Are You Too Making a $100M Mistake?
Are You Too Making a $100M Mistake? I was speaking with a major market research firm that in the not too-distant past had scuttled an eagerly anticipated new practice area, claiming that there wasn't a market for the new practice and associated research. Yet, a few years later, their biggest competitor has a huge, booming practice in the same area! The competitor's most widely-read analyst in the entire firm is (you guessed it!) writing exclusively about the same practice area that was scuttled. For the competitor, this is the largest practice area, generates the greatest volume of reports, and the greatest revenue. Clearly, their competitor has made a very successful business in the same market that was deemed unprofitable and unfit for entry. How could one firm fail when a fierce competitor succeeds?
From a business perspective it may make sense to scuttle a project when sales are lackluster and the new product or service simply isn't gaining traction. Yet, in this case and with the benefit of 20/20 hindsight and a competitive outlook, this was exactly the wrong decision. How could this research firm have made a different (and more profitable) choice?
In talking with executives, the problems were three-fold. First, their initial foray into the marketplace was too general and didn't address specific needs of their customer base. They didn't spend the time up-front to understand their customer base well enough and delivered a product that didn't provide sufficient, immediate and practical value. Second was a marketing issue. Because this was a new product, targeted to a different role within existing customers, marketing should've better equipped their sales team with the ability to identify the right buyers within accounts and the right messages to effectively convey the value of the new product. Third was a sales execution issue. Because the sales team was uncomfortable and ill-prepared they gave up prematurely saying, "We can't figure out who owns this function in the company and so can't sell this."
This may have been a $100M opportunity that the company scuttled, whereas if they had spent a bit more time up-front to find out who & how many will actually buy the new product and what specifically these prospective buyers were looking for, they could've avoided this disaster and saved a huge amount of money.
There are two lessons to be learned from this sad story: You need to clearly identify prospective purchasers and spend time with them to clearly understand how your product/services address Customer Purchase Drivers™. As I've written elsewhere, customers base their purchase decisions on the attributes of a product or service that enable them to do four things: 1. Make more money 2. Reduce costs 3. Mitigate risks 4. Satisfy an emotional need
Only by understanding these Customer Purchase Drivers™ can you develop products and services that are guaranteed to be successful in the marketplace. Only by spending time with customers beforehand can you avoid making a $100M mistake.
About the Author:
Curtis N. Bingham, President of The Predictive Consulting Group, helps organizations dramatically increase customer acquisition, retention, & profitability. For more information about his new Customer Experience Audit, Customer Strategy, or Chief Customer Officers, visit his website at www.predictiveconsulting.com or his blog at www.curtisbingham.com .
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