BY MASTERING THREE MAIN DOMAINS
Now that the global economic downturn begins to slow down, companies are considering again long term growth. They are turning their thinking into preparing their company to take the maximum of advantage of the new growth opportunities that lies ahead. They understand that they must past their traditional performance barriers or they risk falling behind the more agile enterprises.
The past recession was a strong one; a lot of companies got stuck. The concept of hard time is that it freezes people. Very understandably that the main focus of the recent challenging economic environment has been one of cost containment, holding cash and hanging on to their existing customers.
With the worst of it behind us, companies are once again turning their sights on growth and customer acquisition; however this does not mean that the strings have totally been loosened. Most companies, even those with a strong growth orientation generally still operate in a budget-constrained environment and will have probably less money to work with than before the recession. They understand that they must focus their efforts very specifically and strategically.
While opportunities for growth are quickly increasing, challenges are still around.
One of the biggest challenges facing companies today is the fact that customers are totally different today than they were a few years ago. The recent economic downturn has been traumatic for customers and has changes their psyches. Customers are increasingly looking for products and services that are more closely tailored to their individual needs; future proof and durability has increased as customers hold on to products for much longer. Other values such as environmental sustainability and corporate social responsibility will probably grow in importance as customers reject the indiscriminate consumption patterns of the past and become more selective in their choices.
Consumer expectations are rising year over year; these expectations have increased significantly over the past 12 months alone and will continue to arise in the years to come.
Customer satisfaction and increased customer demands makes traditional growth patterns unpredictable. No market or industry is immune to this global trend as consumers show little loyalty to providers and appear willing to explore alternatives, actively seeking out better deals.
Also customer behaviour has changed; today customers are less willing to share information and leave more quickly without notice. Thus challenging even the best retention programs.
For the first time in history, there are five generations in the marketplace, each with different needs and behaviors. Yet in most companies business models have not evolved sufficiently in how to interact with all of them. Besides that populations become more heterogeneous, thus rendering a mass approach nearly impossible.
In view of these challenges, most companies are not organized for growth in this new environment. To sustain profitable growth they need to become more agile by making fundamental changes in their marketing-sales and human resources approaches or they will quickly fall behind in the race to drive growth.
Three main domains to create your own upturn
In reviewing all the possible options and after analyzing many companies with a focus again on development, we believe that companies will find their growth by maximizing three specific domains: unique and strong branding and recognition, innovative marketing principles, and optimal use of the human element.
Unique and strong branding and recognition
It may sound simple but getting any organization or group of people be seen and perceived by the world in the way they wished it should be, is not as easy as it sounds. Creating a compelling brand and identity for your company that matches with your values and your reality, is one of the most important steps to take if you want to sort out of the grey mass and attract the attention of new target groups. In a world that is trying to slam everyone down to commodity and marginalized status, you have to draw a line in the sand and distinguish yourself.
By differentiating yourself against the competition, organizations can generate incremental sales and margins instead of going into the stream the market pushes you in: being a commodity provider.
Being different, distinctive, special, unique, and advantageous in the eyes of your clients is basic to your success. The concept of “Unique Selling Proposition” is no longer merely having an advantage over your competitors. Today you have to be seen as the only viable solution, strategy or opportunity for the problem or desire that your marketplace is trying to address. And you have to be much more refined in it, because there are too many choices. Needs today may be singular, but means to fill them are so vast it’s scary.
The NIVEA-story
A company that achieved significant growth through the use of unique branding based on its own identity and on its true values is the beauty specialist NIVEA. After an in-depth study on the consumers’ needs and a profound market segmentation, they aligned in a very successful way their mission (what role do we want to play, what is our message, our belief) and their values (what is our identity, who are we really) and how they could translate all this into their offering. They then launched a series of products and services addressing a target group of real women with normal imperfections; not the fake ones we see on television and in advertorials. NIVEA found its own voice and unique branding and aligned everything to it. This resulted in huge business successes.
Innovative marketing principles
Change your marketing, change your results. Marketing drivers are the key elements that give you optimal leverage and enhanced performance on a sustained basis in your business.
Almost everything you do has infinitely greater upside leverage, and you can control or eliminate the downside. If you can make the same action, the same activity, the same person, the same capital, the same client, everything produce more, yield greater results and performance, then sustain it, the combined effect is exponential growth. We believe in working on the geometry of your business. It’s all about optimizing. Maximum result, minimum effort, minimum expense, minimum time, and minimum risk.
