Has your “Cheese” Moved?
In his landmark book, “Who Moved my Cheese?”author Spencer Johnson relates a simple parable that reveals profound truths about change. “Who moved my cheese?” is the story of four characters living in a "maze" that face unexpected change when they discover their "cheese" has disappeared. Let’s face it; it’s no secret that over this last year for many of us in business, our cheese too has moved. Many markets have shifted and some have even disappeared altogether. So pouring on more sales activity or investing money on more sales training or sales process improvement just means that your team will arrive nowhere quicker!
If this is the case for you, then it is an imperative that you look to implementing a new customer acquisition and retention strategy ASAP. The sooner you recognise that your cheese may have have moved and that you are existing on crumbs or in some instances only a whiff of what was once a whole storehouse of cheese, the sooner you can re-channel your sales teams energies into new markets looking for fresh opportunities.
This means re- appraising the value of your core capabilities*. It means clearly and objectively understanding what you are good at and what problems you solve and are your solutions still relevant? Then, if you suspect that your cheese has moved, you will then need to figure out who else has those problems. Having determined the “who else”, you will now need to assess what modifications you may be required to make at both a product and marketing collateral level to reflect your solution to the market.
On the other hand, if there is still strong evidence of an abundance of “cheese” in your existing market, then you need to be asking,
- How sure are we that our strategy for attracting new customers and growing existing ones is still appropriate? How do we know?
- If customer buying patterns have slowed or stalled, how can you help your customer to help their customers purchase more?
- Does your marketing collateral accurately explain how you solve your customer’s current problems or help them achieve their current goals? How do you know? When last did you review your sales messages? What exactly are your sales people saying? Are their sales messages compelling enough?
A year ago most companies were interested in how you could help them grow. Today’s markets are focused on saving money, cost reduction and reducing risk. Do your sales messages reflect this massive shift in perception? Has your marketing collateral changed with the changing needs of your market?
An Example of Changing Market Strategy
I have been working with a risk management organization that catered specifically to the freight industry. They set up profitable in-house insurance funds, effectively allowing the freight company to self-fund an insurance program for their customer’s goods and packages. Well, talk about a “cheese movement!” When the economy swung south his prospects all but shut shop, (in point of fact many actually did), and going into complete survival mode, most became completely insular and refused to even take my client's calls.
Our challenge was to shift strategy and go in search of a new market. On reviewing and answering some of the questions listed below we came up a few new target markets. Some new market suggestions were a little too far right of centre and would have taken a whole lot of product development to ensure a good fit, but one market in particular, only a mere 5% shift left of his current existing market looked potentially very lucrative. On-line, web based merchants who ship product around the country seemed like a reasonable bet, without having to re-engineer the product too much. After a little research and within a few short weeks my client had a number of large opportunities in the pipeline.
So What Exactly is a Sales Strategy?
Whilst there are a number of well documented methodologies for developing a sales strategy, simply stated, a sales strategy answers the question, “How do you attract new customers to your business?" and “How do retain and grow your existing customer revenues?” Depending on how complex you want to make the sales strategy planning process there are a number of well documented models and approaches one can use towards developing a targeted and relevant sales strategy. However to keep the process simple, here are five sales strategy boxes that make up the selling strategy puzzle which you need to examine. To really get the most from this article, you will need to turn your thoughts into action. So as we review each of these strategy boxes in detail, I will be posing some key questions to prompt you to consider how each of these strategies impacts your business. As you ponder these questions, your thinking will be provoked and insights and ideas for action will form. Jot down these inspirations and actions for execution later. The five sales strategy boxes that make up the selling strategy puzzle are:
- market
- customer
- capability
- competition
- new market space
Reviewing each of these in depth you need to:
1. Understand your market
- Is your current market still appropriate?
- Is demand for your product or service growing or shrinking? How do you know?
- Which of the market segments you currently serve are growing or shrinking?
- What’s the most effective method of reaching your market? How do you know?
Action: What actions are required?
2. Understand your customer
- Do you have a “profile “of what an ideal customer looks like?
- Who is actually buying the product/service?
- Who could potentially buy our product/service? – Why?
- Why will they want to purchase from you?
- Are your key customers shrinking or growing?
- How much of their wallet share do you currently have?
- Is your key customer wallet- share shrinking or growing?
Action: What actions are required?
3. Understand the value of your capability
- Specifically how do your customers and prospects benefit from the products or services that you are offering?
- What are your core capabilities?
- What are you really good at?
