5 Steps for Driving Growth

The good news is that economy is on the mend; consumer and customers are buying again.  The bad news is that many companies will struggle to capture that opportunity.

Changes made as a result of the recession may now restrict companies from growing.  During the recession, marketing budgets were cut and the sales force chased any customer willing to buy -- at any price.  Most likely, sales territories, products in the bag, etc. were expanding, either as a result of downsizing the sales force, and/or expanding opportunities so that they could have a chance to make quota…either way they have a lot of ground to cover. 

The question facing many organizations today is how to align sales and marketing activities, investments and resources, against the biggest growth opportunities while still covering the expanding set of customers and products.  How can the sales force, and/or our marketing resources to do more?   The classic -- do more with less scenario. 

Well, the answer this time is you can’t. The reason is that the recession lasted so long (20 months) that everything that could be stretched…has been stretched.  It’s now time to reset sales and marketing strategy.  Here are five steps to get you started:

1. Move the "low hanging fruit" – During the downturn many organizations allowed sales organization to count EVERYTHING towards quota.  It’s now time to start moving inbound orders (rebuys) and sales of a certain size (small) somewhere else (most likely telesales) to free up sales force time.  Move it quickly, consider incenting them during the first 6 months to migrate transactions to insides sales or partners. Capacity needs to be freed so that it can be redirected to growth.  If you are concerned about not being able to move fast enough, just stop paying commission on small or inbound deals and/or do not count them towards quota…nature will run its course. 
2. Relocate and recondition small customers – Along with small orders, small customers (who often require more than their share of attention) need to move as well.  They may have grown accustomed to the special attention they’ve received as a result of the downturn. However, it’s now time to ‘right size’ the cost to manage them with the opportunity they represent.  You may want to incent them to self-service via the web or transfer the relationship to a business partner.  Do your homework by evaluating customer profitability and set a new higher target.  
3. Push Sales into bigger deals – After you’ve freed up Sales’ time, focus on increasing the pipeline and average deal size.  Turn marketing back on to help (see my post on the Pipeline).  It’s also time to ramp up your analytics, segmentation and data mining operations.   Build models to help identify opportunities to cross-sell and up-sell products and customers.  Corporate Marketing will need to update corporate positioning and the messaging architecture to align with where the market and customers exist. Product marketing has to develop solutions and messaging to drive larger deals.
4. Increase price points  – This is related to the point above: stop discounting products and services immediately.  Wind down incentive pricing, and start developing new offers with customer, and market aligned value propositions.  This will be a challenge to manage as the sales force and customers have become conditioned to expect a “good deal," despite the fact that it has been shown to be ineffective.  Invest in research to determine how their expectations have been impacted because of this practice.
5. Expand your channels – this will be important to several reasons.  First, a new “home” for small transactions and customers is needed.   The second is that you may not be able to reach or capture the market because it has shifted (e.g. new technology/innovation, competitors, etc.).   Invest ahead of the curve as good sales people are hard to find and there is going to be a run on them.  Along with reps, get your partners up and running now, and grow into full productivity later. 

Lastly, don’t over look the need for change management.  According to the Corporate Executive Board, 25% of high performers indicated that they are interested in changing companies as the economy recovers.  Invest time in evaluating the impact of implementing the steps mentioned inside your organizations. 

Customer and rep behaviors have changed, as well as markets.  The recession was one of the longest in our history.  It’s a mistake to just snap back to the way it was.  Be smart and invest in research on your customers, competitors and markets.  Set a three year plan to double revenues, price points, etc.  Create aspirational goals and get the organization excited again…it’s been a long time coming.  

Legacy Thinking: How We Define “At Work”

What do you think of when someone says they are “at work”?  An office building? A typical work day (9am -5pm or 8am-6pm)?  A typical the work week (Monday-Friday)?  How about the workplace (an office with a desk and a computer)?

We still hold on to these perceptions of work, despite research and our intuition telling us that this is no longer true.  Management workers are increasingly working outside the office and spending more time in that capacity - 16% of the work week on average.

These “knowledge workers,” as Peter Drucker coined them, are also increasing the time they work at home.  38% of managers, information workers, and professionals spending some portion of their time at home during the workday, and 34% spend time on the weekend working (an average of 3.75 hrs).

The workplace, office hours, and work week are changing and will continue to change, so as marketers how should we be thinking about this change?  I recently spoke with the head of a customer analytics company who mentioned that one of his clients discovered that targeting customers at their home address was more effective than reaching them at their office location.  

