Seven Keys to Long Term Business Success
Larry Goddard
Strategy, Growth, Family Business & Turnaround Advisor & Executive Coach
Consistent business success does not come about by accident or wishful thinking. It is the result of deliberate and focused strategic decisions combined with efficient and effective execution.
There have been, and will always be, businesses that attain high levels of success due to a hot product, significant market growth, a competitor stumbling, a new customer, or a large order. Some companies triumphantly ride the wave of short-term success – while others recognize that this may be temporary and use this windfall period to create the architecture for sustainable success. Think of Netflix and Apple. These businesses continue to surge and grow. Others aren’t as successful at evolving or realizing that their success won’t last forever. Think Blockbuster and Blackberry.
So, no matter how much growth your business is experiencing, if you want to create long-term, consistent success, look across the spectrum of companies that have achieved it and you will find seven key elements that they all have in common.
These principles applied before COVID are even more relevant during COVID and will continue to apply when COVID finally is defeated.
1. Pursue Downhill Rides
A Downhill Ride is a market that is conducive to success. The ultimate Downhill Ride is a market, segment or niche that is:
Growing significantly
Has high profit margins
Is not dominated by powerful competitors.
Businesses that enjoy Downhill Rides are more likely to succeed. The expression “a rising tide lifts all boats” truly applies here. Success is theirs’ to lose. The trick is to recognize when your Downhill Ride is ending, and when you need to pivot and refocus to move towards new potential Downhill Rides. But pivoting is usually not easy or fast. Therefore, both as a compliment to a Downhill Ride - and as mitigation if you can’t immediately find that ride - successful companies pursue an additional six success builders.
It is possible to attain long-term success without a Downhill Ride – but it is not easy! Level Rides can facilitate long-term success if the company excels in the other six success builders. With extensive effort, a business can out-pedal an Uphill Ride for a while – but eventually will be drained of energy, morale and resources.
As said earlier, Downhill Rides are not easy to find. But they can be a crucial element for true business success, which invariably makes them worth the pursuit. Occasionally, a business stumbles on a Downhill Ride (Purell in a COVID world). Mostly, they are the result of extensive market research, innovation, product development, and trial and error.
Unfortunately, Downhill Rides frequently do not last forever – because of changing tastes, technology, or demand – and because they attract more competition (Palm Pilot, AOL). Use your downhill momentum to innovate and build liquidity. Don’t become complacent in your current Downhill Ride – evolve the business to lay the foundations for new Downhill Rides when the need arises, bearing in mind that they take time to develop.
2. Offer a Compelling Value Proposition
Customers are more likely to buy from companies that offer superior value, which represents the company’s Value Proposition.
A Compelling Value Proposition includes a top-class range of products, excellent quality, outstanding service, lower prices or attractive terms and conditions. In short, the Company stands for something more than just an undifferentiated commodity.
Many businesses are also a Brand. Brands are aspirational and can become a key part of a Compelling Value Proposition. All companies have the potential to become brands. Even industrial or distribution businesses can move into a position where you have enhanced standing and trust in your marketplace. This will provide a distinctive competitive edge. Your reputation, standing in the industry, quality and service all contribute to the way your business is perceived. Brands create a connection and an ongoing relationship with their customers that goes beyond any particular transaction. Best of all, customers give brands and the business behind them permission to expand their goods and services beyond any one product. (See below - Wallet Share).
A Compelling Value Proposition helps a company outsell its competitors – regardless of whether they operate in a Downhill Ride. Companies that do not have a Compelling Value Proposition are not differentiating themselves from their competitors. They are essentially a “me-too” business. This makes consistent long-term success extremely difficult.
However, in the same manner that Downhill Rides are often transient, even great Value Propositions and Brands need continuous work to remain relevant and to ensure they maintain their competitive edge. A continuous and aggressive effort to improve your company’s Compelling Value Proposition is a vital step in creating the formula for ongoing, consistent long-term success.
Many companies tend to overrate their Value Proposition. Beauty is in the eye of the beholder. It is what the customer thinks that matters.
3. Create a Strong Culture and Generate Team Buy-In
Your team can be turned into a secret and powerful competitive weapon – if they buy-in. The best company cultures for long term success are those that instill high standards of performance – for leadership, quality, customer satisfaction, service and business results, and model a set of values that demonstrate respect and appreciation for all staff.
Employees who care about the business are motivated to go the extra mile, have a spring in their step and are more creative. They are tough to compete against! They are also more likely to help develop, or enhance, a Compelling Value Proposition.
Increasing Buy-In and creating a culture for success is not especially costly, but it does take consistent top-down commitment. Frankness, transparency, accountability at all levels of the organization, and employee empowerment and involvement are key starting points. Great communications - that keep the team informed about vision, plans, goals, key metrics and challenges - are essential.
Companies that unleash Buy-In invariably outperform their competitors. Southwest Airlines and Starbucks used Buy-In very effectively to outperform their competitors.
4. Back Winners
A business enterprise is not a single monolithic entity. It is a conglomeration of business units, divisions, product lines and types, SKU's, customers, regions, salespeople, locations, plants, markets, segments, and channels.
In almost all businesses, not all of these generate winning results. Certain of these are high performers and some are, frankly, losers.
Having an accurate and timely information system provides management with the data to easily and quickly identify and quantify winners and losers – and can make a huge difference to business success.
