Do the Right Thing

...continued

Reinventing your company on an ongoing basis is not an option anymore. Market dynamics dictate what you offer your customers and how you offer it. We consistently tell our clients that if they are not regularly evaluating their value proposition against the backdrop of what is happening in their business, they will be left behind.

This kind of strategic approach is rare. Many companies address these kinds of challenges with operational band-aids. Don’t get me wrong – operational excellence is important, but it will only get you so far. However, choosing the right strategy and resulting value propositions is a long-term approach that will ensure long-term success.

For example, we recently worked with a client to help them see just how much change was happening in their marketing environment. They were continually fighting an uphill battle of competing in a price driven business where more and more of their competitors were using offshore sourcing. By recognizing this and adjusting its approach, this client has been able to open up new markets for a new product category, utilizing their current manufacturing competencies.

At the end of the day, business leadership is aligning your organization with market opportunities. I reminded our professionals of what Peter Drucker once said: “Management is doing things right. Leadership is doing the right things.” The strategy to realize market opportunities is doing the right thing. If you aren’t taking the time to do this, begin making it a priority. Make reinventing your company a way of life. You won’t regret it.

Craig O’Neal
President/CEO

---

Know Thy Customer

...continued

The simplest form of segmentation usually follows the 80/20 rule. Determine the top 20 percent of your customers and you’ll discover that they account for approximately 80 percent of your business. While somewhat of a truism, it’s amazing how accurate this ratio can be. But don’t stop there. There are other simple financial cuts that can be useful, depending on the volume of customers within your database.

These other “data cuts” can do more than just give you a picture of the pure financial numbers – they can also be analyzed to show how your customers are doing business with you. Take a look at the top 10, 20 or 25 customers, or look at customers in terms of the percentage of your company’s business they represent. Other possible segmentation categories include:

• Volume of product
  
• Geographic region
  
• Type of product or service
  
• Margin and/or profitability
  
• Order frequency
  
• Brand preference
  

If your company is like most business-to-business firms, there is more segmentation than you may realize, and often the information you need exists in files you already have.

As you begin your segmentation study, take a few minutes to ask yourself some questions, including:

• What kind of data do I currently have on my customers?
  
• How good/accurate is that data?
  
• How is that data currently collected/analyzed?
  
• What is my level of confidence that current data are accurate?
  
• What data do I still need to gather?
  

Once you’ve answered these questions, you have laid a solid foundation for going to the next step, which is analyzing the data and determining a direction based on what you discover.

Clients for whom we have conducted customer segmentation studies have come to realize the value in finding out more about their customers and how they can market their companies and products in a more targeted way. The potential benefit for conducting such a study can be increased sales, discovering new markets, improving customer relationships, setting new directions and opening untapped resources. Call Keith Groce to set an appointment to discuss how we can apply this process to improve your business.