Psst. I have a secret. I’m talking to you, CEO.
While your counterparts are handwringing about how to grow their business by earning more customers, or by stealing more customers from their competition, you and I are going to have a Zen moment.
While they are lobbing the grenades in that unwinnable battle, in a competitive marketplace in which EVERYONE has the same sales and marketing tools (or is in the process of getting them), we’re going to take a few cleansing breaths, and look within.
While they pin their hopes on the belief that revenue growth is entirely a function of gaining a bigger share of the market, we’re going to take the contrarian view that the market is not “out there,” but already “here” – loyally transacting business with us, trusting us – and eager to grow their relationship with us.
Which brings us back to that secret: Stealing customers from competitors, quite simply, is a zero-sum, win-lose, game. It assumes that the market is a steady-size pie, and all that matters is how big a slice you get. But I believe that the REAL way to grow is to make your pie bigger. Here are three ways you can find your Zen, grow your pie, and get bigger without entering the share-gain dogfight:
- Sell more to your existing customers. This is, by far, one of the most overlooked growth areas, in my experience. You already have a relationship with existing customers – hopefully a good relationship! If so, they already trust you, and will be more willing to listen to and believe what you promise. Statistics indicate that it’s anywhere from five to 25 times more costly to acquire a new customer than to keep an existing one. And, because they are already in store or have vendor relationships, it’s easier to buy from you.
But how do you sell more to existing customers? Here are some ideas:
- Make sure your customers know what you offer! I’ve worked for multi-national conglomerates with dozens of business units. It is amazing how many times I’ve talked to customers about a complementary product and heard, “I had no idea you sold that.” A great example is the carpet manufacturer who also sold carpet cleaning products and services. The offerings were in two different divisions that did not share information – so they missed a golden opportunity to cross-sell. Imagine how powerful it would be to promote carpet cleaning to a new carpet owner after a few months of wear and tear, or if the carpet cleaning crew notified the carpet manufacturing business when one of their customers desperately needed to replace their flooring.
- Add complementary products to your portfolio. This seems to go without saying. Not only do you sell more products because they’re complementary, you may even add value to the products you already sell. One of my clients recently added a new product to their line, and immediately observed a measurable increase in sales across its entire portfolio.
- Sell more frequently to them. Let’s face it. As a consumer, I often forget to buy things I use every day. So, I make do without it until absolutely needed, or I buy it somewhere convenient instead of my usual store. Companies like Amazon and Chewy have figured this out, and set up programs to automatically send me these products. Talk about a win-win. It’s easier for me as a consumer, and companies don’t risk me purchasing elsewhere. (Plus, it’s forecastable revenue!) And even companies that aren’t selling consumables can learn from this. The trick is to truly understand the lifecycle of your product and entice customers to buy (either a replacement or complementary product) as early as possible. (I often wonder if this is why my car company offers to buy my car halfway through my lease. Are they just trying to get me to buy another car earlier?)
- Enter a new market (or part of your market) – preferably one that’s poised for growth. You’ve probably seen the growth quadrant focused on new markets and products. So, going after a new market isn’t, well…new. But thinking about it in terms of which market isn’t just big, but also poised for tremendous growth, may be new. Entering a new market – whether that’s a new industry, target or geography - automatically adds a whole new audience for your company. But, it goes without saying, that if you participate in a market that’s growing rapidly, you’ll naturally enjoy a tailwind that will help you grow faster. One of my favorite examples over the years, as documented in McKinsey’s The Granularity of Growth, is cell phone manufacturer Nokia. In studying the company’s growth patterns from 1999-2004, what was observed was that most of Nokia’s growth came from “portfolio momentum” – the natural growth they achieved by being in the mobile phone and equipment space. This portfolio momentum (or being in a growth market) accounts for nearly half (46 percent, to be precise) of the growth of the companies studied by McKinsey. The trick is to know whether your market is growing, and to be continuously moving toward parts of your market with these tailwinds. This at least makes it easier to grow.
- Increase your price. Obviously, this one doesn’t work in every situation. But, if you can increase prices without losing customers, you automatically grow your revenue and margin – without taking away anyone else’s share. Conversely, in a drive to gain share, companies reduce price – and start a price war. Since share is a zero-sum game, all a price war does is reduce revenue (and therefore the size of the pie) of the market.
Many people would suggest a fourth way to grow the pie -- acquisition. I didn’t, because I don’t see this as its own category; to me, it’s a quicker path to achieve Nos. 1 or 2 – or to gain (buy) share quickly. Is an acquisition the path to get into a new and growing part of the market or add a product, capability or channel that you need?
So, as a CEO, I’d challenge you. The next time you think about growth, don’t just look at how to take a customer away from a competitor. Take a Zen moment, and consider how to get the most growth from the customers you have today – or customers your competition never even considered.