When I ask this question of my clients and their executives, I see a few blank stares. I get a moment of two of silence and then I hear generic justifications. I don’t want justifications, I want you to look at your product and service line and one by one explain why these items are being offered to your customers.
This exercise should cause other questions to be raised. Such as:
When did we start offering this and why?
How does this product or service fit with our future direction?
Is this a profitable product or actually a drain of resources?
How well do we sell this?
How well can our front line staff explain the features and benefits?
What percentage of our customers actually use this product or service?
Do we want more customers using this product?
If yes, how do we make that happen? If no, why are we still offering it?
Sometimes in the evolution of a company, products should be dropped and new ones added. I see many companies holding on to products because back in 1982 it was a hit and some of the board members or managers remember those days. That product may no longer apply to the markets you are currently going after.
There is no advantage to offering everything. Strategically, it is much better to offer fewer products and services you do extremely well than to divide your efforts too thinly across areas with minimal return.
One client doing this exercise realized of the 80 products and services they were offering, only about 35 really were of benefit to enough customers that made them justifiable to keep.
Streamlining your products and services not only help your focus, but makes it easier for your front-line employees to be better acquainted with what you are offering so they can more comfortably sell it to help those who need them.
Showing posts with label planning. Show all posts
Showing posts with label planning. Show all posts
Monday, April 13, 2009
Thursday, February 12, 2009
Don't Just Define Your Market -- Dominate It!
One of the areas many executives misunderstand is market segmentation. You don’t just want to be a player in the market you want to dominate a segment of the market.
Important point: You don’t want to satisfy every customer and you don't want every member of the general public as a customer.
I'll bet you read that at least twice because you couldn't believe your eyes. You can't be all things to all people successfully. I've seen companies offer multitudes of different products and services, no doubt in an effort to try and satisfy every need of every possible customer. This is a wonderful idea in giving great customer service but it begs the question: How can you be great at all of those things? The real answer is you can't. It's best to decide which products and services you can excel at and hit the market hard in those areas.
Which is better, to be an adequate option on a wide range of products thus making you a commodity, or to be the best at a select number of options where everyone sees you as the best at those things?
If your customers shop for what you offer as a commodity, then they have little or no loyalty and will shop everyone else as well, which means you are only seen as an option.
When you dominate a market segment through proper positioning as the best in those products, people will seek you out as the best in this area. Loyalty is high when customers seek you out for specific services. This is how you get to be the only option for those people.
Good market segments are usually made up of people who think about and buy your products and services the same way.
Ask yourself the following questions:
What are they buying?
Who is buying?
Why are they buying?
How do they buy?
How will they use what they buy?
How you answer these questions will point you in the direction of market segments you may want to hone in on so you can be the dominant player in the market.
Important point: You don’t want to satisfy every customer and you don't want every member of the general public as a customer.
I'll bet you read that at least twice because you couldn't believe your eyes. You can't be all things to all people successfully. I've seen companies offer multitudes of different products and services, no doubt in an effort to try and satisfy every need of every possible customer. This is a wonderful idea in giving great customer service but it begs the question: How can you be great at all of those things? The real answer is you can't. It's best to decide which products and services you can excel at and hit the market hard in those areas.
Which is better, to be an adequate option on a wide range of products thus making you a commodity, or to be the best at a select number of options where everyone sees you as the best at those things?
If your customers shop for what you offer as a commodity, then they have little or no loyalty and will shop everyone else as well, which means you are only seen as an option.
When you dominate a market segment through proper positioning as the best in those products, people will seek you out as the best in this area. Loyalty is high when customers seek you out for specific services. This is how you get to be the only option for those people.
Good market segments are usually made up of people who think about and buy your products and services the same way.
Ask yourself the following questions:
What are they buying?
Who is buying?
Why are they buying?
How do they buy?
How will they use what they buy?
How you answer these questions will point you in the direction of market segments you may want to hone in on so you can be the dominant player in the market.
Proactive or reactive?
One executive I tried to work with had pretty much given up on his organization. How did I know he gave up? When something negative would happen such as bad quarterly financials or a new competitor came to town, he would always have the same response: "Whatcha gonna do?"
He went on to say he only needed to make a few more years to retirement, and besides, the world is just a different place than it once was. Then he would shake his head, tell me he had no need for my services because he wasn't sure he could afford them, and even if he could, it wouldn’t make any difference.
He was right about one thing: the world is a different place than it once was, and he had been CEO of that company for over 40 years. Times have sure changed.
Because of so much going on it's easy to fall into reactive mode or heaven forbid, "victim" mode as this gentleman had allowed himself to do. Waiting to see how things shake out and then reacting to that is waiting too late. Opportunity can be lost. Also, since you waited for everyone else to start going the same way, you are now just an option in a commodity market. Most industries find their environment has changed, and those getting ahead are those taking a proactive stance on planning for the future with a specific vision in mind. When you are proactive in your vision and plan, it rallies people behind your direction, it gets people excited to buy-in and you become more in control of your vision.
Not to mention, employees respond better to an executive who takes a proactive stance instead of waiting for the opportunity, then makes a reaction. Would you rather be in control and design your results or wait and hope for the best? You are in charge -- you call the play.
He went on to say he only needed to make a few more years to retirement, and besides, the world is just a different place than it once was. Then he would shake his head, tell me he had no need for my services because he wasn't sure he could afford them, and even if he could, it wouldn’t make any difference.
He was right about one thing: the world is a different place than it once was, and he had been CEO of that company for over 40 years. Times have sure changed.
Because of so much going on it's easy to fall into reactive mode or heaven forbid, "victim" mode as this gentleman had allowed himself to do. Waiting to see how things shake out and then reacting to that is waiting too late. Opportunity can be lost. Also, since you waited for everyone else to start going the same way, you are now just an option in a commodity market. Most industries find their environment has changed, and those getting ahead are those taking a proactive stance on planning for the future with a specific vision in mind. When you are proactive in your vision and plan, it rallies people behind your direction, it gets people excited to buy-in and you become more in control of your vision.
Not to mention, employees respond better to an executive who takes a proactive stance instead of waiting for the opportunity, then makes a reaction. Would you rather be in control and design your results or wait and hope for the best? You are in charge -- you call the play.
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