Monthly CEO Challenge for March 2010
You know the saying about assumptions. Why are you still making them?
by Jane Adamson :: March 2nd, 2010
Assumption testing has always been important in organizations. Right now, however, it’s more critical than ever. Markets are evolving so fast that the wrong assumptions can be fatal.
Worse yet, an organization’s inability to routinely identify and test assumptions is a cultural defect that can be very difficult to correct.
Rick and I often see this problem when we participate in leadership meetings held by our clients. During these meetings, we frequently hear executives mistakenly state assumptions as if they were facts. Here are a few assumptions we hear regularly:
- This slowdown is temporary - things will be back to normal soon.
- This customer loves us, so this deal is safe.
- Our clients want X.
- No one else can beat us at X.
- We have to lower our prices.
- We have to invest in X.
- We can’t afford to do X.
- We tried X before and it didn’t work.
Each and every one of these statements is an assumption. And yet we rarely hear anyone challenge these assumptions. Why not?
ARE WE JUST TOO NICE?
It’s understandable that colleagues sometimes fail to challenge each other. First, there’s the fear of appearing negative, especially during difficult times. Executives need to provide solutions; if a solution isn’t readily apparent, it’s easy to withhold questions or challenges, to indulge the groupthink.
Second, we live in a multi-disciplined world in which we need to trust the expertise of our colleagues. When those from other disciplines speak, we may not have the direct knowledge to evaluate the intricacies of what they said, let alone establish whether it’s right. As a result, assumptions go unchecked.
This problem escalates when power is added to the equation. For example, when a CEO, president, or boss makes an assumptive statement, it’s even more likely to slide by. We’ve watched entire meetings in which a CEO will present assumptions without a single challenge. If we talk with that same CEO privately, s/he will inevitably assure us that s/he invites and encourages dissenting viewpoints. That’s an assumption as well — s/he assumes that the rest of the team feels confident and comfortable sharing that dissention.
It’s naïve and dangerous for any executive to believe that employees will automatically voice anything, especially when that “anything” is negative or challenging. The way to truly create an organization that identifies and checks critical assumptions is to build it into the cultural expectations. Only if it becomes the behavioral expectation in the organization will it become real.
Assumptions rarely exist in a vacuum, and they lead to more assumptions that can devastate a campaign, a strategy, or a company.
A CASE STUDY
Here’s a simple, true example of how one bad assumption leads to a myriad more. Let’s say that an organization is attending a trade show with the assumption that the best way to succeed is to attract as many people as possible into the booth and get their contact information.
Based on this master assumption – we must attract as many people as possible — the organization makes all of these secondary assumptions:
- The booth needs to be huge and highly visible.
- We need sensory devices, contests, premiums and actors.
- We’d better be a show sponsor so our name is on the program, the walls and the big banners.
- We’ll need plenty of power, labor and technology in our booth so we can electronically swipe contact information and download the data in order to follow-up with everyone.
- We need a new booth because it can’t look the same as last year.
- We need to increase our tradeshow budget to X.
- With this huge budget, the sales team must close $X million in new business from this effort.
This show will now require a significant effort from multiple departments – sales, marketing, finance, operations, and the executive team who banks on lofty results to propel the business toward its quarterly and annual goals.
WHAT IF SOMEONE HAD SPOKEN UP?
What if one person in the organization had been encouraged to challenge the initial master assumption? That person might have brought up these arguments:
- Having a lot of traffic in the booth will mean we won’t have time to separate real prospects from tire kickers. We also won’t have time to work with the strategic clients and prospects we’ve invited to the show.
- A massive effort to fill our database means lots of pre-show prep and post-show follow-up for a team of sales reps that doesn’t have the resources or budget to absorb an enormous influx of extra work hours.
- 90% of the names we put in the database won’t be prospective customers, so afterward we’ll need to talk to everyone and find the 10% who are real prospects. This effort will actually reduce sales time with qualified prospects.
