Microsoft is not on the leading edge of technology, yet it dominates the software industry. It’s possible to make a carbonated soft drink better than Coca-Cola’s, yet what’s the likelihood such a venture will succeed on a large scale? Is Ben and Jerry’s ice cream magically better than all its other premium quality competitors? The key to success in business is not having a better mouse trap. Microsoft, Coca-Cola and Ben and Jerry’s don’t. The key is to become a marketing powerhouse.

If you don’t get your marketing and sales act together, you have as much chance of success as a door-to-door encyclopedia salesman in this age of low-cost encyclopedia CD-ROMs; you will be out of touch, out of sight and out of mind with your target market. Make marketing and sales your holy grail, and you can take a competent if average product or service and turn its dross into gold. And the first place to start is by understanding your market and your product.

Gene Bledsoe, managing partner of The Casal Group Corporation, a marketing services firm in Dallas, says two basic marketing steps need to be taken initially:

1. Define your target market. "The target market is really the bull’s-eye of the larger segment that is likely to buy from you. That’s where you should focus your activities," he advises.

2. Define the features and benefits of your products or services.

For most entrepreneurs, defining features is easy. Your gizmo might be faster than the competition’s. Perhaps you provide a broader range of services. Benefits, though, are more difficult to pinpoint, and here is where entrepreneurs often come up empty handed. They have never really considered how their product or service benefits clients. "Every feature has to have an associated, articulated reason why the customer would want it," emphasizes Bledsoe.

The quarter-inch drill bit is a classic example. "No one in the world wants a quarter-inch drill bit," he says, pausing for emphasis. "But a lot of people want a quarter-inch hole. The quarter-inch drill bit is just a way to get there."

Heather Wood, owner of Hardwood Bookkeeping Service, which provides bookkeeping services for small businesses in Salt Lake City, Utah, doesn’t just tell customers what she will do for them—such as recording transactions and balancing their books—but also describes how they will benefit. By having better record keeping, for example, clients can speed up collection efforts and eliminate late-payment penalties on invoices that were overlooked and subsequently not paid on time. Posting all transactions and balancing the books are features that Wood offers; faster collections and fewer late-payment penalties are the resultant benefits.

It’s surprising how many entrepreneurs never really ask themselves how their product or service differs from others. Yet answering this question is essential in formulating marketing and sales strategies.

Michael Baber is author of How Champions Sell, and a marketing sales consultant at the Business Development Institution in Lilburn, Georgia. He once operated a janitor’s supply company targeting the hotel market. Baber had lots of competition, but distinguished his firm by developing a bowl cleaner with a higher acid content that was priced less. More acid (hence a faster cleaning process) and lower price—those were his competitive advantages.

Linda J. Ferlaak runs Ferlaak Office Computing in Washington, D.C., which provides a variety of office services including scanning, transcription, editing, database management and computer programming. She distinguishes herself by offering high quality service, free pickup and delivery (convenience) and a willingness to work around the clock to get a job done (fast turnaround). Ferlaak emphasizes these benefits in her marketing and sales efforts.

According to Al Pond, president of the Atlanta-based architecture, engineering and consulting firm of Armour Cape & Pond Inc., "you have to position yourself as giving more value than your competitors." In his industry, "value" refers to: faster, better and a fair cost.

Steven Greene, with his partner Karen Sperling, owns the New York City-based public relations firm Sperling Greene Associates Inc. Greene says he distinguishes his agency from all the others in Manhattan by telling potential customers that his agency combines the services of a public relations firm with advertising experience that he and his partner have accrued. As public relations agencies often do not like to work with the advertising world, and don’t know how, targeting this niche separates Greene from the competition.

The owner of a Greene Sperling client, a Manhattan bicycle courier service, insisted there was nothing unique about his firm. After probing, however, Greene learned that it once reorganized a customer’s mail room at a moment’s notice when a water main broke and disrupted the mail function. The tag line Greene created—"The fast thinking messenger service"—has been widely used in the company’s marketing and sales efforts.

These examples demonstrate a key factor in business success. Position your product or service so it becomes more than a commodity that is also available from your competitors.

Here are some of the niches your business might address; keep in mind that you can address more than one.

Price: When dealing with this issue, you can go high or low in aiming toward your desired market. If you offer a lot of personal service, for example, emphasizing low price would conflict; you should have a high quality image. Besides, it costs money to provide personal service, making it essential to charge higher prices to generate a profit.

