Beat the Competition Next Year (Higher growth, profitability, innovation)

After the mid-year break – and this year it started way sooner thanks to covid-19 – most organisations get into their planning phase for the coming year in earnest. Do you know how you’re going to beat the competition next year? If not, then this article will set out some clear priorities.

Although business plans are usually developed and approved in the middle of the year before the vacation period starts, it is only afterward the seasonal break that the real work begins. So what have you promised your top management? Faster growth, increased profitability, or more successful innovations?

Whatever is in your plans, now is the time to review them and decide the very best strategies and tactics for meeting them. Let’s take a look at each of these objectives and see how best to meet them.

 

Higher Growth

As you know, there are basically only three ways to grow your sales:

  1. Get more people to buy
  2. Get people to buy more
  3. Get people to buy more frequently

What you may never have noticed before when reviewing these options, is that all three approaches include the word “people.” And it is only by understanding them better than you do today, that you will be able to grow your business tomorrow.

So, how well do you know your current and potential customers? Do you know what they think about your current offer? Do you understand their needs, desires and dreams? Do you recognise what they really want but can’t even themselves articulate? Uncovering these are what will give you a clear competitive advantage.

Of the three strategies, the first seems to be the one that most organisations immediately think about when looking to grow their business. They go out looking for new customers by increasing their distribution channels in the hope of getting more people to buy. But that costs a lot of money, doesn’t it?

CPG (consumer packaged goods) companies on the other hand, frequently encourage their customers to buy more through promotions and discounts. This too takes a large portion of their budget.

However, it is now well documented that it is easier to increase sales amongst your current customers than it is to go out and attract new customers to buy.

A 2015 study by  Price Intelligently showed that a 1% increase in customer acquisition impacts your bottom line by around 3.3%. But improving your retention rate by 1% affects your bottom line by around 7%. In other words, it is twice as profitable to retain a customer than to acquire a new one.

“It is twice as profitable to retain a customer than to acquire a new one.”

Even if you replace every customer who leaves by a new customer who buys, you end up with the same number of customers—but lower margins–because it costs far more to gain a new customer than to keep the one you already have.

According to ThinkJarCollective, it is six to seven times more expensive to attract a new customer than it is to retain an existing one. Continue Reading

A Customer-First Approach to Successful Innovation (and 3 Secrets Shared)

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Whether you believe that 60% of new product launches fail, or the number is 80% or 95%+, the truth is that successful innovation is rare. Why is this? Read on for my own ideas of the reasons and propositions for some simple solutions.

Last year I wrote a highly popular post on “Improving Ideation, Insight & Innovation: How to Prevent Further Costly Failures.” In it, I spoke about the importance of starting the innovation process with customers. I also mentioned that it should be a virtuous circle rather than the funnel that most organisations still use today. 

This time, I want to examine the role of the customer in successful innovation. And why they should actually have a prominent position throughout the process.

 

Start with the Category rather than (just) the Customer

Every customer-centric organisation should start their processes with a review of the customers they are looking to please. But to do this, the first step to both insight development and successful innovation is to identify the category in which you are, or want to compete. Especially when looking to innovate, it is vital to identify what business you are in.

Now you probably can immediately answer that question but would you be right?

A recent client of mine was looking to launch a juice flavoured soft drink. They naturally (?) thought they would be in competition to juices. When we dug deeper, using our “Home or Away™” decision tool, we found they were actually competing with energy drinks for athletes!

Another practice I use is to zoom in or out when looking at a category, in order to identify new opportunities. Today’s technological world is forcing many organisations to take another look at their complete business models – whether they like it or not!

  • Telecoms have become geolocalization data providers to other industries.
  • Pharmaceuticals are being forced (?) to move from treating illness to maintaining wellness.
  • Food companies are moving into nutraceuticals, concentrating the health benefits of certain foods. (have they really only recently understood that our health comes primarily from the food we eat?!)
  • Tobacco companies are reinventing personal pleasure systems with e-cigarettes and other tobacco replacement products. In fact, André Calantzopoulos, Philip Morris International’s CEO recently predicted a “phase-out period” for cigarettes.
  • Alcohol providers are turning more and more to lower and non-alcoholic drinks trying to keep up with the interest in wellness. They have understood that whereas drinking is a social behaviour, most people no longer include getting drunk with that sociability.

From these examples, it is clear that most companies could benefit from a re-evaluation of their assumed category, to see whether it has or will change in the near or longer-term future.

Once the category is defined, it becomes much easier to identify the correct customer segment to target. Of course, you still need to get to know them through customer connection sessions. Continue Reading

I hope you enjoy reading this blog post.

If you want me to catalyse your growth and profitability, just book a call.

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