Growing Your Business As Easy As Making Love
Harry Connick Jr. once crooned that there was indeed a recipe for making love:
A little bit of me and a whole lot of you
Add a dash of starlight and a dozen roses, too
Then let it rise for a hundred years or two
And that’s the recipe for making love
It doesn’t need sugar ’cause it’s already sweet
It doesn’t need an oven ’cause it’s got a lot of heat
Just add a dash of kisses to make it all complete
And that’s the recipe for making love
Ah that it were so simple. If it were, life might very well look like an Axe Body Spray commercial, with spontaneous love erupting to the point of creating chaos in the city streets. However, business – when simplified – can be as easy as making love the Harry Connick way: Just keep it simple and make sure the right ingredients are in order.
We tend to overcomplicate things. We focus on aggressive and investment-heavy innovations, we reorganize far too frequently in the hopes of capturing a magical mix of people and processes, or we cut costs in a way that seems to work against our best-laid plans. The global management consultancy A.T. Kearney agreed. Authors Juergen Rothenbuecher, Martin Handschuh and Bernhard Kickenweiz wrote that organic growth is best attained not by massive overhauls, but by focusing on a few critical ingredients.
Some of the simplest ingredients are the most important, and they have to do with the Customer. Acquiring the right mix of data on your customers and markets – marketing intelligence that reveal what they buy and how they behave – will enable your sales and marketing organizations to capitalize on increases in revenues and profits through pricing, positioning and targeting of the right (most profitable) customers. All of this comes with less costs and greater returns than massive reorganizations or investments.
A few mission-critical data ingredients your company needs are:
- Data that define your best and worst customers. The characteristics that define your customers and differentiate them from mediocre or poor customers is available in both the private and public sectors through syndicate sources by firms specializing in tracking and monitoring business and consumer behavior, purchase, and demographics. Understanding who your best customers are, and what they spend with you versus what their propensity is to buy in your category will help you more easily calculate share of wallet and identify where money is well spent to capture upsell revenue.
- Data on product penetration into your existing and prospective customer base will help you more easily identify cross-sell revenue. A.T. Kearney spoke to this when the authors encouraged companies to focus on maximizing the penetration of their full product portfolio and capitalize on opportunities to identify lower-hanging-fruit cross-sell opportunities. Existing customers who have yet to purchase other products or services you firm offers is an easy path to incremental revenue that only requires optimizing your sales and marketing organization with the right intelligence.
- Data that reveal the RFM, or Recency, Frequency and Monetary Value, of your customers’ habits in your product category. Data on RFM is readily available through syndicate sources for companies to apply to their customer base. Understanding how recently and how frequently customers purchase in your space, and what the monetary value of these purchases are, can help companies identify avenues for growth and calculate a return on sales and marketing investments.
Identifying a sure path to growth – one that gives executives and board members the confidence they need to invest in this slow-growth economy – is not unlike Harry’s song. With a little bit of this data and a whole lot of that data, expertly applied, companies can assure themselves, their board and their stakeholders for less than the more expensive alternatives of reorganizations and new product launches. Through these simple ingredients, growth – organic growth – can be attained.
Charts Courtesy A.T. Kearny
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