Service/Convenience: To differentiate herself, Ferlaak offers free pickup and delivery. Heather Wood offers to bring her services to customer locations or do the bookkeeping at her office. She is also willing to take on a wide range of responsibilities, including signing and distributing checks.

Selection: Some businesses distinguish themselves by providing large selections, or very specialized selections. Wal-Mart is in the large-selection camp, but so is Ferlaak, to a degree, in that she offers a wide range of office and computer services. Atlanta-based Intuitive Technology Consultants, in contrast, provides a limited range of services, specifically temporary staffing of technology people and software programming, particularly for projects dealing with Year 2000 issues. This is not a company that provides all things to all people, nor does it want to, asserts the firm’s president Al Pond. A retail store that carries just trading cards or a firm that provides only residential cleaning services are additional examples of businesses with narrowly focused selections.

Quality: Ferlaak emphasizes quality in all her marketing, including her tag line, "When quality really counts!" However, as so many operations today claim to provide quality service and products, it is somewhat difficult to be convincing with this differentiator. But if you back up your claim with truly high quality goods and services, this can prove a valuable competitive advantage.

Credibility: With small, relatively unknown operations, credibility is often an issue for potential customers. Why should someone buy from a company they know nothing about? Establishing strong credibility can definitely help businesses stand out in the marketplace.

Memoirs Unlimited, Beverly, Massachusetts, is a writing and publishing service that produces business histories and personal memoirs. When owner Webster Bull started the firm, he developed a brochure that described what he did. After obtaining several clients, he asked them to comment on his services and began using these testimonials extensively, which considerably boosted the effectiveness of his marketing efforts.

To allay credibility concerns, a company might want to lower the customer’s risk by providing guarantees such as a money-back or easy-return policy. While guarantees do not build credibility per se, they help minimize the fear of buying from an unknown company.

The discussion so far has focused on setting up a marketing strategy. Once you have defined your market and the message you want to get across, you can begin the next phase—selling.

Bledsoe claims that every product or service has a natural sales cycle; where you are on the cycle affects your marketing and selling efforts. Sales cycles range from a few seconds, such as for impulse items purchased at a supermarket cash register, to months for large ticket items like expensive equipment, to years—as can be the case with airplanes for example. Bledsoe divides the sales cycle into four activities: identification, qualification, education and close.

Identification: In this phase, you are looking for people to sell to, called prospecting, and the number of potential customers is at its largest. This is when cold calling is done, direct mail solicitations are sent, and mass marketing such as television and radio are used. A wide net is cast in hopes of capturing the greatest possible number of people who show some interest in your product or service.

Qualification: Once responses from potential customers have been elicited, the sales effort moves into the qualification stage, which reduces the number of prospects since not all will qualify. Questions salespeople ask include: Are you ready to buy now? What are your needs? How large is your budget?

Another consideration is whether the potential customer’s project is a good fit for your business. Fred Anderson owns Anderson Landscape Construction, a residential landscaping firm in Lancaster, Massachusetts. With only five employees, he knows large jobs that must be completed quickly are beyond his firm’s capacity, so he qualifies potential customers by asking for information about the envisioned project. Sales efforts cease immediately if he learns it is inappropriate. Bledsoe calls those who qualify "suspects."

Education: The education phase, which is sometimes called consultative sales or solution selling, is when efforts focus on educating prospects about your company and its products and services and, of course, their benefits. Anderson tells potential customers exactly what he will do for them and how he will research every aspect of a project like the grass and plants. He shows them other landscaping jobs he has done, and gives out several letters of recommendation.

Wood wants potential clients to get a good picture of what they can expect, so when she attends the first meeting, she brings a sample collection letter and invoice that use phrases and buzzwords typical of the prospect’s industry, rather than generic collection letters and invoices. In so doing, Wood demonstrates that she knows something about their industry and can comfortably work with a company such as theirs.

Close: The close occurs when you actually make a sale. Closing techniques are discussed below.

Keep in mind that during the sales process, you want to involve your salespeople as late in the cycle as possible. Their efforts should be expended where they will produce the greatest payoff, which is typically during the education and closing phases. Identification and qualification are ideally done by lower level (and less expensive) employees.

