By Marc Emmer
[dropcaps type=”circle” color=”” background=””]M[/dropcaps]any business owners and staff members have been conditioned to accept meager business results after two years of stagnation. It may be time to approach 2011 and the shifting business cycle with a new paradigm. For some of us, it is time to charge the hill.
Here are 5 steps that will enable growth next year and beyond:
1. Eliminate self limiting beliefs, and set higher expectations
In 1980, a raggedy group of US players did the unthinkable; they beat the big bad Soviets, and won Olympic gold. They didn’t win on talent, the Soviets were clearly a superior hockey team. The only reason they won was because they thought they could.
Business owners and staff have faced a crisis of confidence. The economy has soured moods and expectations. In the wake of an extreme economic downturn, our employees are paying attention to how we have shown up. If you budget for marginal revenue gains, you will get modest results. It is the responsibility of the entrepreneur to reframe the discussion, and reestablish the value proposition and motivate people to move the business forward.
There are always naysayers, the negative people who see the worst in things and drag your organization down. Be wary of salespeople who settle for excuses for why they can’t sell your product or service. For those people who are unable to drink the Kool Aid, and who do not share your vision, it is time to wish them the best of luck in their next position, wherever that might be.
The business owner or staff member must come to the office every day with a positive state of mind, and passion for growing the business. I am not advocating for reckless investment, I am suggesting that we set the bar higher and expect achievement. Make certain that your incentives plan is in alignment with your corporate growth objectives.
The entrepreneur also has the right to demand a profit. I work with many double digit EBITDA businesses (as a percentage of sales), and the sweat equity of the business owner should be worth something. If your business is break even or losing money, it is incumbent upon you to make changes.
2. Seek out new opportunities
It is well accepted that the best place to grow your business is in segments that are directly adjacent to the ones you already occupy. Growing in adjacent segments requires less R&D investment, and provides the least risk in achieving market leadership.
The marketer should always look for ways to exploit the organization’s core competency in a new market. Honda’s core competency is efficient engines, and when the company expanded, its brand was quickly recognized and accepted in the marine, jet engine, power equipment and motorcycle markets. These markets were natural extensions of what the company did best. When Pepsi bought Aquafina and entered the water market, they were able to leverage their existing distribution channel to build sales.
As a general rule, an organization should seek to achieve some scale (30% market share or more) before entering new markets. However, every company is different, and often business owners are weary of client concentration or industry concentration risk, which is a critical decision point for potential buyers of a business in the future.
However, such gambits can be very costly, and the entrepreneur needs to do his (or her) homework. It is important to understand a new market in depth. In Jim Collins’ latest book “How the Mighty Fall”, he describes how many of the “Good to Great” companies had an “undisciplined pursuit of more” and ultimately failed. Growth into new markets requires a business plan, capital and patience. As John Wooden used to say, “be quick, but don’t be in a hurry.”
3. Maintain price integrity through consultative selling
Your managerial courage is under attack. Do you have the will to defend your brand’s pricing integrity? If you do not value your own products and services, no one else will. Those who are unwavering in the improvement of their products will be in a position to charge prices that will earn a profit.
Examples abound of brands that have been able to defend their position. In the Apple stores, most prices aren’t even posted, because Apple has made such a powerful emotional connection with people, price is an afterthought. The average Apple computer sells for about double that of the average PC, even in a hyper-competitive marketplace.
In response to such thinking, I often hear, we are not Apple, we are a small company. Hogwash! Pricing is about attitude and value, not about size. In our firm, we have 3 employees, but regularly charge rates similar to those of attorneys and CPA’s because of the quality of the services we provide, but also because we are highly consultative in our approach.
The marketplace has a heightened awareness of pricing (that is a polite way of saying we have become “frugal”). Salesman have been conditioned to discount. It is their drug, and the business owner must show leadership in commanding a minimal margin threshold. Every business owner should be very active in the trade, at conferences, industry events and especially on sales calls.
