Tag Archives: strategies

Day 3 – Tactics Are the Third Leg Along with Goals and Strategies

Goals – StrategiesTactics

If you have arrived at this post without having read the previous two on goal setting and setting a marketing strategy, you might want to go back and read those first.In those posts I made the case that spending time creating goals and strategies for achieving those goals will pay off for your business.  The amazing thing is that the total time needed to do this job well might be a day or two.
,To be sure, some owners or managers never take these steps even though they would tell you that they should.  I suspect the number one reason is that it seems very hard to do.  And it is.  You have to be honest with yourself and make hard choices.  And it is really risky.  You might make a mistake.  It often seems easier to wing it.

Once you have the goals and strategies in place, the tactics or action steps can be put in place.  Entrepreneurs love this step.  When executing tactics, the gut tells them which way to go.  Certainly some are blessed with a great gut.  I’ll put forward the argument that even the merchant with a golden gut will improve his results if he sets clear goal and strategies to go with the tactics.

Many marketers are unclear as to the difference between strategies and tactics.  How about a couple of examples.  The goal is a 20% increase in gross sales dollars.  The strategy is to increase the sales force by 10%, prices by 10% and dollars per year per customer by 15%.  The advertising budget is part of the strategy, and the budget is 3% of the current year’s sales.

Now it is time to add the tactics.  To increase the sales force by 10% we will hire three people and expect one to leave. We believe based on history that two new successful sales people will give us the 10% increase.  We will look for candidates through an online effort with a budget of $10,000 per salesman.  The ideal candidate will have experience in our industry and might even be employed by a competitor.

Almost every owner or manager gets the tactics confused with the goals. They will see the goal as adding a salesman or new products. They will create an ad campaign (which could be either a tactic or a strategy) without considering the goal of the campaign or how the tactic of an ad campaign will further a strategic plan.

You may want even more details in the tactical plan, but hopefully this gives you the basic idea.  Have you used this approach of Goal, Strategy, Tactics in your planning?  How did it work for you?

For further clarification, let’s take another fictional case study based on a real client. I have a bike shop near Indianapolis who is profitable at current levels, but not enough to pay off old loans and pay himself fairly. He needs to increase profits by at least 20% in order to pay himself an amount equal to what he could make working for someone else, and have an amount left over to pay off loans.  His goal is just that: increase sales by 20%.
Strategically, he has several options:
  • Increase sales while maintaining margins
  • Increase margins
  • Decrease overhead

He decides to keep sales even, but increase margins by 1% and decrease overhead by 3.3%, which will improve profits by the needed 20%.  (e.g. Current sales of $1m is creating a gross profit of $400k. His overhead is $300k, leaving $100k to pay himself. If he increases margins by 1%, that will create an additional $10,000 in profit. If he decreases overhead by 3.3%, that will create another profit increase of $10k, giving him his 20% increase and allowing him to pay down debt by $20,000.)

Now what are possible tactics:

  • Cut personnel hours to reduce payroll
  • Close one day per week to reduce all costs except rent
  • Review each line item on the overhead and try cutting a little here and there
  • Work very hard on the buy side to reduce cost of goods sold
  • Give incentives to sale force for increasing high margin sales and reducing discounting on bikes

How are you doing so far on the dare? Have you set goals? Have you established strategies designed to achieve the goals? If not, consider taking today off from the normal schedule. Go to a quiet place and seriously lay out a plan based on these first three days of the marketing makeover. Figure it might take 4 – 8 hours. You might even want to come back with your basic concepts and run them past your spouse and top management. Get their input and make them feel like part of the decision.

Take a minute to comment below. Was this process helpful?  Why aren’t you going to accept the dare?