Take a look at last year's strategic planning document. What was the direction of your competitive strategies? Were you aiming for a niche market that although had low volume delivering high margins? Or were you trying to compete as a commodity to get high volumes even though the margins were low? Or did you take the time to research and develop ideas that created differentiation to your organization where you can have high volumes along with high margins? You achieve this by delivering premium products or services at premium prices.
All three of these strategies can make your company sound, but your actions must align with your competitive strategies and your competitive strategies must align with your approach to leading the organization.
Niche Market
To reach a niche market you have to segment your market and offer special features for a specific type of customer. In some cases customization is required along with a good bit of research to understand the needs and proper approaches for this market. Obviously, if you want to attract young white collar customers to use a particular product, then you must find ways to rise above the competition and reach that customer or prospect in the correct manner based on their buying habits.
If a blue collar customer is the niche you want to serve more, research the products that best fit their needs and still fit the proper margins. Learn their buying habits and develop strategies to directly reach them. Needless to say, the different market segments used in this example are going to have different buying habits and have different product needs. The organization needs to strategize which niche they want to be the expert in and work to deliver for that niche.
The Commodity Strategy
Some organizations accept the fact they are not well positioned to serve a niche market and prefer to hold the course they have been on for decades by being another commodity in the marketplace. Although I don’t agree with using this as a long term approach to be competitive, it can be a stopgap approach. Let's say you want to make some shifts over the new couple of years to better position yourself but you don’t want to just sit without any strategies until you get a better definition of who you want to become, so you want to at least maximize your current situation.
A commodity strategy accepts you are one of several options for prospective customers, and you want to attract high volumes with lower margins. This is a strategy that can be profitable, provided you have an economy of scale. For example, the large banks in this country have hundreds if not thousands of branches across the country to serve their large numbers of customers. They have an aggressive approach to grow by acquisition as well as with service. Their profitability is based on their size! Their size allows them to offer slim margins because of the volume they can create. How does a credit union or smaller community bank compare? Most have an advantage in offering slightly better rates and lower fees but the commodity shopper is mostly looking for convenience followed by best rates. Wal-Mart has become expert in their ability to use their economy of scale to drive out smaller competitors and those competing in commodity-focused arenas could face the same fate.
Differentiation
By differentiating your organization from the rest of the pack, you are able to have the best of both worlds with high volume and high margins. How is this possible? When current and prospective customers must be part of your organization you have the ability to operate from a greater position of strength. Differentiation is all about uniqueness and brand recognition. Apple has been able to create this with the iPod and now the iPhone. Apple is creating must-have products where price is of much less concern to the buyer than the uniqueness of product and the brand of Apple. Obviously, Apple had to work hard to establish the brand with effective advertising and build the uniqueness in the mind of the potential customer where price was an afterthought.
Monday, March 30, 2009
Monday, March 23, 2009
Be Honest with Yourself
Looking in the mirror and being honest is always a difficult thing. It's hard to admit weaknesses and I find people embellish their strengths.
This can be an obstacle to strategic planning. Effective planning requires honesty so you know where your strengths are and how strong they really are so you can set objectives to make them even stronger. In evaluating weaknesses it helps to have an outside perspective who can ask the tough questions. As one of my clients said, "Sometimes you have to ask someone outside of the family whether your baby is ugly or not." Weaknesses are naturally difficult to face, and in some cases even recognize depending on the management team dynamic.
It's easy to put the best spin on the situation and believe you are the best in customer service and product offerings. However, in the final analysis you are what you are, and if you are having a net loss in customer accounts, and your profits are decreasing, then something is obviously amiss.
Declare an amnesty day where your team can "confess" openly to their concerns and views on the strengths and weaknesses. It's always better to be solution-focused rather than blame-focused, and honesty in this process will get you to better solutions quicker.
It's better to be honest when preparing for your planning process, than to work hard on spin control when the competitors or regulators are knocking on your door.
This can be an obstacle to strategic planning. Effective planning requires honesty so you know where your strengths are and how strong they really are so you can set objectives to make them even stronger. In evaluating weaknesses it helps to have an outside perspective who can ask the tough questions. As one of my clients said, "Sometimes you have to ask someone outside of the family whether your baby is ugly or not." Weaknesses are naturally difficult to face, and in some cases even recognize depending on the management team dynamic.
It's easy to put the best spin on the situation and believe you are the best in customer service and product offerings. However, in the final analysis you are what you are, and if you are having a net loss in customer accounts, and your profits are decreasing, then something is obviously amiss.
Declare an amnesty day where your team can "confess" openly to their concerns and views on the strengths and weaknesses. It's always better to be solution-focused rather than blame-focused, and honesty in this process will get you to better solutions quicker.
