Powering the Business: Rolodexes vs. Campaigns


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published June 25, 2003

Pushcart or Engine Powered?

Starting a business venture with a good Rolodex is like starting at the top of a hill with a good pushcart. Going down the hill, the pushcart will gain speed and move quickly. Once at the bottom of the hill, the pushcart will slow to a halt and you’ll have to push it back up.

Pushcarts are fun for a while, but at some point most people want a go-cart. Strapping a 3.5 horsepower lawnmower engine to the pushcart, the go-cart will be able to both roll quickly down the hill and have the power to propel itself back up.

For businesses in business markets, the integrated sales and marketing campaign is that engine. As with most building efforts, a business can start with an integrated sales and marketing at the go-cart level and build up to the level of NASCAR.

Off to a Good Start, but Sustain the Momentum.

Many venture capitalist and non-profit support agencies will offer to open their Rolodex for a young business to help get the ball moving. Their Rolodex provides a highly valuable resource for businesses to investigate the market demand and understand customer needs. Initially, these Rolodexes and the Rolodexes of the executives within the business may provide the momentum needed to get the business off the ground. But, at some point, the business will go through these Rolodexes, exhausting the prospects within their network.

The Rolodex will run-out-of-steam if it isn’t fed by some mechanism.

To feed the Rolodex, business people can practice business networking, but this too will fail eventually. Networking activities produce a closed set of prospects. New prospects within the network will cease to be an easy find and the returns to networking will diminish. On a personal level, this leads to the formation of tight, fruitful friendships based on a common set of interests. On a business level, this can be disastrous. Without fresh prospects, the business will stagnate. Momentum must be sustained.

Networks too become stale if fresh relationships are not created.

Buying New Rolodexes

Many businesses, realizing that their Rolodex momentum is slowing, will seek to bring in new partners and employees with fresh Rolodexes. Buying a brand new Rolodex, in the form a new hire or new partner, will add prospects to the lead of the sales funnel. But this is little more than a temporary solution. Businesses must find a means to create their own Rolodex.

Perhaps more disastrous than discovering that the Rolodexes are burning out, is the sycophant effect of using employee’s Rolodexes without adding back to them. At some point in the process, the salespeople will question the wisdom of donating their Rolodex to the cause without having the activity help them grow their Rolodex. While pay and incentive based compensation may be a nice elixir, their band-aid effect won’t suffice forever. More importantly, it won’t create a salesperson excited and dedicated to the cause.

Buying Rolodexes is a temporary solution at best and produces negative support at worst.

The Alternative: Build an Engine.

Using Rolodexes to find initial customers is an excellent means to investigate the market for new products and service. But if the business hasn’t built the integrated sales and marketing engine while enjoying the downhill ride with the Rolodexes, climbing back from the bottom of the hill will be a trudge.

In the sales vernacular, the business must constantly feed the sales funnel. Either through calling on new prospects, expanding the network, or hitting the tradeshow circuit, salespeople must constantly feed the sales funnel with fresh prospects.

In the marketing vernacular, the business must constantly create awareness within the target market for their products and services and convert the aware portion of the market towards investigation and forward to choice. Either through direct mail, telemarketing, advertising, or tradeshows, marketing people must constantly feed the customer lifecycle with fresh prospects.

An integrated sales and marketing campaign is the engine that drives the constant building of a business’s Rolodex, creating sustainability. Integrated sales and marketing includes a branding component, but it isn’t branding alone. The sole focus of a campaign should be to generate revenue in the most economically efficient manner. Brand awareness isn’t sufficient, but brand awareness, coupled with targeting, clarification of brand identity, relationship building, prompting of customer investigation, needs identification, customer choice, purchase, and client development is closer to the mark. An integrated sales and marketing campaign should touch every point in the customer lifecycle – including repeat purchase. Its results should be measured by its ability to create new customers and capture new revenue.

To provide a numerical example, consider the effort that might be undertaken by a small sales and marketing team. If the team starts with a Rolodex of 1200 contacts, finds that 5 out of 100 contacts will make a referral, and holds conversations with 300 people each month, that team will have contacted a total of 1374 individuals in the first six months but be out of new contacts. At that point, the business will fail. In contrast, if the same team starts with nothing but an Integrated Sales and Marketing Effort that generates 300 new prospects each month, then, given the same rate of attaining referrals and holding conversations, that team will be able to contact 2202 individuals in the same six months and go forward with a growing prospect base. The Integrated Sales and Marketing campaign produces a sustainable business. (See Exhibit: Managing the Contact Flow.)

Build the Engine AND Enjoy the Ride

Rolodexes can build short-term value in a fast downhill ride, but an integrated sales and marketing campaign that builds the corporate Rolodex will create a lasting enterprise that both coasts downhill and forges paths uphill.

Exhibit 1: Managing the Contact Flow

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About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.