Knowledge workers are also more likely to be business decision makers.   In addition to logging time from their home, they are also the ones who are most likely to be mobile.  As a result, they are heavy technology users: 93% saying that mobile technology makes them more productive.   So is that the answer?  Do we try to reach these business buyers on their smart phones and shift to mobile advertising?  

 

Not so, according to Nielson in a McKinsey Quarterly report that found that it would take “a technology breakthrough to make mobile screens a more inviting environment for direct marketing and wireless commerce.”

Although technology will need to evolve, and it will, we should recognize that we are in middle of a significant change.  The mobile movement is on, but it hasn’t reached critical mass yet.  Behaviors are changing, but it isn’t a majority.  The era of Business-to-Person (B2P) is evolving, but it’s also being viewed as a distraction.  

As these technologies and work habits continue to evolve, what is certain is that businesses will continue to lose control over the message, the channel, the engagement, and the timeframe.

Customers can and do, decide on what and where they want to consume information.  Americans now consume five times the information they did in 1980, averaging 11.8 hours a day.  According to a recent Harvard Business Review article we’re now able to pack in, thanks to multitasking, 12 hours of media usage into 9 hours (think watching TV and surfing the net at the same time).  

Our world is changing.  The concept of “work” is no longer defined by a physical location, title or time, but rather it is a state of mind.  Businesses are no longer an entity, but rather, a trusted individual. Legacy thinking is the idea of a business targeting a business buyer (by a title), at a business address, during “business hours.” 

In this new world, sophisticated marketers have to embrace this change by understanding how to identify unique behavior segments of decision makers and influencers, where they congregate and how they want to consumer information, and that includes who they want it from, and when. 

Creating a Corporate Value Proposition

In my experience, one of the most difficult tasks for an organization is defining their corporate value proposition and their key differentiators: The ”Why Us” question.  We were in a meeting recently with a company and they told us that the last agency resigned from the account because they went through 400 iterations (not making this up) on the value proposition and still couldn’t agree on one.  

Organizations fail for many reasons when developing corporate value propositions: too little collaboration yielding no buy-in, a meddling CEO, a lack of a disciplined approach, failure to properly test externally, etc.  But in this particular case, the company’s past success was now causing confusing among executives as they plotted their future course.  

The organization enjoyed 25 years of strong growth and profit performance (prior to the recession).  A portion of this success was attributed to allowing the business units to operate nearly autonomously. However, that freedom came with a price: it formed separate cultures, brand identifies, logos, sales collateral, even the “language” that was used varied when talking about “what the company was, what they stood for, and what it should be in the future”.

As a result, tying the organization together under one umbrella message and value proposition was a huge challenge.  

Defining Value

Michael Treacy & Fred Wiersema, in their ground-breaking book The Discipline of Market Leaders, suggest that there are only three ways an organization can define it’s value and hence, how they define themselves in the market:

Each type requires different operating models, corporate cultures, and marketing communication strategies. While companies may be able to provide value beyond one category, they must first define their primary value definition through a competitive and self-analysis. Part of this review includes an evaluation of an organization’s ability to deliver the value that is defined through its core-operating model.

An assessment revealed the company to have good products, but it was not a product leader, in the example that it employed no Product Managers. It also had strong relationships with customers, but could not be considered “Customer-Centric” since it had just launched an Account Manager role a few months prior.

It was clear.  The company's success was built on a core-operating model that emphasized scale and efficiency.  The model delivered operational excellence, however, too many in the organization equated that with being "Walmart."  Because they were in they were a professional services firm this view appeared to lack the important customer intimacy component, with was true, given their customer retention and satisfaction rates.   

Being presented as “Operationally Excellent” despite the performance it could deliver (EBITA 20+%), wasn’t viewed as “sexy” enough.  For someone who interfaced with the customer on a daily basis to solve complex problems, that value proposition seemed inadequate and incomplete.  While these points were accurate, they were secondary value propositions. 

And this became a key insight.  Treacy and Wiersema point out that to determine the right corporate value proposition you have to look at how the company is delivering scalable and sustainable value to customers.  What we learned was that employees have a tendency to perceive the value the organization delivers through their own experiences (that are generally not scalable), and not based on the core business model.  

In some cases, companies have been able to successfully shift their core value delivery model, for example, from delivering a product to a service, and as a result need to redefine their value proposition and how they communicate it.  In other cases, executives can get caught up in trying to define the company’s value from their personal point of view even though the core business model has not changed.  There is nothing wrong in wanting company to be more than it is, the problem is communicating and delivering on it.  

If you find yourself in that situation, take a look at what customers value and how you are delivering it.  It usually starts with understanding what built the company in the first place.  Starting there will guide you to your destination with most of your colleagues in agreement…and in less than 400 rounds.