Most people who start or own a business want it to grow, that's pretty safe to say. The problem is that most people have nothing but their desire to guide them down a path for growth. I'd like to share a few observations based on the things I've seen over the years; much of which has been brought into focus by others I follow in my profession and those that are closely related. Hopefully, they will help to refocus a few business owners on principals and fundamentals that are important if your goal is to be a growing company rather than a meteoric failure. Very often, it's hard to tell the difference if you don't know what to look for.
The Fallacy of Stealing From Your Competition There are only so many opportunities to steal market share from your competitors. Yet, so many companies in well defined (real) markets base most or all of their growth efforts on this. Inside-out product promoting and discounting has become commonplace. This tactic is neither a science (the wrong kind of measurement) or an art (I really don't know how to reproduce any intermittent success). At it's best, it's the easy way of promoting your business and social media has become an enabler for this, unfortunately. I'm sorry to say this, since I am using social media to communicate this to you.
It's easy to blast out emails with eye-catching graphics. There is this misguided belief that the look will draw them in (How do you like my ChiaThug by the way?). Or that the discount that you offer everyone is going to lure customers away from the competition. Are customers who continually look for discounts really the kind that you want? Is your entire business model about trading margins and profitability for revenue - simply because it's easy to do. Welcome to the club, you have millions of friends doing the same thing. Now, what's that differentiator again?
Focus On Factors That Grow A Market And Your Business Will Grow With It
Innovators are inherently customer-centric, even if they deliver it in a product-centric way - Innovation doesn't come from your idea about what the world needs in order to get through their daily lives and jobs. It comes from a deep understanding of those jobs from the customers perspective and how those jobs change over time. Sometimes an innovation has to wait for technology to catch-up, kind of like the iPhone or the iPad. I think this may actually solve some problems for enough people to be valuable but really couldn't be created until now (I own a Droid). By the way, that doesn't make Apple customer-centric, it makes Steve Jobs a genius. It's ideal to have a methodology or framework that facilitates this process, because we can't all be geniuses (or genii, whatever).
Take, for example, the Pet Rock. Was this an innovation? Whoever came up with this sold something like a million of them. They made some money, I'm sure. To me this seems almost like arbitrage. Nothing of value was really created, and as a result, many of you won't even know about this sensation of the 1970's. In short, it was short-lived and totally product-focused. Something that came in a close second were mood rings but I'm trying my best to shove that memory deep, deep into my subconscious mind.
Innovation comes from a deep understanding and analysis of the work your customer is doing, not a deep understanding of your product or service - If you look for innovation in the context of your product, the best you can hope for is an incremental improvement to something it already does. If you focus on the people that are using it, you will find that your product is not their job or their life. Look for frustration or inefficiencies in their job and you will be on the right path to discovering a niche your can exploit.
Beware of Ideation and Crowd-sourcing as your primary source of innovative ideas - Sure, you might get lucky but seriously folks, I have to disagree. You don't need scale to innovate. Your next innovative idea will most like come from a single person or group that are solving a problem being being faced by customers. The customer collective are going to be focused on your product. After all, they are in your product community so everything looks like a product feature.Innovative ideas can come from a community, but if the bulk of the community is behind it, it's probably not a new idea and I would be surprised if your competition wasn't already working on it. Additionally, how deep can you dive in a community where each person has a megaphone - and is it really a representative bunch? Can your business even populate an online community - are your customers hanging out in communities?
Create The Best Experience For Your Customers - Maybe a Different Experience
Let them experience a friction free process - Sometimes they just want to buy your damn product and get efficient service when they need it. If you're not selling dolls, don't try to be American Girl. If you've got internal workflows that were designed from the inside-out, department by department, I guarantee you I will find them. There is a whole new philosophy on office/service process and many excellent practitioners out there that can surgically repair your business in ways that will blow your mind. It's really scary seeing a truth that eludes you as you run your business from the inside-out. Check out customerprocessone dot com if you want to follow some the great thinking on this topic.
When it makes sense, allow your customers to partner with you in ways that make your product more valuable to them, and ultimately to you - I'm not talking about value-added resellers because they generally add little value at all. On the other hand, there are awesome opportunities to add value, but they don't usually tie back to products. Imagine if you were to focus on business transformation, and make the product a supporting character? The product will be talked about in terms of the business transformation (even though it was your ideas and effort that transformed the business) which is great for the customer, great for you the consultant and great for the Vendor.This brings up the term I have struggled to understand; co-creation of value. The best example I've heard was from Paul Greenberg who explained it in terms of the creators of the game Doom (I think it was Doom). Users hacked this game to add modifications that suited their needs and desires. Instead of locking it down, the creator embraced it and as a result the product exploded. Why? Because people could add their own value. This sent value back to the company. Case closed.