- We know that 10-20% of the 90% non-customers will ask us to quote or send us RFPs, which will further reduce sales team time to sell strategic prospects. At the same time these extra RFPs will add to the work burden of the various support teams, decreasing their ability to meet their budgets.
- Since the post-show marketing program will require a big follow-up effort with limited staff, it will be a long time before we get to the 10% who are the qualified prospective buyers. By that time, many of them will have already bought from someone else. We will be lucky if we can get 33% of that 10% to buy, and we’ll never hit our revenue goals at that rate.
These challenges highlight the fact that “more people” wasn’t the right strategy for the show. And a challenger would have saved the organization many headaches and put millions back into the top and bottom lines. However, since nobody challenged the master assumption, the ramifications negatively affected the company and its strategy for a year.
SOLUTION
If your company’s culture isn’t proficient in identifying, challenging, and testing assumptions … you’re not alone. Therefore, you can gain considerable advantage by evolving into an organization that welcomes and benefits from this kind of consistent, strategic analysis.
ACTION PLAN
1. Make sure your organization supports assumption testing.
There are two tests that demonstrate whether your organization is good at identifying and testing assumptions.
First, when new employees join the organization, find out what they informally learn about the company and its culture. Preferred cultural norms pass from person to person. Listen carefully to what you hear. Are new employees inspired to challenge the status quo? To speak up in meetings? To drive new initiatives? Or are they encouraged to get along and keep their heads low? If there’s any semblance of the latter, you have a serious cultural problem.
Second, observe what gets rewarded and why. When team members question an assumption, what do they receive? A look of annoyance, an eye roll, or a pat on the back? If a company wants a culture that identifies and tests assumptions, it must reward that behavior openly and consistently.
2. Start listening for assumptions. You’ll be surprised by how many are being made.
There are two basic categories of assumptions – those made about the external marketplace and those made about and internal environment of the company. Here are just a few general examples of common assumptions companies make.
| EXTERNAL ASSUMPTION | INTERNAL ASSUMPTIONS |
|---|---|
| Who are our best prospects and clients What’s happening in markets, organizations, industries What our competitors are doing What will happen in the economy Who our best suppliers and partners are and why Which trends are real and the impact they’ll have |
What our strategy is and where we want to be in X years How teams, individuals and businesses should be evaluated and rewarded measured The purpose for an existing policy, process, or metric How the organization and teams should work together Roles and impact of different teams and individuals |
3. Identify the risks.
In the ideal world, you’d take all of the assumptions from #2 and test each and every one. Unfortunately, that’s not possible or practical. Instead, you can start by requiring that assumptions simply be labeled as such. Separate the known facts from assumptions being made.
How do you implement this step? First, keep a list of assumptions during any important discussion. Then when someone draws on one of those assumptions, ask two important questions:
- “What makes you believe that to be the case?” Listen for substantiation. If the answers are vague or hearsay or judgmental, then keep probing.
- “If we’re wrong about this assumption, will it cause substantial harm?” If the answer is NO, then move forward, but look for ways to substantiate the assumption in the future. If the answer is YES, then testing is required.
4. Test the most costly, dangerous assumptions.
For those assumptions that will cause substantial harm, focus your team to identify the best and fastest way to uncover the truth and mitigate the risk. The investigation could take numerous forms such as talking to customers or prospects, formal market research, internal surveys, competitive research, “secret shopping,” or even simply asking someone who may have the true facts.
5. Encourage and reward the challengers.
Remember the old adage “Focus on what is right, not who is right.” When there’s a win, credit belongs to the whole team. When there’s a loss, it’s the leader’s fault for not identifying and validating assumptions.
Thus, an important way to encourage challenges is to publicly embrace them. That doesn’t mean you have to engage in long discussion every time someone asks a question, but it does mean that when someone challenges an assumption, it should be labeled, accepted, considered, and appreciated.
