Oak Tree Communications is a small but capable firm that specializes in network based communications technology. The company has successfully conducted operations for six years and obtained profitable levels in the first four. The Oak Tree service offering is broad in scope and ranges from less profitable out of the box equipment solutions to highly profitable custom designed network integration projects. The Oak Tree staff possesses the technical expertise necessary to accomplish almost any communications integration challenge.

Over the last two years, Oak Tree has encountered stiff competition from a large communications conglomerate and has lost significant market share. Due to outstanding debt greater than $2 Million, decreasing gross profit levels, and a very limited marketing budget, the Oak Tree management team does not believe that the firm can continue operations under current conditions for more that 6 months. What can the Oak Tree management team do to return the firm back to profitable levels?

Using the information above, a sales driven marketing plan was developed. Oak Tree Communications immediately stopped marketing the unprofitable out of the box solutions and began to focus on profitable integration projects. A complementary partnership was formed with the communications conglomerate in which all of the out of the box opportunities were turned over to the conglomerate and the integration projects were completed by Oak Tree. As a result, Oak Tree increased gross profits, invested in a marketing strategy to further increase profitable business, and eliminate the outstanding debt.

AJR Imaging, Inc.

AJR Imaging has serviced the copying and imaging needs of its clients for 27 years. At inception, the company was one of three copier resellers servicing a geographic area of 75 square miles that was home to approximately 1,500 small to medium size businesses. 27 years later, the prospect client base has grown to over 5,000 businesses. The competition has also grown considerably and AJR now has 12 legitimate competitors. Seven of the twelve are believed to have greater marketing / advertising budgets and frequently utilize mass media advertising. With advances in technology and the need to self fund training for service technicians, AJR’s cost of goods sold has increased 5% each year over the last four years.

In the last year and a half, AJR noticed a 15% decline in sales revenue and an even greater decline in gross profit. In attempt to regain this lost market share, AJR first spent $20,000 to launch a mass media advertising campaign utilizing radio, television, and newspaper. Next, AJR spent $5,000 on a direct mail campaign to all of the 5,000 local businesses. A marketing card was mailed and then AJR sat back to wait for the phone to ring. The response rate to both efforts was minimal at best and not closely monitored. The close ratio on the prospect responses to completed sale was believed to be less than 20%. What can AJR Imaging do to regain the lost market share, recoup the advertising costs, and return the company back to profitability?

The Solution:

Several issues have prevented AJR Imaging from realizing its goals. First, AJR Imaging did not create or utilize a quality sales and marketing strategy. Instead, AJR relied solely on advertising. $23,000 was spent on advertising with $20,000 of this committed to broadcast and print media. This means that 87% of the advertising budget was spent on an advertising media that reaches far beyond the target prospect. The remaining 13% utilized a more targeted approach but did not involve a proactive sales effort or process. In addition, program results were not accurately monitored and could not be accounted or planned for.

To solve this problem, a step by step sales development process was created and implemented. Each of the 5,000 target prospects were contacted to identify any potential opportunities that still remained. Each member of the sales staff was evaluated to determine individual skill set levels and trained accordingly. Sales training was customized to the organizations specific needs and focused on building consultative selling skills and not product knowledge. A quality CRM system was also integrated to monitor client / prospect data and direct proactive and reactive action accordingly.

The other identified issue was the annual increases in Cost of Goods Sold. While this is an ongoing operational issue with many factors, it was recommended that AJR contact it’s vendors to solicit financial assistance to absorb some or all of the technical product training costs. One of the vendors agreed to do so in exchange for a product exclusivity commitment. In addition, the vendor agreed to provide advertising coop dollars based on sales performance.

As a direct result of the changes, AJR Imaging identified 15 short and mid term imaging opportunities and was able to obtain contracts for 11 of the 15 opportunities within 4 months. AJR continued to follow the new sales driven marketing program and achieved profitable levels within 6 months.