Situation: The Company wants to enter a new market, but does not know much about it. Jim Collins advises understanding the brutal facts of any business as an essential part of strategy. How do you research the brutal facts of a business or market?
Advice from the CEOs:
- Determine the key players in the market, and closely observe them – their mistakes and successes. Identify and interview clients and look for gaps in products and services offered. Use this research to develop a differential advantage for your product/service.
- Use allied resources. For a general contractor this includes real estate professionals and other allied professionals who know the marketplace and the performance/reputation of other contractors.
- Business consulting firms conduct surveys of markets. Look for and purchase published surveys. If you participate in their surveys you can get the results at a reduced cost.
- Trade magazines and business journals like the San Jose/Silicon Valley Business Journal publishes surveys of the “Top 25” local businesses by industry. These help to assess local competition and gather information about revenues, principals, etc.
- Leverage industry associations. Attend conventions and learn the lay of the land from the attending sales people.
- Leverage Internet resources: Hoovers.com, Dunn & Bradstreet, HarrisInfo.com, and IndustryBuildingBlocks.com.
- Have your best sales reps talk to customers in the new market about their needs and desires, and their current suppliers. Ask them to gather information and present to marketing and sales competitive reviews of the market based on what they learn.
Key Words: Market Assessment, Customer Needs, Customer Survey, Differential Advantage, Consulting Reports, Trade Associations
Situation: The Company has had success with a few large clients but wants to expand their customer base for long-term growth. How do they differentiate their products in what is perceived as a commodity market?
Advice of the CEOs:
- One company created differentiation by getting to know everyone in the business – building long term relationships, based on reputation and trust.
- They spent time up front understanding the needs of customers that they wanted to develop.
- As opportunities arose, they built relationships and asked questions to clearly define client needs.
- While it takes time and patience, the objective is to be able to say “We know your business” – with credibility.
- The steps:
- Study the business, sector, and customers that you wish to serve.
- Leverage the success that you have had with large customers. Talk about how you helped subunits within your large customers. This makes a big customer seem more like a collection of small customers similar to your prospects and makes your experience relevant.
- Let prospective customers know, when appropriate to the situation, that you are hungry and will go the extra mile for their business. Simply out-serve your competition.
- Learn who currently serves your prospective clientele. Study these competitors, their strengths and weaknesses. Talk to their customers – learn what they love about competitors’ service, and what they would like to see changed. Find the holes in what they provide and fill these holes with a better offer.
- Look for and encourage repeat business and references to new business.
Key Words: Commodity, Differentiation, Sales, Marketing, Business Development, Customer Needs, Competition
Situation: The business climate is starting to improve. Opportunities are coming in. How do you decide what to do and what not to do?
Advice from the CEOs:
- Talk to your customers. What do they value about your product/service and what is less valuable? Build on opportunities that customers value – which are consistent with your company’s strength and focus.
- Consider a customer survey – Survey Monkey or a telephone.
- If you don’t have in-house expertise to design and administer a survey, find knowledgeable outside resources.
- Make sure that the survey questions will drive understanding of your focus.
- If you are short of cash, at least get an expert to review the survey and administration plan.
- Before you launch the survey to your full customer base, “test” it with a select group of customers – this will tell you whether it will produce usable information. If not, rewrite.
- Have employees take the survey and predict how customers will respond. Compare these results with the actual results from customers. You may learn something!
- Which opportunities will build sustainable recurring revenue vs. opportunistic (one-time) revenue?
- Recurring revenue can be lower margin if the income stream is sustainable.
- Balance efficiency and utilization. For example, fixed fee service contracts that renew consistently.
- Judge opportunities against your “Hedgehog” as defined by Jim Collins in Good to Great:
- What you are passionate about?
- What you can be best at in your marketplace?
- What you can measure by a single economic ratio?
Key Words: Customer Needs, Customer Survey, Business Opportunities