It’s also important to establish the difference between negativity and positive assumption testing. Negativity simply shuts down ideas. Positive assumption testing asks questions and forces to the surface thoughtful discussions: What evidence do we have that this is true right now? What will be the result if we’re wrong? What alternatives might we be exploring if this assumption proved false?
Finally, you can include assumption testing as a critical behavior that is expected and discussed during regular performance evaluations. That certainly elevates it from a “tolerated” status to a mandatory action.
6. Identify assumptions (and how you’ll test them) in your annual, quarterly and project-based plans.
Make sure each assumption is clearly identified, and understand how the company will test and react to the results. Then make sure teams are testing and reporting back in real time.
When an assumption is tested and proves to be faulty, don’t punish the team for the original assumption; instead, praise the team for identifying, testing, and preventing expensive mistakes that hinged from that assumption. Point out the importance of the new conclusion and the resulting benefit to the company. The team will now have a new direction based on facts, not assumptions, and that is worth celebrating.
CONCLUSION
Part of the benefit in testing assumptions is greater clarity, completeness and accuracy in cost considerations. Understand why there are different assumptions from different teams, or roles within the company, or from those that impact your success from outside the company (customers, partners and vendors). Understanding their assumptions will help us see gaps, inhibitors, time considerations and cost impacts for all the parties.
We assume you’re going to bring this principle of assumption testing back to your company and put it to work. Is that assumption valid? Let us know!
What do you think? Please share your thoughts and experiences with us here!
Monthly CEO Challenge for February 2010
The Cost of Chaos
by Jane Adamson :: February 2nd, 2010
During the first week of the new year, when we tend to gaze optimistically at the road ahead, a headline from the Associated Press announced “Americans’ job satisfaction lowest in 22 years.”
The article then went on to say “That is the lowest level ever recorded by the Conference Board research group in over 22 years of studying the issue. If the job satisfaction trend is not reversed, economists say, it could stifle innovation and hurt America’s competitiveness and productivity. It also could make unhappy older workers less inclined to take the time to share their knowledge and skills with younger workers.”
Well, that got my attention! Of course there are many reasons for the decline, including the worst recession since the 1930s and the fact that downsizing has created more work and more demands on the workers who’ve survived the cuts. That doesn’t change the fact, however, that such a decline has somber implications for businesses, and executive teams need to address this issue in their organizations.
Soft issues, hard impact
Much has been written about the effect morale, culture, and what’s frequently referred to as the “soft issues” have on an organization. If you’ve read the articles or experienced a negative culture, you know that the effects are anything but soft. Lost productivity, poor teamwork, tension, a dearth of ideas and innovation, doing just as much as required and nothing more … all of these problems dramatically impact the bottom line.
Need proof? In their book The New Corporate Cultures, Terrance Deal and Allan Kennedy calculated the average performance of culturally robust companies and their weaker counterparts. They found that
- Over a span of 11 years, “culturally strong companies” averaged 571% higher gains in operating earnings than those they deemed “culturally deprived.”
- Companies with highly-rated cultures averaged 417% higher returns on investment than their less culturally-robust counterparts.
At The Revenue Game, we frequently use the term “cost of chaos.” This concept came from our work creating revenue strategies and aligning organizations to execute on those strategies. We’ve seen firsthand that the staggering lack of alignment in most organizations has real financial cost. But today, let’s talk about the human cost – the cost of poor alignment on people and their outlook about their work.
Some of you may object to the word “chaos” when we’re talking about organizations that are out of alignment. You may say, hey, we’re not perfect, we have problems, but “chaos” is much too harsh. We argue, however, that the word choice is appropriate and weighted accurately.
The human cost of misalignment
Human beings, especially in today’s economy where the necessity of brainpower is so acute, desperately want to do things because they matter. They want to be part of something bigger than themselves. It’s the motivational driver behind engaged workers, behind innovation, behind passion and commitment. In order to feel that intrinsic motivational pull, employees need to be pulling in the same direction and not at cross-purposes. (On that note, I highly recommend this 20-minute TED lecture by Dan Pink on “The Surprising Science of Motivation.”)