- What problems do you solve?
- What are the needs, pains, and desires of your target market?
- Are the above needs still relevant?
- Who else has those or similar problems?
- What if any modifications are required to make both your product and marketing collateral relevant to current market conditions?
Action: What actions are required?
4. Understand the Competition
- How significant is your unique selling proposition/value statement (Unique selling proposition (USP) defines your competitive advantage. It clearly identifies what makes you different from your competitors and emphasize these advantages in your marketing and selling efforts).
- What are all the competitive influences (external/internal) you face?
- Do you have a competition strategy in play that deals with ALL competitive influences?
- How do you clearly differentiate from your competition?
- Who are those potential competitors that “play” in the space either above our limits (our limits being determined by price and performance) or below our limits?
- Is there an opportunity to compete there?
Action: What actions are required?
Answering the above questions will confirm whether or not your cheese has moved. They should also open up discussions as to where “new cheese” opportunities could be found. If you have discovered that your cheese has moved, often just a slight shuffle three – five degrees to the left or right of where you currently operate can open up a whole raft of fresh market prospects.
5. Understand new market space
In their Harvard Business Review paper “Creating new market space” and book “Blue Ocean Strategy”, W. Chan Kim and Renee Mauborgne present 6 strategies, for companies to develop new markets. There is a terrific summary of these 6 Strategies to help you “Create New Market Space” and it can be found by clicking the following link: http://www.unitedbit.com/creating-new-market-space-review/
Here is a cursory outline of the 6 strategies to Creating a New Market Space written up in the Harvard Business Review paper. For a deeper insight and understanding please refer to the website above.
1. Alternative Industries: a company competes not only with the other firms in its own industry but also with companies in those other industries that produce alternative products or services. Alternatives include products or services that have different functions and forms but the same purpose. Consider cinemas versus restaurants. Despite the differences in form and function, however, people go to a restaurant for the same objective that they go to the movies: to enjoy a night out. These are not substitutes, but alternatives to choose from. Therefore, to create a new market space, ask yourself:
- What are the alternative industries to your industry?
- Why do customers trade across them?
2. Strategic groups within industries: Strategic groups can generally be ranked in a rough hierarchical order built on two dimensions: price and performance. Each jump in price tends to bring a corresponding jump in some dimensions of performance. Most companies focus on improving their competitive position within a strategic group. Mercedes, BMW, and Jaguar, for example, focus on outcompeting one another in the luxury car segment as economy car makers focus on excelling over one another in their strategic group. Neither strategic group, however, pays much heed to what the other is doing because from a supply point of view they do not seem to be competing. The key to creating a market space across existing strategic groups is to break out of this narrow tunnel vision by understanding which factors determine customers’ decisions to trade up or down from one group to another. Questions to ask to create a new market space within strategic groups are:
- What are the strategic groups in your industry?
- Why do customers trade up for the higher group, and why do they trade down for the lower one?
3. The chain of buyers: There is a chain of “buyers” who are directly or indirectly involved in the buying decision. In most industries, competitors converge around a common definition of who the target buyer is. In reality, though, there is a chain of “buyers” who are directly or indirectly involved in the buying decision. The purchasers who pay for the product or service may differ from the actual users, and in some cases there are important influencers as well. Although these three groups may overlap, they often differ. When they do, they frequently hold different definitions of value. A corporate purchasing agent, for example, may be more concerned with costs than the corporate user, who is likely to be far more concerned with ease of use. Similarly, a retailer may value a manufacturer’s just-in-time stock replenishment and innovative financing. But consumer purchasers, although strongly influenced by the channel, do not value these things. Challenging an industry’s conventional wisdom about which buyer group to target can gain new insights into how to redesign their value focusing on a previously overlooked set of buyers. Therefore, to create new market space by looking across the chain of buyers, ask yourself some questions such as:
- What is the chain of buyers in your industry?
- Which buyer group does your industry typically focus on?
- If you shifted the buyer group of your industry, how could you unlock new value?
4. Look across complementary product and service offerings: Untapped value is often hidden in complementary products and services. A simple way to do so is to think about what happens before, during, and after your product is used. Take movie theatres. The ease and cost of getting a babysitter and parking the car affect the perceived value of going to the movies. Yet these complementary services are beyond the bounds of the movie theatre industry as it has been traditionally defined. Few cinema operators worry about how hard or costly it is for people to get babysitters. But they should, because it affects demand for their business. Imagine a movie theatre with a babysitting service.
