a higher level of quality, excellent delivery, good customer service and investment in low pricing (in the short term) they were able to take initial orders on a limited range of contracts.

The U.K business due to a mixture of complacency and poor management failed to identify the long term threat of the new entrant dismissing the initial level of their orders as insignificant. They failed to recognise the importance of the foothold secured by the new entrant and their ability to capitalise and build upon initial relationships.

Five years later with its business destroyed by a combination of mismanagement (and resulting financial pressures), bad luck and a loss of a major part of its business to the new entrant what remained of the U.K. business was sold to a competitor for a minimal sum. The new entrant built on their initial success by leveraging the relationships established to introduce a number of new product ranges.

Although blessed with excellent support from senior management and the backup of operations the drive behind the new entrant entry into the marketplace and their market penetration strategy was effectively one individual who spotted the opportunity and drove it through.

The new entrant executed a market penetration strategy perfectly. They identified a weak competitor and an excellent intermediary. They started with a niche, gained a foothold and built from there and they had a marketing and sales team (actually just one person initially) able to spot an opportunity and to build and execute a plan.

The amount of research carried out by the new entrant is unknown but it is not thought to have been extensive. This was a major risk given the amount of financial and other resources allocated to the project but in this case the strategy did pay off.

The Product Innovation Process

It’s a hard truth but without a product innovation process most manufacturing companies are destined to fail. In this post we discuss some tools and techniques to develop an innovative culture and the process of developing and screening new product ideas.

As technology moves forward, as new and innovative solutions enter the market, as economic conditions change businesses that fail to innovate to remain relevant in a changing market lose market share. Some markets may change very slowly but ultimately the end result remains the same

Innovation can take many forms. Myers and Marquis (1969) defined it as ‘not a singleOutput from the product innovation process action but a total process of interrelated sub processes. It is not just the conception of a new idea, nor the invention of a new device, nor the development of a new market. The process is all these things acting in an integrated fashion.’ In this post we deal specifically with product innovation

Any innovation process needs support from the top of the organisation, it needs resources and it must fit within the overall strategic framework of the business. A mistake made by many organisations is a failure to allow the process time to run its course without interference or mismanagement.

Generating New Product Ideas

Every product innovation process needs to start with a basic framework linked to the business strategy. A combination of Ansoff matrix, the value chain and competitive analysis tools can deliver an understanding of where the business is now and identify opportunities for growth that may be developed further utilising the techniques outlined below:

  • Brainstorming
  • Customer Input
  • Suggestion Box

Given a basic framework the product innovation process often starts with a brainstorming type activity. It is important that this is inclusive and not judgemental in any way if it is to be of value. Ideas that come out of this process may be rough and poorly defined but are the starting point for further work.

Customer ideas are also useful although our own experience shows customers are surprisingly poor at defining the products / services that may satisfy their future needs. Often the discussion turns to products offered by the competition today rather than future needs. Although the sales department may be the closest to the customer and have the best relationship they are not always the best at extracting the required information. Sales tend to be focussed on the next 6 – 12 months and achieving the sales forecast (rightly so) rather than what may help the business grow in future.

As brainstorming tends to be an invitational process and include mainly senior staff suggestion boxes (with incentives) can be useful as many good ideas can come from manufacturing operatives and junior staff who may be unwilling to raise their ideas in an open forum.

Idea Screening And Research

With a number of roughly defined product ideas in place it is important to develop a short but robust top level screening process to weed out those ideas that do not fit with business strategy. The process should not screen out ideas simply because they appear too difficult or do not fit with current manufacturing capability only those that clearly do not fit with the business long term objectives

Design of the top level (and subsequent) screening processes is essential as many good and valid ideas can be discounted simply because of a screening process that has not been thought through in appropriate detail and designed appropriately.

With several ideas in place a top level research process may then be undertaken to assess the market potential for the product and competition as an input to the second level screening process. A rough assessment should be made at this point of the investment required to take the product forward.

The process then repeats, screening out products that do not match the required criteria followed by more detailed market research before a final fine screening process which should result in only the best ideas moving forward to initial manufacturing trials, mock ups, prototypes and market sampling.

The importance of a product innovation may be clear but defining a building a process that delivers sound new product ideas that are worth further investment can be difficult. The key issues are adequate resourcing of the process, robust screening procedures and adequate market research with inclusion of all sources that may make a valuable input.