For example, here are three common examples of misalignment that cause frustration, anger, confusion and, eventually, disengagement.
1. Sales reps are judged on and rewarded for bringing in revenue while manufacturing/ engineering/ operations teams are judged on and rewarded for efficiency.
This misalignment directly and frequently impacts a company’s bottom line. After all, when there is no alignment on the type of revenue or projects sales should bring in, reps will bring in anything they can find. Manufacturing/engineering/operations teams end up with a slew of different projects with different expectations from different customers with different needs.
Sales reps walk around patting themselves on the back for the revenue they’ve brought in, but the delivery folks gripe about sales because the projects coming into the company make efficiency impossible. Sales reps become confused and frustrated, and the most talented ones often leave the company for greener pastures. Operations teams become equally angry. And guess what — customers see this tension and eventually take their business elsewhere.
2. The company’s revenue goals depend on a few sales heroes who get all of the recognition, pay, and perks. The support group behind those reps works hard but receives little recognition for contribution.
What makes this scenario even worse is that company leaders will get up in meetings and talk about teamwork, but employees experience a far different reality – one that tells them some team members are better than others. Resentment is rampant.
3. Everyone knows the company’s revenue goals, but the strategy for achieving those goals is either non-existent or known to only a few executives. Everyone does the best they can, but with a limited view of the strategic whole, their efforts are frequently ignored, unappreciated, or even disparaged.
If employees think what they’re doing is right, but then they’re shot down for their efforts without understanding why, the natural reaction is disengagement.
Is it any wonder that job satisfaction is so alarmingly low?
Action Plan
1. Develop a clear revenue strategy that maps out HOW you will achieve your revenue goals.
Every functional area of the company should be represented in the development of the strategy so that each representative understands the rationale behind the strategy, the revenue principles the strategy is based on, and what the key elements to success are. Ensure that the communication then flows from the strategic development team to all corners of the company. The goal is to paint a very clear picture to every single employee of where you’re going, why you’re going there, and how individual employee’s work contributes to the company success.
The plan itself should clarify:
- The specific niche the company wants to dominate
- A profile of the perfect customer
- The promises the company is making to that customer
- The problems that customer has that the company’s offer will solve
- The offer deliverables to the customer
With that information in hand, individual employees will be able to stay in alignment with the strategy as they make small daily work decisions.
2. Build high-performing teams that understand and want to support the big picture.
It’s not enough to just communicate a revenue strategy and plan at the beginning of the year. Your management teams need to continually communicate the vision and lead your organization to execute on those goals each day.
A big part of that leadership is to break down silos and rally your employees around the customer and solving the customer’s problem. Silos intensify when people either don’t understand dependencies or they’re rewarded on silo-based metrics. It’s up to your management team to monitor silos and address any disconnects immediately.
Remember, humans want to do a good job. The goal is to show them exactly how they help each other — they will make the system even better.
3. Give your team the resources they need to succeed.
Nothing discourages employees faster knowing what the goal is, but not having the resources to achieve it. It’s the root of most accountability problems and many morale issues that – as we said earlier – have human and financial costs for your business.
If your revenue goals are worth achieving, they’re worth the appropriate investments in people, processes and technology. If you can’t justify the investments, then you probably need to lower your goals so they’re achievable.
4. Make sure that your compensation plan supports your alignment.
Comp plans that reward a few sales stars with hefty commission, generous expense accounts and lavish trips can absolutely kill the alignment in your organization. You’re sending a message to the entire team that only a few players in one functional area – sales – are highly valued and that individual performance is more valuable than team accomplishment.
We’re not suggesting that commission and bonuses are wrong. We do recommend that your sales reps are rewarded for profitable, successful projects rather than just revenue. That way, their goals are aligned with the company’s revenue strategy and the goals that all functional areas share.