Understand that the experience framework might be different for retail consumers as compared to business consumers - If the experience is more than a simple process designed with the customer in mind, make sure you don't try to implement an experience that doesn't fit the business you're in. For example, the trend in coffee shops over the years has been more about the experience than about the coffee. Lounge areas, Internet access, coffee wrapped in caloric foam...this is the experience that has worked for them. Putting an Internet lounge and coffee shop in the lobby of an industrial pipe manufacturer probably doesn't have the same impact. Neither would a tea room at a truck stop.
Learn How To Measure The Right Things And Make Sure It's Focused On The Customer
Learn which early warning signs are important, and where to look for them - If your customers are the focus of your business, and I know they are, then you certainly want to know when they are leaving. I don't mean a specific customer, because measurements at the level are inefficient. I mean, try to understand when your customers, on average, tend to defect. Understand this and know exactly when to communicate with them.
There is nothing new here. It's been done, basically, forever. Your relationship with customers and their behavior is captured right there in their buying history. And for the most part, it's the best early warning system you have. Certainly, there are occasions (United Breaks Guitars) where social channels are the early warning system of the day, but typically they are simply going to be an affirmation of what you can already know with the data you already have. Social Media is simply not a replacement for it.
Focus on the behavior of your customers and not the features of your product - If you understand your customers then you are in a position to solve their problems. Guess what? Their problem isn't related to your product, it's related to their business and the work they do. If you have created a product that you feel encapsulates all of the best practices, problems, or whatever for a broad set of businesses and focus on selling those features, then you don't understand that things change. If you are not innovating, your competitors will eventually marginalize your product or service either by making it about price, or by out-innovating you.
Stay away from measures that allow you to manipulate the outcome, like revenue goals - If you are measuring revenue goals and telling your team that this is important by confining them to quota-based incentives, they will certainly game the system by bringing in the least valuable (easiest to close) deals once they begin reaching the end of a quota period. In fact, they will likely sacrifice their own commissionable base, by discounting, simply to get these low value customers in the door. Now they're your problem to deal with and their expectations have already been set.
Make sure retention is measured since profitability is as important as revenue - If you ask anyone they are going to agree that customer retention is important. Once they're a customer, the acquisition cost for that next sale is dramatically reduced. Yet, ask any company how they are measuring this and you may find a very shallow understanding of the concept. Have a solid understanding of when you need to ramp up your efforts to retain disengaging customers. No one can afford to treat all customers the same; i.e., if they are not planning to leave, don't treat them like they are and vice versa.
While I believe in simplicity, measure things that drive growth, don't waste time on things that claim to predict growth - Beware of simple solutions that can't be backed up with real results. You want to do things that drive growth in your business. Don't waste your time on measurements that tell you nothing about what you are doing well and what you need to do to grow your market or even to retain customers. Tools like Net Promoter Score have been touted by a vocal few recently as a predictor of revenue growth. Unfortunately, on further analysis this is simply not the case. Please understand that in order to grow your business, the measures you take should lead you in the direction of the proper questions to ask your customers.
Don't Assume You Know Your Customer
Ask your customers the right questions, listen to what they are saying and "you may find a niche waiting to be occupied" - I've recently been influenced by a really well done paper on understanding customer needs from MIT Sloan. Here are the first two of 10 or so rules they propose. I think these are the weakest link for CRM consultants today - guess why:
Rule #1: "When capturing customer requirements, the unit of analysis must be the job the customer is trying to get done".
Rule # 2: " The requirement statement must not include or make mention of a technology, solution or product or service feature."
Don't project your own feelings onto your customers - If you are the sort that likes to make something because you think it's cool and then scramble to find customers, that's cool. I think there are some venture capital companies out there that like to gamble. The problem comes when you try to find customers. If this is something totally new, is it solving the customer's problems or is it simply satisfying your ego? I'm serious, sorry if you don't like my bluntness. I've watched the cycle happen repeatedly, I didn't just read it in books. If you don't really know their needs, you're simply not adding value to anything.
Solve real problems your customers are facing and possibly create a new market - This is so common sense and no, not everyone can do it. The people that do it right (either by luck or by their methodology) will create value and markets. I don't think I really need to give examples here. The key is understanding how they did it. The Pet Rock did not create a true market, nor did it add value. The personal computer did. Here are the key characteristics Esteban Kolsky states that a market must to be a market, in his post I Am Not A SCRM Market Expert, I Just Play One On Twitter:
Sufficient differentiating features to make it independent of other markets
The ability to operate independently of other applications (no do-or-die dependencies)
An addressable, unique problem that cannot be solved with other application (or methodologies - I added that)
A revenue projection that will make it worth the time for vendors and providers
A business justification, tangible costs and benefits, and in some (OK most) cases an ROI
A story that is easy to understand by Sr. Management, Middle Management and users.
The bottom line is that we should all be starting from a problem that isn't being solved any other way. Don't package rocks in a box and call them a pet and expect to create a market. Don't use a social media idea that works for networks of friends and think it makes sense for the business world just because you know how to write the code. If you're the local landscaping company, why did you create a Facebook page (I just saw this on a sign today)? If you can ask why, keep asking until you can't.
Ok, what did I miss today? I'm sure there is something.
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