Financial Support For Business Growth – The options

When the recession hit many Government backed financial support for business growth initiatives simply disappeared. Although Government support for the SME market remains far from perfect at least some financial support initiatives to support businesses intent on growth have re-appeared.

This post covers some of the support packages currently available. The list is not exhaustive and includes only those offering modest sums to smaller SME and start-ups in the North East of England. The following excludes finance and grants for working capital and asset finance.

Growth Accelerator

The Growth Accelerator program is available to UK registered businesses employing less than 250 people and with a turnover less than £40m that are intent on growth. Many businesses entering the program are looking to exploit new markets, new opportunities and / or new products or innovations.

Funding is targeted at overcoming obstacles to growth (marketing and / or financial) and on developing the leadership and management skills of senior employees. Funding must be matched to a level depending on the company size. The nominal value of the support available is £3,500 to which a micro business (1-4 employee) would contribute £600 + VAT (@£700)

More details are available at www.growthaccelerator.com, the twitter feed @growthaccel is also worth a follow for latest information. In the North East region both WinningPitch and RTCNorth are involved in the Growth Accelerator project.

North East Business Support Fund

The business support fund is available to North East based businesses in B2B markets that have less than 250 employees. The fund (to a maximum of £1,400) does not cover capital purchase or printing or advertising costs but does cover a wide range of (new) projects including financial planning, process development, marketing, HR strategy and product development. Up to 40% of the full project budget may be funded (capped at £1,400)

The project is managed by NBSL. More details are available at www.nbsl.org.uk

With the economic outlook improving the above funding covers some of the costs and eliminates some of the risks associated with new business development but as both funds are time limited (Growth Accelerator closes mid 2015) then it is important to start the application procedure as soon as practical.

B2B Marketing In A Niche Market – Part 2

In a previous post on B2B marketing in a niche market I covered the major factors that limit sales. In this post I will suggest some ways to address the first of those issues, the relatively small number of potential cusTarget your marketing on your nichetomers and prospects.

The definition of a niche is a clearly defined segment of the market. It is about satisfying a specific customer need that is, in general, not covered by any major competitors. A niche must be quantifiable and measurable, accessible and, probably most important, both of sufficient size to be viable and growing at a fast enough rate to sustain sales growth.

In some cases there may be less than 200 customers in a niche which means many standard marketing techniques simply will not work. Delivering a general message to many in the hope the few percent that respond will be sufficient to sustain business is not a viable way forward. Instead it is important to precisely define the niche, the specific offer the business provides and why (exactly) it satisfies customer needs.

Identify Prospects In The Niche Market

Armed with this information on the benefits the business can offer and a precise profile of existing customers it should be possible to identify all potential customers in the niche in whatever the defined geographical area may be. The challenge then is to deliver the message on what benefits the business may offer to as many of these potential customers as practical.

A two pronged attack based part on reaching out to potential customers and part on pulling them in to the business is often the best way forward.

Pull Prospects Into The Business

It is highly likely prospects in the niche will be searching for information on the product or service offered by the business. As a niche product is not mainstream it is probable those searches will be specific and either carried out online (in most cases) or by reviewing specialist publications. As the product or service will be different in some way from that generally available then the volume of searches will tend to be higher than for mainstream product.

A web presence focussed on delivering information to any prospect typing in a specific search term is essential. The priority should be to deliver, to anyone landing on the website, the information they require to make an informed purchasing decision. If, as in most cases, the process is not commodity based (find, quick check of specification, buy) the first priority is to supply the required information, build credibility and start an ongoing communication process (Email opt in)

Every effort should be made to secure press coverage in the form of press releases and feature stories in relevant publications to push the message to the proportion of the market either not online or who still trust the printed word more than what they find online. In one respect it can be difficult to obtain coverage in a market dominated by major brands but on the other a story about something outside the mainstream is often of interest to journalists.

It is not practical to reach all potential prospects by promotional activity alone which means a process is required to actively reach out to prospects on the list. Outbound activities such as telemarketing, direct mail and Email marketing can all be effective if the message is not sales based but is based entirely on seeking permission to continue to communicate (perhaps via newsletter). A professional telemarketing campaign can be particularly useful as it is a measurable activity

The most effective way to increase niche market sales is to specifically identify all potential customers in the niche in a given geographic area then to combine the best of inbound and outbound marketing techniques to reach out to those customers and communicate with them on an ongoing basis. In a growing niche it is also important to track potential new prospects entering the market.