The same philosophy holds true for other functional areas – make sure their incentives and bonuses are tied to the company’s goals so that they are rewarded for working together rather than in silos. In addition, high performers in all areas should be recognized for their contributions on a regular basis. Don’t let the sales team walk around patting themselves on the back without publicly recognizing the rest of the talent that brings the company’s vision to life. Not everyone wants the stress of sales, but they do want recognition for their achievements.
5. Create positive metrics for your revenue plan.
Your team wants to celebrate success, so structure your metrics so they’re positive, not negative. For example, instead of the negative “reduce our current error rate of 20%,” say “improve our 80% accuracy rate.” That small shift allows you to celebrate small steps as you approach the goal and then surpass it! Celebrate 79.9%, 80%, 80.1%, 80.2%, and so on. The celebrations will motivate, re-energize, and keep people focused on the right things.
Conclusion
Win The Revenue Game by cutting out the “cost of chaos.” Give your employees the joy of being engaged and committed to something they understand and know they can affect. In order for that to happen, employees need to be pulling in the same direction and not at cross purposes. Let’s not let year another year go by without addressing and improving that employee satisfaction statistic!
What do you think? Please share your thoughts and experiences with us here!
Monthly CEO Challenge for January 2010
Thought Leadership is a Business Strategy
by Rick McPartlin :: January 5th, 2010
Last month, Jane wrote about the courage to create a brand, and boy, the word “courage” struck an interesting chord within our community. Branding involves making a difficult choice to go after a niche market with laser focus in order to differentiate your business from your myriads of competitors. (Even if you think you don’t have a lot of competition, you do — more than ever.) That focus means turning down business that isn’t on strategy. Difficult? Yes. Courageous? Absolutely.
This month, I’m intrigued by a similar concept: “thought leadership.” A lot of companies bandy about the word “thought leader” as if it’s a marketing tactic, but many others aren’t familiar with the concept or the strategic benefits that come with it.
The cold reality is that thought leadership is much harder than it appears. It isn’t a marketing campaign; it’s a long-term business strategy. In this month’s CEO Challenge, I’ll outline what the concept really means, the benefits, and how your company – if you’re courageous enough – can implement this strategy in 2010.
What is thought leadership and why is it valuable?
When I talk with companies about thought leadership, they sometimes tell me that “yes, we’re doing that.” They point to their shiny new blog, their Twitter account, their webinar series, their Facebook group. However, any company can implement these kinds of marketing programs, but that doesn’t mean the company is a thought leader. They’re confusing communication tools with strategy.
Instead, thought leadership is a long-term business strategy that drives everything the organization does each day and at all levels. A thought leader is an innovator in a very specific niche, and customers in that niche recognize, value, and – most importantly – are willing to pay for that innovation, that leadership position.
Many companies that launch new products and services have truly high value solutions. They pride themselves for delivering great value and they heap services, support and options into their offering. They’re proactive in sharing knowledge, opportunities and choices. They believe they’re a thought leader because they’re delivering innovation and value.
Yet somehow they find themselves competing with low-cost providers, and they can’t charge what they believe their solutions are worth. The problem is that these companies aren’t thought leaders because the market isn’t following; prospects and customers don’t consistently recognize or understand the value.
True thought leaders can demand substantial price premiums for their solutions because they can clearly articulate a compelling value proposition for very specific market niche. They also enjoy shorter sales cycles, greater repeat business, and strategic opportunities that their competitors miss.
You must consistently lead
If a company delivers value in a stealth way that the market doesn’t clearly understand or value, that company isn’t a thought leader. Why? They have to actually be a leader.
Leadership means a company has followers who recognize and take action toward their intended results. It means the company is absolutely recognized and respected as THE LEADER in a specific niche. It’s not something a company just suddenly decides to do and then implements during a short campaign. It’s a core business strategy that the organization implements at all levels and over many years.
