Why focus is the secret to fast business growth
There’s no denying it. It’s tough out there. Many business leaders who come to us asking for help feel exhausted and burnt out. They feel like they’re swimming against a tsunami of demands with no hope of moving forward. As the economic conditions worsen, they take on any business that comes their way. It gets harder to see the wood from the trees.
Yet even in this tough environment, some businesses are thriving. Look in from the outside, and it seems effortless. They’re growing exponentially. What’s their secret weapon? One word. Focus.
Here’s a great example. I was talking to a sales rep from MarTech last week and said I’d be interested in trying their product. ‘I’m really sorry,’ he replied, ‘You don’t qualify’. ‘Really?’ I exclaimed. ‘But I’ve got the money!’ He told me that they only sell to businesses of a specific size that spend a given amount on marketing. My business would also need a decent-sized sales team to follow up on the higher volume of leads generated by their product. I didn’t have these resources, so he wasn’t willing to sell their product to me.
This is focus in action. And the irony is the faster you want to scale a business, the more you need to focus. It seems counter-intuitive, but this is how you achieve the growth trajectory you crave.
Clarity over core customer
Like the MarTech example mentioned above, getting clarity over your core customer is vital. I return to this repeatedly because it’s essential to get it right. The rep at MarTech knew that 97% of their customers renewed because of the value they received from their product. 97%! That’s phenomenal.
MarTech was tracking towards IPO and knew they needed to keep this retention rate high. They couldn’t afford to risk selling to customers who were potentially a bad fit for their product and, as a result, wouldn’t renew. They’d got crystal clear on where their product worked, and there were enough of these customers to propel their business on an exponential growth track to IPO.
So identify where you’ve struck gold in the past. What’s the profile of the customers who love your product? The ones that are highly profitable and whose accounts are growing. Who are your competitors in this space? Recognise that the features and benefits of your product are likely to be broadly similar. So you need to look at the impact you’re making and the problem you’re solving.
Find something around which you can create a willingness to pay. Get specific. For example, one of our clients identified that they’re uniquely able to move the needle for CTOs who are new in their role. These people are likely to have arrived in the last quarter and are looking for suppliers to help them make a significant impact in their first year. They’re less risk averse than colleagues who have been in post for longer and are more willing to try using a smaller supplier.
When I was MD at Peer 1, we created a hosting package for Magento Enterprise. This was after we’d identified our core customers as the partners who put in Magento Enterprise deployments. They were people who needed our help with their sales and marketing. If we did this, we could win their back-end hosting contract, and this became a highly profitable niche that drove our growth.
Selling fewer things to fewer people.
My experience with fast-growing businesses is they often have client concentration. And that means selling fewer things to fewer people. The alternative to this is getting stuck in a growth trap where you sell more things to more people, and bureaucracy and pace go through the roof.
Last week, I talked to a prospective client, and we did a few back-of-the-fag-packet sums. We worked out they only needed ten new customers this year, twenty next year and twenty the following year to increase their growth trajectory from doubling in five years (where they were currently headed) to doubling in three. If you find the right, high-value customers, you’ll only need a small number to drive growth.
As part of focusing on core customer, you need to stop doing business with other customers. I’m coaching Executive teams who are going through this right now, and I can tell you, it’s painful. There will be people in your business aligned with these customers that you need to show the door to.
One of our clients has several thousand customers, and have decided to focus on the top 700. That’s a big shift. They will consolidate efforts on this smaller number of core customers, giving them a premium experience. We did the same thing at Peer 1. It transformed our service offering for our core customers, whose accounts were growing 4% month over month. The impact on our business was massive. We grew by 25% year over year from a service delivery perspective without hiring any new people.
Likewise, decide on the products and services that are complementary in terms of growing your margin and cease the ones that aren’t. We did this with a client a few years ago who had three lines of business selling to care homes, doctors and dentists. After profiling their core customers, they realised the less profitable doctors and dentists were sucking time and attention away from the more profitable care homes line. So they focused on becoming world-class in this sector and exited on the back of this work.
Focus on processes and procedures
Another area that can get neglected when businesses are growing fast is processes and procedures. Whether through growth or acquisitions, we often find that knowledge is passed on haphazardly. Something like this: Fred was taught by Betty, Simon taught Betty, and there’s a lack of clarity around how things are done. The processes and procedures that the leadership think are in place are not happening on the front line.
If you’re growing, you need to find time to document these processes. If you don’t, it can be challenging to hire and onboard people quickly. It will also hinder any off-shore operations. We’ve got clients with support centres all over Europe and Asia. It becomes impossible to work across multiple locations if they don’t document processes and put the right metrics and tools in place.
Focus on branding
Trying to create a brand around multiple types of customers, products, and services is impossible. But once you’ve nailed down your core customer and the products that will generate your future growth, you can focus on a specific brand.
When I moved from Rackspace to IT Lab, I saw first-hand how difficult it can be to operate without a clear brand. At Rackspace, we’d created the category of service-led IT support and were the number one player in that marketplace. There was no specific brand at IT Lab, and it was tough going.
Recognise that if you want to create a premium brand, you can’t be all things to all people. I’ve been fascinated by a recent example that’s part of a Harvard Business School strategy course. Banza chickpea pasta. They’re going to market as influencers on Instagram with a product that’s ten times more expensive than other kinds of pasta. Their brand creates a willingness to pay differential that isn’t supported solely by features and benefits. They’ve successfully captured the emotional pull of healthy eating, attracting a small number of high-value customers. And this will increase their margin to invest more money in growing faster.
Where does your brand show up? Not only in your external market but also internally in your employer brand and culture. There’s a great book by Denise Lee Yohn, ‘FUSION: How Integrating Brand and Culture Powers the World’s Greatest Companies’. It’s well worth a read. She talks about how your core values and marketing attributes should line up hence the book title.
So how do you show up as a business? What are you like as a company? Can you create a brand that attracts and retains A-Player talent and the right types of customers? Focus works on many levels, so put time and effort into the right areas. This is how you get results.
- NAVIGATING AND COMMUNICATING CHANGE
- BUILDING COMPANY CULTURE
- CHOOSING THE RIGHT OPPORTUNITIES
- ORGANISING YOUR A-TEAM