Top performing companies are not hampered by emotional or historical factors. Losers should be identified and rapidly improved or eliminated, unless there is a significant strategic reason to keep them. Winners should be enhanced and possibly expanded. Valuable lessons can often be gleaned from studying winners – and these can sometimes be applied to enhance losers.
5. Drive Wallet Share Growth
One of the easiest ways for a business to grow is to expand "Wallet Share" - obtain a bigger share of existing customer spending dollars. If a business has an ongoing relationship with a customer - with a degree of trust and familiarity already established - it is generally easier to expand the relationship with that customer than it is to find a new customer, who has never dealt with the company. This is as relevant for B-2-B enterprises as it is for B-2-C companies. Repeat business and obtaining a larger proportion of your customer’s spending in the category is a formula for both higher growth and improved profitability.
Securing new customers generally involves a significant amount of time, risk and financial investment. The new customer has to be identified and a salesperson (or lead generating marketing) has to penetrate a "firewall", which could take many attempts. Once in the door, the salesperson has to convince the prospect that the company and its products should be given consideration. Then it is highly likely that the company's products will be subjected to evaluation - and possibly - testing and certification. Finally, when the prospect is willing to place an order, B-2-B companies have to do a credit check to be comfortable that the prospect is likely to pay for the products or services provided.
Very little of this work needs to be done to expand Wallet Share with an existing customer! This is why growing Wallet Share is so attractive in terms of long-term consistent success.
The most successful companies put a significant amount of effort into understanding and growing Wallet Share.
6. Let Salespeople Sell
While expanding Wallet Share is one of the easiest and best ways to grow profitable revenue, most businesses still need to identify and pursue new customers to achieve their sales goals.
Those B-2-B businesses that rely on a sales team to develop new business often ask sales staff to identify, qualify and make appointments with prospects. Some businesses also expect their top salespeople to take routine orders, deal with complaints, do paperwork, fix operational issues and even collect accounts receivable. Generally, this is not a productive use of the time of top-level salespeople. Salespeople who can close new business consistently are rare. Top companies ensure they are spending much of their time connected with buying decision-makers.
Top performing businesses use many other methods to generate leads including traditional advertising, digital advertising, trade shows, thought leadership forums, telemarketing, and social networking, They also develop inside sales and other support personnel to research, qualify, prepare presentations and make appointments with prospects. All of these actions free up time to Let Salespeople Sell.
It also may be time to upgrade the support and services you provide to your sales staff that deal with customers who have a digital side to their business. Do you understand the keys for success on these third-party platforms? Is your sales staff armed with funding, digital assets, on-line marketing tools and order response technology to penetrate and then grow your business on-line? Customers, even in B-2-B, are increasingly expecting to interact with suppliers digitally – to be able to gain product knowledge, place orders and check the status of orders and deliveries. Salespeople who don’t have the appropriate digital support could be at a significant disadvantage.
Those businesses that rely on digital outreach (whether to consumers or to other businesses) need to ensure that their traffic driving initiatives are bringing in qualified prospects, and their e-commerce sites, or the marketplaces they create on third party sites are optimized for conversion of these prospects into customers. Tracking customer acquisition costs and profitability, and the return on ad spend, are critical elements in helping your sales staff develop a digital sales initiative that will provide long term success.
7. Relentlessly Drive Improvement
A culture of continuous and aggressive improvement is a huge contributor to long-term business success. In this environment, staff and management are never complacent with success or accept sub-par quality or performance. Successful businesses are constantly looking for ways to improve.
Areas to focus on include all costs, such as manpower and equipment productivity, supply chain and operations, material yields, product and customer margins, as well as expenses for all third-party services, insurance and real estate. Then, there are the drags on performance due to quality problems, unsatisfactory customer service levels, late deliveries, out-of-stock key items, and inefficient decision making.
Knowledge is the starting point for improvement. An information system that provides this information (often referred to as Key Performance Indicators or KPIs) on a real-time basis facilitates actions that drive improvement. Dashboards that are widely distributed within the business and reflect performance in the most significant KPIs are highly effective tools for focusing attention on driving improvement. When managers and employees receive this information on an hourly, daily or weekly basis, they can rapidly identify underperforming areas – and quickly take corrective action.
The improvements that result in cost reduction, higher margins, improved customer satisfaction and profit enhancement make a significant contribution to business success.
Improvements in product features and benefits are usually essential to a Compelling Value Proposition and sales growth. This requires both an attitude of continuous improvement and innovation – backed by research on competitor products, customers’ evolving needs and wants, and technology.
Businesses that successfully focus on all seven areas have a high probability of long-term and significant success. Those that focus on the majority can achieve intermittent and/or moderate success and put themselves in a position to make further progress. Those that focus only on one or two are likely to struggle.
By Larry Goddard and Laurence Franklin
Larry Goddard, a strategy, growth and turnaround coach and consultant, is the CEO of The Parkland Group, Inc. and SOAR Growth Strategies (www.SOARgrowth.com; www.Parkland.com)
Laurence Franklin, business advisor and board member, is the former CEO and business leader of Tumi, Coach, Elizabeth Arden, and Frette. www.linkedin.com/in/laurence-franklin-18a88427/
©Copyright, 2020, Larry Goddard and Laurence Franklin. All rights reserved.
While the authors believe the information contained herein is accurate, readers are advised that this information does not cover all circumstances, and readers should consider their own unique circumstances and consult their own financial and legal advisers before taking any action related to these topics.
LinkedIn Article:
https://www.linkedin.com/pulse/seven-keys-long-term-business-success-larry-goddard/