Print and mass media advertising, telemarketing, direct mail and many other sales and marketing strategies are worth considering, but for smaller businesses, a few of them are particularly effective.

One of these is the age-old, tried-and-true word of mouth, when you get referrals from someone, usually a satisfied customer. Ed Zollars, CPA, a shareholder in the Phoenix, Arizona-based accounting firm of Henricks, Martin, Thomas & Zollars Ltd. (in business since the 1960s), claims that almost all of his company’s clients have resulted from customer referrals.

Don’t mistakenly view word of mouth as a passive marketing strategy, where you sit around waiting for someone to do you a favor and make a referral. Zollars assiduously networks at various meetings and functions, and lets others know when he is looking for new business. He also recognizes that referrals are a two-way street. Often, he gets them from attorneys. "It helps if you give these attorneys referrals as well," says Zollars. "It’s not that anyone keeps score, but people should believe they are getting something in return."

Another often overlooked strategy is getting business from existing and past customers. As a rule, your best prospects are current customers, to whom you can most easily cross sell and with whom you have the greatest chance of success. Your second best prospects are past customers who have not bought from you for a year or more. Those who have purchased products or services similar to yours, but from someone else, rank third. The hardest sell are people who have never bought the type of products or services you offer.

Keep in mind the sales cycle mentioned above. If someone has purchased a product or service similar to yours, you know they are qualified and have been educated. The further afield you go, the harder the sell. For Wood, a company that uses a CPA for taxes but has never used a service to maintain its books is a better prospect than a company that has never used an outside accountant. An even better prospect is a firm that has hired a bookkeeping service in the past.

Make selling to current and past customers a defined piece of your marketing strategy. "Never lose contact with clients," recommends Greene. "Touch base every six months. Keep mailing to them [articles, brochures, newsletters] even if they move out of town." Greene is also very direct in asking clients for referrals. He may say something like, "I sense you’re seeing a benefit in our services. Is there anyone else you know who could use them?" When he works for a division of a large company, Greene actively seeks opportunities at other divisions within the operation.

According to Mary Ann McKenzie-Goode, chairman of the board and president of McKenzie Equipment Co., a Houston-based firm that sells and services compressed air products, the effort for repeat sales starts as soon as you land a customer. "Take care of them with your first sale. You’ve got to do a real good job from the beginning."

When Heather Wood of Hardwood Bookkeeping goes out on a sales call, she researches the prospect’s industry beforehand (often calling acquaintances who know something about the business), prepares bookkeeping materials using the language of that industry, and even dresses appropriately for the particular client. This is not to say that Wood doesn’t always dress professionally, but her attire is more formal for a law firm prospect than for a home-based business or construction firm.

Fred Anderson of Anderson Landscape Construction carries pictures of both finished projects and work in progress in an attractive leather portfolio. He also brings testimonials from satisfied customers, a cost estimate and a plan for the job in question. As these examples demonstrate, if you want your sales calls to succeed, do your homework.

Clearly define in your mind how your product or service will benefit prospective clients. Author Michael Baber suggests as an opening comment: "I’m sure you get many people who call you, but none of them will do…"

And during the sales call, listen for the prospect’s complaints, needs, goals, desires and difficulties. Listening is the most important skill a salesperson can possess.

Understandably, sales calls strike fear in the hearts of many, unless they are naturally-born salespeople or have built up experience in how to sell. Wood deals with this fear by coming to a meeting well prepared. "Usually people are willing to talk to you," she says, "so once you get into conversation, it gets easier. If things don’t go smoothly, have questions ready to ask: ‘Describe your bookkeeping system,’ or ‘tell me more about your company.’ Get them talking," suggests Wood.

Elliot Eisenberg, director of corporate accounts for Traverse City, Michigan-based Versus Technology Inc., which sells infrared tracking systems, is an experienced salesperson. Before making a call, he runs through his mind an experience he had years ago when, while living in a house with a yard, he was faced with having to mow the lawn—which he really disliked. One day, a neighborhood kid came by and offered to do this dreaded task. To this day, he imagines that the sales prospect will be as happy to see him as he was to see the young man with the lawn mower. The lesson here is that people aren’t necessarily annoyed when talking to a salesperson. If you provide a solution to a problem, you are doing prospects a valuable service, for which they will be appreciative.