Untapped value is often hidden in complementary products and services. The key is to define the total solution buyers seek when they choose a product or service. In order to create new market space by looking across complementary product and service offerings, you should ask yourself the following questions:
- What is the context in which your product or service is used?
- What happens before, during, and after?
- Can you identify the pain points?
- How can you eliminate these pain points through a complementary product or service offering?
5. Functional or Emotional Appeal to Buyers: Over time, functionally oriented industries become more functionally oriented; emotionally oriented industries become more emotionally oriented. Some industries compete principally on price and function largely on calculations of utility; their appeal is rational. Other industries compete largely on feelings; their appeal is emotional. Yet the appeal of most products or services is rarely intrinsically one or the other. Rather it is usually a result of the way companies have competed in the past, which has unconsciously educated consumers on what to expect.
Companies’ behaviour affects buyers’ expectations in a reinforcing cycle. Over time, functionally oriented industries become more functionally oriented; emotionally oriented industries become more emotionally oriented. Industries have trained customers in what to expect. When surveyed, they echo back: more of the same for less. When companies are willing to challenge the functional emotional orientation of their industry, they often find new market space. We have observed two common patterns. Emotionally oriented industries offer many extras that add price without enhancing functionality. Stripping away those extras may create a fundamentally simpler, lower-priced, lower-cost business model that customers would welcome.
Conversely, functionally oriented industries can often infuse commodity products with new life by adding a dose of emotion and, in so doing, can stimulate new demand. In order to create new market space by looking across functional or emotional appeal to buyers, you should ask yourself the following questions:
- Does your industry compete on functionality or emotional appeal?
- If you compete on emotional appeal, what elements can you strip out to make it functional?
- If you compete on functionality, what elements can be added to make it emotional?
6.Time: All industries are subject to external trends that affect their businesses over time. Think of the rapid rise of the Internet or the global movement toward protecting the environment. Most companies adapt incrementally and somewhat passively as events unfold. Whether it’s the emergence of new technologies or major regulatory changes, managers tend to focus on projecting the trend itself. That is, they ask in which direction a technology will evolve, how it will be adopted, whether it will become scalable. They pace their own actions to keep up with the development of the trends they’re tracking.
But key insights into creating new market space rarely come from projecting the trend itself. Instead they arise from business insights into how the trend will change value to customers and impact the company’s business model. By looking across time—from the value a market delivers today to the value it might deliver tomorrow — managers can actively shape their future and lay claim to a new market space. With this approach, we’re not talking about predicting the future, something that is inherently impossible. Rather, we’re talking about finding insight in trends that are observable today. Looking at these trends with the right perspective can show you how to create new market opportunities. In order to create new market space, you should ask yourself the following questions:
- What trends have a high probability of impacting your industry, are irreversible, and are evolving in a clear trajectory?
- How will these trends impact your industry?
- Given this, how can you open up unprecedented customer utility?
Where to from here?
There are three ways you can get some significant value from this strategic planning process for your sales organization:
- Hire an expert facilitator to run you and some or all of your sales team through the list of questions above or have them bring in their own specific sales strategy development process. Have them fill the ideas funnel and then tease out a “where to from here” project plan. Whilst this method will be the most expensive in upfront costs, in the long run, assuming you select a good facilitator, the results you get will be far superior to the other two options proposed below. By the way the more pre work preparation you can get the participants to do prior to the session, the shorter and more valuable the time invested. Have the participants prepare for the session by reading this newsletter and pre answering the questions herein.
- Have someone from another department facilitate some or all of your sales team through the list of questions above. Have the participants prepare for the session by reading this newsletter and pre answering the questions herein. Then, together with them, fill the ideas funnel and tease out a “where to from here “project plan.
- Have the participants prepare for the session by reading this newsletter and pre answering the questions herein. Then, you facilitate some or all of your sales team through the list of questions above. Have them fill the ideas funnel and tease out a “where to from here “project plan.
If your sales strategy is no longer appropriate then for goodness sakes get a new one. Every day that your salespeople go out without a specific and relevant sales strategy is costing your organization sales! In our next newsletter we will look at the second key code ... Sales Process.
* Core capabilities - Alternative term for core competencies. Cluster of extraordinary abilities or related 'excellences' that a firm acquires from its founders, after consistent striving over the years, and which cannot be easily imitated. Core competencies are what give a company/organization one or more competitive advantages, in creating and delivering value to its customers in its chosen field. (BusinessDictionary.com)
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