Creating an Entrepreneurship-led Program

Commoditization means the product cannot be differentiated and so lowest price wins. To get the lowest price requires reducing expenses including wages. This downward cycle of tit-for-tat price reductions creates  ommodity traps which circulate around in the economy, sucking employees and communities into poverty and decline. The antidote is innovation which creates new products, new jobs, new wealth. Innovation, in essence, is a short-term monopoly which allows higher profit margins – until competitors commoditize the product/service.

A community’s local economy can best be understood with a bathtub analogy. Water in a bathtub is analogous to money in the local economy. It circulates among local businesses. If someone buys something from out of town, then the money leaves via a drain. If a local company sells outside of the community, then new money enters the tub via a faucet. If the faucet and the drain run at the same rate, then the community is stable. If the drain runs faster than the faucet, the community declines. If the faucet runs faster than the drain, then thecommunity grows and there is more money to circulate among the local businesses.

Faucet companies are typically local, Stage 2 businesses which sell innovation outside the community. Stage 2 companies have 10-100 employees and $1 – 50 million in sales. They have already mastered basic business skills. Their issue is not survival but rather building an organization for growth. They need strategic information about markets, competitors, business models and core strategy.

Economic Gardening uses three marketing channels: outbound (meaning a list with individual contacts); inbound meaning Google searches on the website and watering holes meaning physical; and virtual places where target customers gather. Outbound marketing has five steps: build a profile, run a universe list, refine the universe list with keywords, look for signals of change indicating the prospect is in the market and find contact information. The critical step is signals of change.

Economic Gardening’s experience with various types of marketing campaigns
kept turning up a number: 2%. No matter whether it was a field sales force, telemarketing, direct mail, or Google ads, the general effectiveness rate ran around 2%. This raises the question: “Can we identify and target the 2% without having to call on the other 98%?” The answer is yes, by spotting signals of change.

The purchase process typically goes through four steps. In step 1 motivation is established to purchase something. Step 2 is the investigation stage to determine what the choices are. Step 3 is an evaluation stage to determine which one is best. Step 4 is selection, meaning picking the best option.

This entire purchase process can be considered a sales window in which the probability of making a sale rises substantially inside the sales window. Outside the sales window, the probability of a purchase is low. There is a time factor associated with sales windows. They open for a period of time and then they close. Timing is of the essence.

Old economy marketing focuses on Step 1 (motivate) and Step 4 (close the deal). Marketing in Economic Gardening focuses on Step 2, the investigation stage. Motivation has already been established by some change internal or external to the company, and they are now  investigating their options. Economic Gardening marketing intercepts that investigation stage.

Economic Gardening identifies the sales windows by looking for signals of change. These changes may be internal or external, but they indicate the old bonds between a customer and vendor are about to be broken. These changes can be mergers and acquisitions, new CEO, new products introduced to the market, changes in physical locations, lawsuits and regulatory problems.

Economic Gardening is built around five frameworks that address typical root problems in a growing business. These consist of core strategy, market dynamics, innovation, temperament, and qualified sales leads. These business model issues must be solved before a marketing plan can be developed.