A lot of companies aren’t prepared to make that kind of commitment. Some executives aren’t comfortable getting in front of their industry on a regular basis. Or they think it’s more important to focus on internal issues rather than creating an external voice and face for the organization’s vision and values.
These companies should not even think about the words “thought leadership” because they don’t have the tools to do it successfully.
In addition, some CEOs worry that, by consistently and loudly sharing their vision and value, they’ll invite competition. And they’re right. That’s why thought leadership isn’t short term, and very few companies can do it because they don’t have a sustainable, meaningful competitive advantage that is differentiated and defensible. They also need to commit to continuous innovation so that when copycats show up, they’re always a step or two ahead.
That’s why thought leadership is a business strategy, not a campaign. It’s a commitment to innovation and sustainable competitive advantage over the long term. It’s also a major commitment to consistently communicate that innovation in a way that creates followers who are willing to pay for that innovation.
Solution
Thought leadership is incredibly important for companies that are launching new products and services, particularly those aimed at early adopters. It creates differentiation and changes the way the market views solutions. Yet unfortunately, I’ve found that very few B2B or small/midsize companies have the guts to create a brand strategy let alone make a long-term commitment to thought leadership.
If your company is truly ready to commit to thought leadership as a business strategy, here’s a high-level action plan to get you started.
Action Plan
1. Define the niche for which you can reasonably be THE thought leader. It may be near impossible to become a thought leader for your entire industry, but you can be the thought leader for a very small, highly targeted niche – for example, a specific geography, customer need, or application. You have to deeply understand the needs of your niche and how they will assess the value that your solution provides.
2. Develop a brand strategy and be ready to stick to it. If you don’t have the guts to turn down business that isn’t consistent with your brand strategy, then you can’t possibly become the thought leader in your space.
3. Define a leadership roadmap. How will you show leadership in your niche? It takes time and effort to become recognized as a leader. Create a roadmap that outlines all of the leadership opportunities you will pursue over the years ahead. For example, are there conferences for which you could deliver a keynote address? Publications in which you would need to be featured regularly? Committees that you can lead?
4. Develop your thought platform. You’ll need a compelling vision, stories, data, and market insight to be respected and recognized as a thought leader. You have to tell the world and your your prospective customers that you are the go-to firm. Your thought platform should show deep knowledge of where your industry has been, the problems your customers face, and where you are collectively going. You’ll also need to create intriguing communications vehicles to share these stories and vision – speeches to industry, conference proposals, events, media materials, publishable articles, intellectual property, best practices libraries, your own communications platform, etc.
5. Get your organization aligned. I can’t stress enough how important this step is. Many – perhaps most – companies have a chasm between cost functions (operations, finance) and customer acquisition (sales, marketing). Your senior team needs to align and lead those functions to execute on your brand and thought leadership position each day. Failure to align an organization is a failure of executive leadership and thought leaders are NOT in chaos!
6. Find the right executive. Here’s the reason so many companies don’t successfully achieve thought leader status – they assign this role to a midlevel communications person or to an executive that isn’t comfortable playing such a public role (or who is too busy with internal initiatives to get out there and lead the industry). A thought leader must have deep experience and industry contacts along with a public persona and job description to lead your niche. The rest of your executive team needs to be fully engaged and able to contribute as well – thought leadership has to be part of your culture.
7. Define your metrics. Naturally, you need to know that this strategy is working. The first set of metrics should involve revenue, pricing and profit margins; you need to know that customers are buying from you based on pricing that reflects the value you deliver. The second set of metrics should track evidence of followership. For example, do journalists call you to comment on news or industry trends? Are you invited to speak at important conferences? Do prospective partners, customers, or funding sources reach out to you rather than vice versa? Do employees want to work for you because they view you as the leader? These metrics might be hard to track, but do it anyway – you’ll evolve your figures over time, and they’ll help you establish your progress.
Conclusion
True thought leaders position themselves as THE source of best practices, language, and metrics for their chosen market niche. When they lead the niche in this way, competitors have to adjust and meet the rules and standards the thought leader has established. What a great competitive position!