It's better to be honest when preparing for your planning process, than to work hard on spin control when the competitors or regulators are knocking on your door.
Monday, March 16, 2009
Sustainability
One of my clients wanted to do some brainstorming during a rebranding process. The process was designed to give them a fresh look, a fresh image and an opportunity to reemerge in the community as they pursued a new group of customers.
The process lasted pretty much the entire day and fresh ideas were popping all over. Toward the end of the day names were getting whittled down to fewer options, and it suddenly dawned on a couple of participants that a new name and image was going to be arrived at. Immediately, feet got shoved into the dirt and the resistance happened and the big shift in image and name became stalled. In fact the board finally voted on simply using the initials of the previous name for the “rebranding.”
To get significantly different results you have to do something significantly different.
When you find you are losing customers and market share and the competition is becoming a more preferred provider, some significant shifting has to occur. You can't just dust off what is already in place and hope it produces different results. You have to make some shifts.
Sustainability is key. I find when companies are in difficult times, people run around in a panic trying anything they can to change results. As soon as those desired results become more visible the natural tendency is to slide back to the comfort of old habits. In other words, no sustainability to the changes, no real shifting has taken place, so any change in results are temporary.
Well thought-out management strategies are not reactionary, temporary or easy to slide back off of. They have measurements, accountability and sustainability. Strategies that have been designed to create proper changes will be better accepted by the staff, have better implementation and be treated as less of a fad where employees expect to slide away from after a few weeks.
In your planning process look for ways to create sustainable changes, not just knee-jerk reactions that only panic staff and have no lasting result.
The process lasted pretty much the entire day and fresh ideas were popping all over. Toward the end of the day names were getting whittled down to fewer options, and it suddenly dawned on a couple of participants that a new name and image was going to be arrived at. Immediately, feet got shoved into the dirt and the resistance happened and the big shift in image and name became stalled. In fact the board finally voted on simply using the initials of the previous name for the “rebranding.”
To get significantly different results you have to do something significantly different.
When you find you are losing customers and market share and the competition is becoming a more preferred provider, some significant shifting has to occur. You can't just dust off what is already in place and hope it produces different results. You have to make some shifts.
Sustainability is key. I find when companies are in difficult times, people run around in a panic trying anything they can to change results. As soon as those desired results become more visible the natural tendency is to slide back to the comfort of old habits. In other words, no sustainability to the changes, no real shifting has taken place, so any change in results are temporary.
Well thought-out management strategies are not reactionary, temporary or easy to slide back off of. They have measurements, accountability and sustainability. Strategies that have been designed to create proper changes will be better accepted by the staff, have better implementation and be treated as less of a fad where employees expect to slide away from after a few weeks.
In your planning process look for ways to create sustainable changes, not just knee-jerk reactions that only panic staff and have no lasting result.
Monday, March 9, 2009
How Do I Sell and Serve Remote Customers?
A question I've heard recently as we become a more decentralized, computer-driven society: Most of our customers are remote and don't visit us at our locations. How do we service and sell to those customers?
The simple answer is "With the same approach you've always used in serving customers, just using different technology and tools." If bank customers are not getting the face to face time with tellers as they once did, then they must be connecting with the bank through drive-through traffic, on the phone or online.
What are the demographics of your customer base? Do you find the more senior customers still walk in, the middle-aged customers drive through and use the call centers, and the younger customers are all about online services? (Anybody order a pizza from Domino's online? You can actually track who is making it, and when it goes in the oven and when it's out the door with the delivery driver. Beats the old days of waiting on hold until a harried part-time employee can take your order and you guesstimated when it would arrive.)
Once you find the breakdown of these demographics, you can then approach them in the ways they are connecting with you.
Do the research. List the reasons why each group chooses their point of contact with you. Why do senior citizens prefer to do business in person? Who does the phone service appeal to? Once you understand their reasons for that method, then you know why it is appealing to them and how to use that to your advantage.
Blogging and YouTube will not be the best approach for some customers, yet others may find that their preferred method of getting information. Get to know your customers by the products they use and the way they access your products and services.
Bottom line, providing good product information to the customer, maintaining common courtesies, and speaking to the customer about the specifics they are interested in hasn't changed. It's only the method and where the information is best placed that have changed.
To maximize your marketing efforts, know the strategically correct channels to reach a target audience with a specific initiative. This will guide you in the direction of better returns for your efforts.
The simple answer is "With the same approach you've always used in serving customers, just using different technology and tools." If bank customers are not getting the face to face time with tellers as they once did, then they must be connecting with the bank through drive-through traffic, on the phone or online.
