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March 26, 2014 | digitalexe |
A common mistake that small companies make is they want to be everything to everyone. Even big companies make this mistake too. The truth is that your business, particularly if you sell some sort of technology offering, will be BEST SUITED for only one particular type or profile of customer.
And, because time and money are limited, the exercise of narrowing your lens to focus on just that type of customer could help you increase the yield of your various lead generation and sales activities.
Why is it important to narrow your focus?
1. To concentrate on your organization's core competencies. Put another way…do what you do best. Passion, creativity, and the willingness to go the extra mile will come through in the product or service – and clients will immediately take notice. The attention to detail, research and best-practice methods will even spark innovation -- leading to countless new products that your organization can consider launching into the market.
What if I lose business? You won't. Instead, you will actually gain business, because you will be demonstrating a commitment to clients in an industry that will regard you as a trusted resource or advisor. If you are concerned that you might lose potential business – perhaps a client in the periphery to your core market – you should instead concentrate on serving the market with the products you know best.
What if I become obsolete? Markets, preferences, customers, and products can all be expected to change at a moment's notice. One big fear of narrowing focus on only one product or audience demographic might be that the product no longer becomes useful or interesting – that it becomes obsolete. You can combat this if you and your organization have been strategic all along. By accurately drawing a product roadmap and being able to accurately predict the direction of your target market, you will be able to predict obsolescence long before it is an issue. And if you have been maintaining a narrow, concentrated focus all along, you will be able to harness both internal and external resources to develop a plan that addresses any product or market shortfalls long before they become an issue.
2. To improve overall communications and messaging. Instead of general messaging, do not be afraid to let your audience know about the specific type of product that you offer, or the specific market that you serve. This is a radical departure from current marketing communications trends but additional rewards will surface in the form of journalists and bloggers who will not only easily find you, but also more easily write about you, as your corporate and product story is much more easy to relate. As such, you will win over a notoriously difficult constituent group – which any business needs to carry forth its brand messaging and communications.
What if the creative gets stifled? If you are feeling that your creative is getting a bit worn out, or that you have said everything you can possibly say, you are not working hard enough. Challenge your marketing team or agency to develop more engaging content, or better yet, crowdsource your messaging: use your Yammer, Chatter, or online community software instance to ask both your internal and external communities for input, advice, and ideas on messaging. Don't forget to gamify the experience, and reward the winner or winning team with something valuable (or fun).
3. To differentiate your organization and its capabilities. Ironically, in an age of 'solution providers' that promise all things to all people, focusing on only one product, category, or industry will set you apart. Just as with becoming memorable to journalists, bloggers, and influencers or your razor-sharp focus, you will become indelible to your clients for delivering a stellar product or service to an audience whom you clearly demonstrate to know very well.
4. To better balance risk. Small companies often over-extend themselves to grab a new, tangential piece of business – rather than focusing attention on core segments OR they become too focused on that one or two really great clients and ignore other opportunities in their bailiwick. The best approach to this is to balance harvesting your core segments, and your best customers, while also diversifying with a choice few new ones. Be sure to give your best customers your fullest resources and attention while you grow – but also be willing to balance your time and resource investment with new customers that might bring greater profits and/or growth. This will be a challenge, but one worth fighting through. The rule of thumb is – if you’ve got more than 50% of your revenues coming from ONE customer, you need to diversify. And, if your resource allocation does not reflect your profit yield per customer (meaning the most profitable customers get the most support, value-add, etc.) then you need to consider how you are serving your customers – this should match up reasonably well. Lastly, if you don’t know the profit yield of each customer – you will probably benefit greatly from better accounting and budgeting practices.
5. To increase productivity and profitability. Because nearly everyone in your organization will be more focused on the products or services that will yield the highest sales with the least number of customer service issues, your company will become more productive and profitable. Knowing what works best will enable you and your company to avoid developing, selling, and servicing products which will not work, making your organization more efficient over time.
Final Thought: Narrowing does not mean limiting. A razor-sharp focus on clients with targeted messaging about the right product will lead to sales. Today's marketing professional may struggle with this concept, but when sales and satisfied customers result, the rest of the industry will take notice. Since all marketing should tie back to revenue, your team will easily be able to measure the results of this strategy.
It's always a tough decision to break away from the pack. Make the tough decision to focus on what your company does best in order to concentrate on favorable outcomes. And, more importantly, you can point your efforts to outcomes that will really matter to the success of the business.
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ChangeU: for your independent study…
1. THE GLOBAL INNOVATION 1000: http://goo.gl/AVZk30 How the Top Innovators Keep Winning Booz & Company's annual study of the world's biggest R&D spenders shows why highly innovative companies are able to consistently outperform. Their secret? They're good at the right things, not at everything.
2. The Nine Principles of Branding: http://goo.gl/Y4F4cr Greg Stine identifies 9 fundamental qualities of a good branding program to help companies positively differentiate themselves and their products from that of the competition.
3. Discipline of Market Leaders: Target your Customers, Narrow your Focus, Dominate your Market, by Michael Treacy and Fred Wiersema: http://goo.gl/VzZwKS From the best-selling book, The Discipline of Market Leaders, research shows that businesses achieve sustained success by using 3 disciplines: operational excellence, product leadership and customer intimacy. Successful companies excel in one of the disciplines and must be satisfactory in the other two.
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