In reality, few companies have the discipline and stamina to commit to thought leadership as a business strategy. Those that don’t won’t succeed. Those who are successful, however, can command higher prices, enjoy shorter sales cycles, and operate from a leadership position in their niches.
What do you think? Please share your thoughts and experiences with us here!
Monthly CEO Challenge for December 2009
Have the Courage to Create a Brand!
by Jane Adamson :: December 1st, 2009
Branding is a tricky subject to discuss with small to mid-size companies. It’s a concept that’s more easily associated with consumer products, packaged goods, or the Fortune 500. Branding books use examples like Starbucks, Apple or Dell – examples that don’t resonate with midsize service companies, B2B companies, or industrial product companies.
Many of these types of businesses think of a brand as their logo, the look & feel of their web site, or their slogan. Unfortunately, a brand is none of those things. Instead, we define a brand as the combination of what you sell, how you sell it, and to whom. The result is an experience that develops your customers’ trust, and it can create substantial value because the right customers will be willing to pay a premium for that experience. That experience is based on trust and belief that you will be who you say you are every single time and in all circumstances. Not most of the time. Not just with certain people. All the time, everywhere.
A brand is narrow
The very essence of branding is being very clear about who you are and what specific customer segment you best serve. Thus, done correctly, branding is discomforting for a small to mid-size company because it requires a courageous and counter-intuitive choice to limit your market. After all, when you’re very specific about your target customers, you leave out other customers that don’t perfectly fit your target. For a small company fighting for survival, decisions don’t get much tougher than that.
Why should you limit your market and develop a brand? Because the dangers of NOT branding the company carefully, of NOT choosing, are lethal.
No brand? You’re no different.
First, the act of NOT choosing very specifically who you are, what market you’ll serve, and how you’ll serve that market, is in itself a choice. It’s the choice to be like everyone else, to be anonymous, to hide in the chorus of companies and hope that your voice will be heard amongst all the others.
In an age where your customers can choose from a huge swell of service providers from around the globe, choosing anonymity is a dangerous decision indeed. If you don’t answer the question of “why me,” a competitor surely will. Very simply, branding gives customers a reason to buy from you without you having to plead, prod, and cajole a sale.
A brand is a clear promise
A good brand says, “You can trust that I will meet your expectations because I’ve clearly told you what those expectations are.” If a company hasn’t developed a clear brand, then it’s difficult to be clear about the promises it makes to customers.
If a company knows, internally, what it promises to customers, then the entire structure of the organization (including compensation plans, values, reward systems, resource allocation and so forth) can be clearly established to ensure that the company delivers on those promises. Without brand clarity, it’s easy for internal systems to become misaligned, inevitably leading to customer disappointment and overall mediocrity.
For example, online shoe retailer Zappos.com promises no hassle returns, and they successfully deliver on that promise. I returned a pair of shoes last week, and there was absolutely no hassle — no questioning of my return decision, no cost to me, easy instructions, and friendly service. Their business processes are set up to ensure no hassle returns and their employees are enthusiastic about returns. In other words, their organization is aligned to deliver on a clear brand promise.
Branding drives marketing efficiency
A good brand is extremely specific about the profile of ideal customers. Without that specificity, marketing efforts are diluted because they need to appeal to a broad audience. Next, expensive sales time is wasted as sales reps talk with prospects who really aren’t a good fit for the company.
Is your company facing this problem? Check your revenue generation metrics. Are you attracting the right number of prospects for your investments? Are you closing a high percentage of the prospects you do attract? If either numbers isn’t where you’d like it to be, there’s a good chance that your organization isn’t completely clear about your customer profile and you are, unfortunately, wasting money.