What are the demographics of your customer base? Do you find the more senior customers still walk in, the middle-aged customers drive through and use the call centers, and the younger customers are all about online services? (Anybody order a pizza from Domino's online? You can actually track who is making it, and when it goes in the oven and when it's out the door with the delivery driver. Beats the old days of waiting on hold until a harried part-time employee can take your order and you guesstimated when it would arrive.)
Once you find the breakdown of these demographics, you can then approach them in the ways they are connecting with you.
Do the research. List the reasons why each group chooses their point of contact with you. Why do senior citizens prefer to do business in person? Who does the phone service appeal to? Once you understand their reasons for that method, then you know why it is appealing to them and how to use that to your advantage.
Blogging and YouTube will not be the best approach for some customers, yet others may find that their preferred method of getting information. Get to know your customers by the products they use and the way they access your products and services.
Bottom line, providing good product information to the customer, maintaining common courtesies, and speaking to the customer about the specifics they are interested in hasn't changed. It's only the method and where the information is best placed that have changed.
To maximize your marketing efforts, know the strategically correct channels to reach a target audience with a specific initiative. This will guide you in the direction of better returns for your efforts.
Monday, March 2, 2009
Lean Into Your Strengths
What is your company really good at? I mean the one thing you really can slay the competition at?
I find that companies often look toward their weaknesses first in the planning process in order to make improvements and shore up areas they may not be doing effectively, and this is a mistaken approach. I'm not saying ignore weaknesses, but be careful if you find yourself making them your main focus for your planning process.
We should be spending our time focusing on what we do well, and work on making it even better. For example, I'll talk with executives about customer service training and I hear the response, "Our service is great, we don't need to worry about doing that type training anymore." The Ritz Carlton also has great guest service; in fact, it is one of their defining strengths in the hospitality industry, which is why they spend an inordinate amount of training dollars to maintain that strength and look for ways to make it even better. They are leaning into their strength, not taking it for granted until it disappears and needs refreshing. That's waiting for your strength to turn into a weakness, and that's too late.
Let's assume you have defined your company's greatest strength as customer service:
What standards of excellence do you hold every employee to when delivering customer service?
What are the measurements you use month to month to monitor your strength in this area?
Do you have employee turnover? If so, what is the training process every new employee receives to achieve those standards of excellence before being exposed to the customer?
When asking customers what they like best about doing business with you is the first response always your customer service?
What ways can it become even better in order to stay in front of competition trying to match your service level?
Are you the buzz of the industry as the standard for customer service?
Are you the buzz in your market?
If people within your market both customers and non-customers were asked who offers the best customer service in your industry in your area, would you be the name on everyone's lips?
Southwest Airlines is routinely the standard in airline customer service, Ritz Carlton is the standard for guest service. These are names known throughout the industry for their strengths and they are constantly looking for ways to improve on their strength as you want to do with your strengths.
This is leaning into your strength. Taking what you do well and making it even better. Making your strength your defining factor in the minds of competitors and the customers and prospects you can serve. The planning process is the best time to make the steps and objectives to keep the main thing the main thing.
I find that companies often look toward their weaknesses first in the planning process in order to make improvements and shore up areas they may not be doing effectively, and this is a mistaken approach. I'm not saying ignore weaknesses, but be careful if you find yourself making them your main focus for your planning process.
We should be spending our time focusing on what we do well, and work on making it even better. For example, I'll talk with executives about customer service training and I hear the response, "Our service is great, we don't need to worry about doing that type training anymore." The Ritz Carlton also has great guest service; in fact, it is one of their defining strengths in the hospitality industry, which is why they spend an inordinate amount of training dollars to maintain that strength and look for ways to make it even better. They are leaning into their strength, not taking it for granted until it disappears and needs refreshing. That's waiting for your strength to turn into a weakness, and that's too late.
Let's assume you have defined your company's greatest strength as customer service:
What standards of excellence do you hold every employee to when delivering customer service?
What are the measurements you use month to month to monitor your strength in this area?
Do you have employee turnover? If so, what is the training process every new employee receives to achieve those standards of excellence before being exposed to the customer?
When asking customers what they like best about doing business with you is the first response always your customer service?
What ways can it become even better in order to stay in front of competition trying to match your service level?
Are you the buzz of the industry as the standard for customer service?
Are you the buzz in your market?
If people within your market both customers and non-customers were asked who offers the best customer service in your industry in your area, would you be the name on everyone's lips?
Southwest Airlines is routinely the standard in airline customer service, Ritz Carlton is the standard for guest service. These are names known throughout the industry for their strengths and they are constantly looking for ways to improve on their strength as you want to do with your strengths.
This is leaning into your strength. Taking what you do well and making it even better. Making your strength your defining factor in the minds of competitors and the customers and prospects you can serve. The planning process is the best time to make the steps and objectives to keep the main thing the main thing.
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