Situation: The CEO of a service company needs to expand its market base due to concerns that a significant service and referrals partner may decide to stop working with them. A break-up would have significant impact on salaries, effort and focus. The company’s priority is to expand client growth to minimize the impact of a break-up. How do you expand your market base?
Advice from the CEOs:
To expand or build a market requires a champion. Someone like the company’s founder who has the passion and contacts to build new business.
Second, incentives must be established to reward success bringing in new clients. These incentives must have teeth – no success, no incentive. No safety valves.
Third, create a plan to support the new business development – including marketing, event attendance, etc.
Initially, be selective and target just a few highly desirable new clients to test and refine the client attraction model before expanding to the broader potential client audience.
Build a set of case studies of services and results for new clients.
Track and prove out the profitability and workability of this model.
How should the effort to expand the market base be constructed?
Start with preparation. Research the current prospect list to assure that they are good prospects. Also look at the current company culture – do the company’s strengths align with what is needed to attract and serve new clients?
If the research shows that a significant number of prospects are different from current clients, think of this as a new channel. Create a different business unit to specialize in serving these clients. Hire a team to focus exclusively on the new client group, with proper incentives tied to achievement with these prospects.
Another company had a similar choice. They created a program to increase their market base and went after it with full focus. It took five years to accomplish vs. the two years that they had planned. Nevertheless, the results have been worth the effort and expense. If the company believes in the model, invest in it.
Situation: A growing technology company is faced with several opportunities. The CEO is too busy to devote the time to analyze each of these. In addition, the CEO wants to develop her staff so that they can take on more responsibility and mature into a full organization. How do you choose between opportunities?
Advice from the CEOs:
Everything starts with a strategic plan for the company. Either the CEO or an outside consultant should coordinate a strategic planning session to develop and rank the opportunities facing the company. The ranking exercise is best done as an open departmental or company-wide exercise so that everyone is involved in the process. This helps to build consensus and commitment to the opportunities developed.
Once the opportunities have been identified assign one to each of the employees that you want to develop. Each of the employees will be the champion for that opportunity.
Ask each champion to develop a business case and plan for their opportunity. This will include a development plan and ROI analysis. Allow each champion to access all company resources as they develop their plans. Set a deadline for all champions to complete their plans.
Once the plans have been completed, reconvene the group that participated in the strategic planning session and have the champions pitch their plans to the group. The group will provide feedback and suggestions for each plan. At the end of the session repeat the ranking exercise based on the new information developed and presented.
This will provide a wonderful training opportunity for the champions as well as valuable insight into their talents and potential for future development. In addition. Because the strategic planning sessions will be conducted as a company-wide exercise, they will act as team-building exercises and excite everyone about the potential facing the company.
Situation: A company collaborates with a large client to provide services to their mutual market. The company wants to offer similar services to secondary markets not currently of interest to the client. The challenge is that the client is very conservative; their current priorities are forcing long delays responding to the company’s requests, and the primary contacts within the client will not take any risks arguing the company’s case to their upper management. How can the company approach this situation to create a win-win situation with this client?
Advice from the CEOs:
Since the services provided combine the capabilities of the two companies, it is necessary to develop a strong case to show how the proposed extension of services will benefit the client. Without their agreement the service offering is compromised.
One option is to offer a no-risk revenue share or royalty arrangement to the client in exchange for their agreement to allow you to build the secondary markets.
A second option is to offer to sell a minority share of your company to the client in exchange for your ability to develop the secondary markets. The deal could include an option to make a larger investment in your company if your strategy plays out profitably.
A third option is to raise money and purchase rights to the client’s capabilities outright. It is worth exploring whether the client would be open to this.
Find an informal setting to ask the client’s CEO for advice on how you should proceed. Have your ducks in line to offer options if the CEO responds positively.