Consultative selling is about listening and this is a time to listen carefully to customers whose budgets have been cut and headcounts have been slashed. They are looking to outsource work, services, or even just administration of details that they no longer have bandwidth to manage.
4. Provide exceptional experiences
McDonald’s founder Ray Kroc once said “we are not in the hamburger business; we are in the show business”. Like Netflix movement to digital downloads, the marketer must perpetually; prod, question and reinvent the value of the services provided and enrich the customer experience. Clearly experiential brands such as Cirque du Soleil command a price premium, and the marketer should continuously seek out methods for creating emotional value for the buyer.
More and more, emerging technologies seem to capture the imagination of customers or lead to greater efficiency that drives advantage. I recently bought a Lexus hybrid, offering 35 miles to the gallon. Toyota has been deeply troubled of late, but eventually its hybrid technology (offered in the Toyota brand, Prius) will be a dominating technology, which is currently unmatched by other automakers. Don’t only think about disruptive innovation, but also think about disruptive experiences.
5. Invest in retention
The number one rule of customer relationship management is to invest more heavily in retaining customers you already have than in acquiring new ones. Providing deep discounts to new customers is misguided. Customers who switch on price have little loyalty. Such investment is better directed towards customers who have proven their worth (usually measured in lifetime value), and who pay full price, pay on time and are easy to work with.
This is particularly important in times of rampant discounting as acquisition costs can be higher. In lieu of cutting pricing, marketers should seek out opportunities to treat preferred customers like VIPs. Consider expanding your service bundle for these clients and extending them perks such as faster cycle times or preferred customer service phone lines.
In my travels, I regularly stay at Hyatt and Marriot hotels in instances when clients control my itinerary. They are very good brands, and if asked, I would say I am satisfied. But I am loyal to Hilton. I will travel 15 miles or more to stay at a Hilton property because as a Gold VIP, I am treated like…..gold.
All businesses should regularly measure customer loyalty (a higher standard than satisfaction). Asking customers about their experiences is a self-fulfilling prophecy, it reinforces for the client that you care deeply about their business and you want to learn more about how you can improve.
According to Dana Borowka, CEO of Lighthouse Consulting Services, LLC (www.lighthouseconsulting.com), hiring the right people is key to future growth. If you would like additional information on hiring, please click here to see an article on this subject.
Marc Emmer is an author, speaker and consultant recognized as a thought leader throughout North America as an expert in strategic planning. The release of Marc’s book, Intended Consequences was covered by Forbes, CNBC and Fox Business. Before his consulting career, Marc spent over 20 years in the food business, in operations, marketing and business development. Marc founded Optimize Inc., a California based consulting firm in 2002. Optimize has an impressive client list including public companies such as CB Richard Ellis, Rio Tinto, and Superior International and mid market companies in a diverse range of industries including financial services, health care, technology and energy. Marc has personally facilitated over 100 strategy sessions. Learn more about Marc at www.optimizeinc.net. He can be reached at firstname.lastname@example.org.
Permission is needed from Lighthouse Consulting Services, LLC to reproduce any portion provided in this article. © 2014 This information contained in this article is not meant to be a substitute for professional counseling.
If you would like additional information on this topic or others, please contact your Human Resources department or Lighthouse Consulting Services LLC, 3130 Wilshire Blvd., Suite 550, Santa Monica, CA 90403, (310) 453-6556, email@example.com & our website: www.lighthouseconsulting.com
Lighthouse Consulting Services, LLC provides a variety of services, including in-depth work style assessments for new hires & staff development, team building, interpersonal & communication training, career guidance & transition, conflict management, 360s, workshops, and executive & employee coaching. Other areas of expertise: Executive on boarding for success, leadership training for the 21st century, exploring global options for expanding your business, sales and customer service training and operational productivity improvement.
To order the books, “Cracking the Personality Code” and “Cracking the Business Code” please go to www.lighthouseconsulting.com.