The human brain is capable of understanding incredibly complex and intricate concepts. Yet at times unable to recognize the simple. Once the obvious connections have been made, we can’t believe we didn’t see them sooner. Especially in the business world an endless number of these unmade connections exist, we are surrounded by it and they can dramatically increase the income, the power and success of organizations. Business is all about connections: money connections, product connections, relationship connections.
The approach of recognizing the income- and success-increasing connections is based on two strategies: maximize what you have and multiply your maximum. There are only 3 ways to growth, no matter what business you are in: you either increase the number of customers or prospects, you increase the unit of sale (not only raising your price but also making a new package and putting more added value in it that sells for more and gives the customer more sense for value), you increase the number of purchase or the residual value that a customer is worth to you. The secret is: do any one and you can grow geometric, do any combination of the three and you grow exponential.
We call it “The Force Multiplier Effect” , a military term. It’s defined as the capability that, when added to and employed by a combat force, significantly increases the combat potential of that force. And thus enhances the probability of successful mission accomplishments. It’s the militaristic discipline of creating multiple avenues of penetration at the same time. Going by land, going by sea, funnel attack, side attack, surprise attack, missiles, going ahead to penetrate and soften the market, air attack, land attack, sea attack, stealth attack. And it’s a proven process of dominating your enemy in military terms. And when you apply it to your business, you can dominate and preeminently own your market. It’s letting the full force of many different factors carry you to greatness without you having to lug it and push it.
An example:
Let’s say you have one thousand clients and they average €100 per transaction or sale. And they make two purchases in a year. Look what happens if you increase these three numbers (clients-sale-number of purchases) by just 10%: a mere 10% increase across the line expands the income by 33.1%. A 25% increase in these categories nearly doubles your income to €390.625. Focusing on this simple formula alone is just one small way to easily grow your business by 100%, 200% or more.
Optimal use of the human element.
Despite all our gains in technology, product innovation and world markets, most people are not thriving in the organizations they work for. We live in a knowledge worker age but operate our organizations in a controlling industrial age model that absolutely suppresses the release of human potential.
In a recent study, Harris Interactive* interviewed 3500 managers and professionals in client organizations and asked them the question “what holds you back from empowering the human element in your company”.
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Only 37 % said they have a clear understanding of what their organization is trying to achieve and why;
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Only 1 in 5 was enthusiastic about their team’s and organization’s goals;
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Only 1 in 5 workers said they have a clear ‘line of sight’ between their tasks and their team’s and organization’s goals;
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Only half were satisfied with the work they have accomplished at the end of the week;
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Only 15% felt that their organization fully enables them to execute key goals;
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Only 15% felt they worked in a high-trust environment;
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Only 17% felt their organization fosters open communication that is respectful of differing opinions that results in new and better ideas;
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Only 13% have high-trust, highly cooperative working relationships with other groups or departments…
Today, we are witnesses to one of the most significant shifts in human history. And it is not technology, nor the Internet, nor e-commerce but the unprecedented change in the human condition. For the first time, growing numbers of people, of employees have choices. And for the first time, they will have to manage themselves. And companies are totally unprepared for it.
Empowering the knowledge worker: A few years ago product cost used to be 80% on materials and 20% on knowledge; today the split is 70/30 the other way. 80% of value added to products and services comes from knowledge work. Quality knowledge work is so valuable that -unleashing its potential- offers organizations an extraordinary opportunity for value creation.
Conclusion
The recent economic downturn has certainly been challenging for companies across all industries. The depth and breadth of the recession took a heavy toll, with many companies forced to close their doors and even the best-run organizations being sorely tested.
As executives consider the lessons learned and prepare to focus once more on their
growth agendas, they will be confronted with the very real possibility that many of their existing approaches to stimulate demand, may no longer be appropriate and that the market environment has dramatically changed. Companies seeking to grow their customer base require a strategy rooted in the recognition that the strongest growth will go to those who are able to understand the new market drivers and how to create new customer value that align closely new tailored experiences.
Learning from the market-leaders best practices, organizations that master the ten key capabilities in the context of branding, innovative marketing and unlocking the human element will create their own upturn. From a unique branding and recognition strategy, such capabilities will enable companies to be distinctive and to be perceived as a high added value partner, away from the commodity market push. In terms of innovative marketing principles, companies will build their business on a foundation of Multiple Profit Sources instead of depending on one single revenue source. Managers today are still applying the Industrial Age Control model to knowledge workers; they manage people as they do things. This lack of understanding also prevents them from tapping into the highest motivations, talents and genius of people.
