These are extremely challenging times for all American businesses, from smaller, multi-generational family-owned firms to inhabitants of the Fortune 500.
The issues are complex. They include rapidly evolving technologies; from traditional products such as home appliances and building materials, to ever-advancing smartphones, PCs, and the latest in medical imaging. We face relentless global pressures on labor supply, placement and costs of manufacturing locations, and access to capital. There are constant advances in warehousing and distribution and new forms of logistics. It is more difficult than ever, at all levels of business, to secure the loyalties of customers.
Markets seem to be simultaneously contracting and expanding. Technology’s globe flattening presents opportunities anywhere and at an increasing pace. However, those same opportunities are also shared by more and more competitors in other parts of the country and world. Thus, new forms of bidding and purchasing fueled by the Internet threaten to turn even the most specialized manufacturers or service providers into commodity providers. Everything happens faster, sooner, more often. We get the message, but what can we make of it?
As a result, the sales and marketing departments of all companies are under intense pressure by owners and investors to keep up with this onslaught; to restore lost revenues and profitability, and grow new and profitable revenues by finding more in past, existing, and new customers and new markets, as differentiation, diversification and expansion become keys to success in our new economy.
Do your homework
In many cases, opportunities to improve profitable revenues exist, but they are not always adequately identified and pursued by sales and marketing departments. In some cases, these departments rely on programs or strategies that worked in years past, but that are no longer effective in today’s fast-paced global economy. Time and again, many businesses miss the boat of optimizing market diversification by not aligning the true costs of their marketing and sales resources with true revenue opportunities for maximum returns.
[SYSTEM-AD-RIGHT]The way to comprehensive revenue growth and profitability begins with a careful analysis of past, present and future customers, programs and activities. In some cases, sales and marketing teams will be able to identify resource cost and alignment issues that deter efforts to secure new business. In this context, we are defining resources in the broadest sense. The concept can cover many areas marketed by a business, including its core technologies and intellectual property; executive and operational personnel capabilities; how well it understands customer expectations; or its ability to identify diminishing market sectors, as well as viable new ones. One telltale sign of a sales and marketing mismatch is when we find a firm chasing many contract or proposal requests, but achieving a very low success rate; say, less than 5 percent.
The goal is to optimize resource costs and alignment, and maximize returns on opportunities, by a thorough analysis of one’s capabilities relative to one’s competitors (supply side), as well as quantifying needs of existing and potential customers or buyers (demand side). Overall, the capabilities and differentiators of sellers and the demands of buyers are relatively defined, while the interaction between the two, the marketplace or exchange, is intensely dynamic and multi-dimensional. This in-depth knowledge enables sales and marketing teams to craft and resource very specific market diversification strategies.
A careful gap analysis between capability competencies and differentiators relative to customer needs will generally help sales and marketing diversify the business mix: we will discover issues that are holding us back; we will identity new buyers, new market segments and the paths by which to reach them. The goal is to drive value for customers in a way that allows us to charge more for our product or service, as opposed to playing the commodity game.
Let it happen
Sales and marketing teams must discover what differentiates one’s business operations from competitors and, also, identify who values those differentiators. We will learn more about existing resources; areas where we may be lacking in needed resources; and areas where we can better direct our sales and marketing efforts.
However, knowing is one thing, acting on that knowledge is another. Each organization has its distinct ownership, executive and management structure, overall business style and operational history. Whether the issue is deficiencies in sales and marketing leadership, the way resources are being deployed, or leadership that won’t give free reign to an otherwise innovative sales and marketing department, each business must find a way to reconcile and respond to marketplace realities.
Allowing an objective, independent analysis of resources, capabilities and buyers to drive decisions takes an investment of time, attention and, often, courage. It is the path to market diversification and growing revenues.