Harvard Business School professor and the father of modern marketing, Theodore Levitt, asks a powerful question that every business leader, sales representative and marketing manager must answer: What business are you in?
The answer to this question will determine the future of your company. At this critical moment when the needs of your customers are changing, this question needs to be answered correctly.
The reality is that what you sell and what people buy are different. As I say in my book Revenue Growth Engine, "Buyers don't buy products, they buy the outcomes the products deliver."
Theodore Levitt would famously walk into his marketing class holding up an electric drill bit. He would tell the class that no one has ever purchased a drill bit, but what they bought was the hole. Some take it a step further and say that they aren't buying the hole, they are buying the ability to hang a picture on the wall so they can look good to their friends. Others takes it even further,...
I’m not sure who first said this popular quote: “Hope is not a strategy.” (Who Said Hope Is Not a Strategy?)
In one of my favorite strategy books, Blue Ocean Strategy, the authors observe that companies are rarely open to changing their strategy because they are heavily invested in the status quo.
What prompts a strategy change? A strong leader and/or a serious crisis.
Most companies are in a serious crisis. Some have seen a drop in revenue. Others have seen a dramatic increase of demand. In either case, this is time to reevaluate strategy.
The fact is, most companies should have reevaluated their strategy long before the crisis. The inertia of a growing economy and relatively easy growth created an environment that leaders were reluctant to change.
Well, guess what? Things have changed. That means now is the time to evaluate our strategies.
How do you adjust your business strategy? (These are concepts I’m organizing as I prepare to lead a Revenue...
The reason to buy a company is to take what you purchased and grow it. Unfortunately, what often happens is that companies let the customers of the companies they acquired slowly get picked off by the competition. Instead of growing the new base of customers, the new base dwindles away.
You can buy a business but you cannot acquire customers. Keeping customers requires trust. After an acquisition, that trust must be built.
When we buy something big, we all experience buyer’s remorse. It’s that moment of time where we are nervous that we made a bad decision. (You may have some buyer’s remorse on the company you bought!) At that moment, the sale is very vulnerable to cancelation.
The same thing happens to customers after an acquisition. The customers of the acquired company get acquisition remorse. They are nervous. The customers of the company you acquired are vulnerable.
Sprint has provided my cellular service for over 10 years. Recently, T-Mobile acquired Sprint....
Every company wants to grow. At the end of the month, end of the quarter, and end of the year, we all look at our top-line revenue. How much did we grow?
What we need to be looking at is one level deeper. These are the the two drivers of revenue growth. Unfortunately, many companies do not look at these simple numbers.
What are the two two revenue metrics?
They come from the two sources of revenue. If you boil it all down, there are only two ways to grow revenue:
That’s it. The problem is that most companies tend to be good at one or the other. Some are good at landing new deals. Others are good at developing client relationships. Rarely do you find a company that has the processes in place to do both well.
Here’s why that’s important. If you can show modest growth in net-new business and cross-sell business, you can experience exponential revenue growth. (Download the...
Sales and marketing both have common objectives in the pursuit of revenue: creating competitive advantage and increasing perceived value. Without these, the company’s offerings slide into the slimy pit of commodities, decreasing win rates and profit margins.
How can you build competitive advantage and communicate value? In Revenue Growth Engine, I recommend that you think strategically about the experience you provide your ideal clients before and after they become clients.
In The Experience Economy, Competing For Customer Time, Attention, and Money, Pine and Gilmore recommend looking at your company as a stage and your team as actors. In this model, the script is your sales and marketing processes.
In show businesses, compelling scripts get turned into profitable movies and plays. Boring scripts get rejected.
What about your sales and marketing processes? Would the script you have written for prospects and clients capture the attention of your clients? Or, would the script...
Looking for creative ways to keep your ideal clients happy, especially during the frustrating challenges that we currently face, is smart business. According to recent Bain & Company research, increasing customer retention by 5% increases profit by 25% to upwards of 95% depending on your industry.
Wow! That is some compelling data.
In the Bain & Company report, Fred Reichheld says: “Systematically rank all of your customer acquisition campaigns on the basis of their yield of loyal customers. Shift resources towards programs that attract the richest mix of loyal customers.” He goes on to conclude that many firms are wasting half their marketing expenses on disloyal customers who will never stick around long enough to pay back the acquisition investment!
What could you do to increase client loyalty and thus improve your profitability? Here are some ideas to consider.
The first step is to identify your Ideal Clients. As Mike...
The Big Idea: Pay attention to client sacrifice if you want to increase your competitive advantage.
In a tight economy where buyers tend to pay closer attention to where they allocate their budget companies, must consider how they add value. Organizations that get this right differentiate from their competition and build client loyalty, leading to increased revenue and profit.
How do you build your competitive advantage? Typically, we think of our product or service. What features do we offer? What are the advantages of these features? And, how does the client benefit?
While these questions are important, the reality is that product differentiation is at best short-lived. Service differentiation can be a challenge as well, as most companies offer similar types of services.
So where do you go to create a sustainable competitive advantage?
In the book, The Experience Economy: Competing For Customer Time, Attention, and Money, authors Pine and Gilmore assert the next frontier of...
By Guest Author, Lee Salz
If you are a follower of my articles and blogs, you know I reside in Minneapolis, but I’m not originally from here. I grew up in the New York/New Jersey area. I don’t need to tell you how brutal the winters are here as the media does a great job of painting that picture. When I moved here, I was not issued Minnesota skin. I still have my East Coast skin. I can deal with the cold, but there are some things I won’t do in subfreezing temperatures.
A great example of something I won’t do in the cold is dealing with my dogs’ poo. I have two, shelter-adopted dogs that weigh about sixty pounds each. From Thanksgiving until March, the dogs “do their business” in my backyard, and I don’t clean it up until Spring. Before you say, “That’s disgusting,” keep in mind the climate in which I live. The poo is covered by snow most of that time and is completely frozen.
As you can probably imagine, there is a...
Cross-selling to current clients to additional products and services may be the fastest way great companies can grow. According to Amy Gallo, a contributing editor at Harvard Business Review, acquiring a new customer is anywhere from five to twenty-five times more expensive than retaining an existing one!
The old saying is true: it takes more effort to get a new client than it takes to cross-sell a current client. Even better, happy clients create a basis for referrals, helping feed the net-new side of your growth engine. If you are providing great products with a responsive service delivered by caring people, why wouldn’t your clients want to buy more from your organization?
Unfortunately, most companies do not fully optimize their cross-selling opportunities and only drive net-new business. They don’t see that cross-selling to current clients creates low-hanging fruit. As I consult with companies, many begin to realize that if they simply focused on this half...
If you want profit, value, and client loyalty, stop calling them customers and start treating them like clients.
I hate the word customer.
Customers go to vendors to buy commodities. If I want toothpaste, I go to Walmart or Amazon. If I want 2X4’s, I go to Home Depot or Lowes.
Clients go to trusted advisors to get value. If I need financial advice, I email my accountant. If I need legal advice, I call my attorney. If I have a security problem with my computer systems, I call my managed I.T. services provider.
Customers are price-driven. Unless you offer the lowest price, they are not loyal. They will drop you in a heartbeat for a competitor with a lower price.
Clients are value-driven. They realize that the value doesn’t just come from the product you sell. It also comes from the services you wrap around the product, the advice you give, and their overall experience.
Customers see you as a vendor. They have a list of...