Of all parts of the sales cycle, closing—or getting the prospect to sign on the dotted line—is probably the most difficult. "It’s amazing how often people are just a step from closing a sale, but don’t recognize it," comments Greene of Sperling Greene.

He cites some comments that indicate prospects are ready to buy: They ask about fees. They ask how soon you can begin. They ask how long a project will take to complete. They ask for specifics about what you can do for them. They give you information about a project and request that you not tell anyone else.

Some closing techniques work in certain situations but not in others. Bledsoe refers to one technique as the "puppy dog close," so-called because pet shops use it. It goes like this: "If you (the prospect) don’t like the puppy (or whatever is being sold), bring it back for a full refund." Few return puppies, or anything else, he has found.

Bledsoe also recommends doing "test" or "trial" closings: "Mr. Prospect, it looks like we’ve wrapped up all the details, do you agree?" If the answer is yes, proceed directly to the close.

Bledsoe warns that many salespeople continue to sell even after the customer has decided to buy. "This can lose you a sale," he says. Use test closings to stop yourself from overselling.

Arguably more than any other aspect of your operations, marketing and sales—carefully planned, prepared and executed—help determine your competitive positioning. Focus on these two areas and your business will grow faster than Donald Trump’s ego. (The Donald, by the way, doesn’t build better buildings—he’s successful because he’s a master marketer.)

Linda J. Ferlaak owns the Washington, D.C.-based office and computer services company, Ferlaak Office Computing. Partially disabled, she is unable to do some common sales and marketing activities such as making personal sales calls. As a result, she relies heavily on other strategies like direct mail, renting mailing lists from such sources as Dun & Bradstreet and professional and trade associations. Using local telephone books, Ferlaak also makes lists of potential clients to contact, and has joined various associations, such as the Software Publishers Association, to get lists of members she can solicit. (Many associations will rent their mailing lists to non-members as well.)

Ferlaak is a great believer in promotional items imprinted with her firm’s name and phone number, including pens, holders for business cards, calendars and key chains. "I call them bribe gifts," she explains with a laugh. Ferlaak strategically "forgets" her promotional items, leaving them at such high visibility locations as ATM machines and restaurants. She sends them to existing and past clients as an excuse for keeping in touch. When submitting a proposal, she’ll include one or two. These are all small, inexpensive gifts; Ferlaak spent less than $2,500 last year on purchasing them. But they work, she insists, and helped her land a $30,000 contract. Big things can come from small packages.

"Hiring salespeople is probably the hardest thing I do," admits Scott Schuster of Intuitive Technology Consultants in Atlanta. What makes it difficult, he says, is deciding between the experienced person and the inexperienced one. Experienced people cost more, might be hampered by noncompete clauses from their last job, and may be burnt out or unwilling to try new things. On the other hand, inexperienced salespeople have enthusiasm and come relatively cheap, but probably aren’t familiar with your business and don’t know much about sales. Getting them up to speed takes both time and money.

Schuster suggests having a salesforce that is comprised of both experienced and inexperienced people. "The newcomers are excited and aggressive. The experienced staff provides expertise and advice; they’re like mentors." This blend of experience and inexperience has proved effective for his operation.

Mary Ann McKenzie-Goode of McKenzie Equipment Co. in Houston opts for those with experience, and is careful to investigate how successful their track record has been. To make sure candidates are telling the truth, she asks to see their W2 tax forms to verify how much money they earned.

But success isn’t enough, McKenzie-Goode emphasizes, if candidates lack good self-esteem and the same values she has.

To ascertain the former, she asks prospective salespeople if they consider themselves lucky. "Someone with good self-esteem will say, ‘yes,’ because luck is really what you make of it."

To check values, McKenzie-Goode asks what the candidate would tell a customer if a delivery was promised by a certain date and didn’t come through. In this scenario, she wants an answer that indicates the salesperson would be honest.

Another situation McKenzie-Wood poses is one in which a customer needs something right away and all the drivers are booked up. She wants someone with a can-do attitude, whose solution would be, for example, to "deliver the product myself."

If you will be hiring a salesforce, as opposed to just one person, Bledsoe recommends hiring the sales manager first, and subsequently allowing that person to take on most of the hiring responsibilities.

He notes: "Hiring salespeople is easy. If they are truly high quality, they will pay for themselves."

Excerpted with permission from Small Business Success, Volume XI, produced by Pacific Bell Directory in partnership with the U.S. Small Business Administration.