Aside

Churn and Burn or Ways to Go?

It is true that, over time, strong technology consumer companies will win market share from weak companies. However, there’s one nearly surefire way to make sure you don’t fail. Focus. You got know enough to know if you’re going to go right into a hard brick wall.
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The purpose of any business and market strategy is to become #1 in the market segments the company has decided to serve and win.
Accordingly, any of us leading those companies needs to define the segments in such a way that they can leverage their strengths against weaker competitors to achieve the winning result. Businesses that have the number-one market share position are simply more profitable than their weaker competitors.
Sounds good, right?
So once you know which market you want to be in, the key is to stop trying to “do it all” and align your plan and go-to-market approach to do that.
Ideas on what to focus on:
1. Targets
Business-to-Business (B2B) markets require salespeople to grow. B2C (business to consumer) is typically more marketing driven. In the case of B2B, salespeople or indirect channels to the market (such as distributors, agents, and reps) have got to concentrate all their focus on growable accounts in the targeted market. This means the sales force must spend more time with more people in fewer accounts. The business with the most touches today is the strongest. A key question to ask then: Do you know how many touches can the business concentrate on the targeted accounts? The goal is to have two to three times more touches on the growable accounts (ones where you can gain share because of your strength in touches and/or offerings and/or business results) than all competitors. Even with equal offerings, more touches will eventually lead to gains in share. Evidence: Cisco.
2. Offerings.
What you sell has to be targeted to what the market considers when buying. This can be termed “Offering strength”. It is driven by a simple premise — businesses buy products and services to produce better business results. Every dollar in every budget in every for-profit business was put there under the assumption that results would be produced. Therefore, the objective measure of the relative strengths of competing offerings is the business results that the targeted market is producing with them. The offerings that produce the best business results are the strongest in this measure. Look at what you are spending and make sure it ties the highest value to your offers’ consideration. Evidence: Photoshop in the Graphics Design space is a must have.
3. TAM Saturation
Once you know your targeted market segment, you want to know how BIG is that segment and then over time, how MUCH of that segment do you own. You will likely never penetrate 100% so you need to know when to stop, and when to find a new set of target accounts. Measure this and you will know when you’ve peaked, and how effective your yield to spend is. You must know how much churn you’ve had in a base of clients. We were just working with a client in our offices for two days. They didn’t know how much of a certain mobile platform they had sold to in their history.

This could mean that they only had 2% share because they had effectively sold upgrades to the same installed base, or they had a churn issue and had already run through most of the platform base and would soon hit a solid brick wall.

Seems like a key thing to know. Hope they find out.

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0 Responses:

  1. Bawo Wagbatsoma. August 9, 2007 at 8:18 am  |  

    Thanks for this information. it was quite helpful

    Reply

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