Branding drives word of mouth and referrals
There is one true indicator of a good brand: word of mouth. Strong brands are so reliable and rare that people talk about them. This fact is true even in service industries, industrial companies, small businesses, B2B product companies and the like. Regardless of size or industry, a well-branded company enjoys a tremendous advantage in the marketplace because word of mouth and referrals are the best possible form of marketing.
If your company doesn’t have a strong brand, your competitors have a major opportunity to beat you to the punch and gain an enormous advantage.
Action Plan to Create a Strong Brand
1. Focus on the customer problem you’re trying to solve.
As Marty Neumeier says in his excellent book The Brand Gap, “A brand is not what you say it is; it’s what they say it is.” Therefore, you need to start with the real needs of your customers – and those needs typically have nothing to do with your product. Ultimately, your customers need to generate revenue and profit, and your solution has to help them get there. Customers also have needs such as mitigating risk, convenience, personal image within the company, political agendas, technical limitations, and much more.
Be VERY SPECIFIC concerning what problems your customers actually have and how your solution can solve those problems. Become a specialist your customers can trust, not a generalist for everyone.
2. Create a detailed profile of your perfect customer.
Companies often say they have a target customer profile, but it’s typically so general that it’s ineffective. Dig much deeper than top tier characteristics such as company size, geography, job title or industry. The goal is to help the prospect feel like you are talking specifically to him/her. Help your marketing and sales department understand the problems your customers face as well as characteristics like how they make decisions, what’s important to them, what they struggle with, with whom they interact, and how they like to do business.
When the profile is complete, the marketing and sales teams can then identify how best to reach the target group and how to recognize a “good” target customer. A great brand will attract certain types of people. Do not bend to the temptation of responding to prospects that do not fit the profile. Let go. Trying to appeal to different groups will dilute and ultimately crush the brand.
3. Decide, as a company, on your promises.
A promise is a much stronger word than “value proposition.” Value proposition sounds casual and murky and spineless. A promise is real. People are careful about making promises and breaking them is a serious cultural violation. Your brand promises should take on the same solemn quality.
For instance, if a local nursery promises to help customers make informed buying decisions, everything about that company should be set up to deliver on that promise. HR would hire only cashiers with backgrounds in gardening and the different types of shrubs, trees and plants. Training classes would be held on a regular basis so the staff could keep up to date with local planting techniques and watering requirements. Employees would be well versed on all inventoried items. Specialists would be available for detailed questions. The company may even conduct gardening classes for its customers.
A brand promise is a solemn vow. Are you keeping yours? How do you know?
4. Avoid corporate speak.
Great brands speak directly to their client groups in language that they understand and believe. Corporate fluff such as “we’re dedicated to your success,” “we have a full range of products to meet all your needs,” and “we’re better, faster, cheaper” have lost all meaning and credibility. Tell your prospective clients exactly how you solve their problems. Then walk, talk, and demonstrate your dedication to that brand.
A local Scottsdale remodeling contractor I know requires all his subs to clean up a home every evening. He bases his remodeling recommendations on how a family lives their daily lives, and he spends time perfecting every detail of the project even though it may never be noticed. In a city among the hardest hit by the housing crisis, this contractor stays booked, and he enjoys strong word of mouth. He has created an authentic, powerful brand.
The buzzword “transparency” is another way of telling companies to be authentic. In this world of instant messaging and the internet, companies cannot get by for too long without authenticity because the market will unmask the reality and spread the word.
Conclusion
Why don’t more small to mid-size companies spend more time on creating an identifiable brand? The answer is that, like most good things, it’s hard to do and takes enormous corporate discipline and strength of character. Every company has heard the internal plea “we can’t be that specific, then we’ll lose all these other opportunities.” The counter-intuitive pull is tough. Yet when you choose not to create a brand, you’re choosing to be the same as everyone else.
Remember: Your goal is to consistently communicate WHAT you do, for WHOM, and HOW you do it. Make a solemn promise and keep it every time. That’s a powerful brand that can differentiate your company in a difficult, crowded market.
What do you think? Please share your thoughts and experiences with us here!
