The Top Question For Business Leaders: What Business Are We In?

The Top Question For Business Leaders: What Business Are We In?

Harvard Business School professor and the father of modern marketing, Theodore Levitt, asks a powerful question that every business leader, sales representative and marketing manager must answer: What business are you in?

The answer to this question will determine the future of your company. At this critical moment when the needs of your customers are changing, this question needs to be answered correctly.

The reality is that what you sell and what people buy are different. As I say in my book Revenue Growth Engine, “Buyers don’t buy products, they buy the outcomes the products deliver.”

Theodore Levitt would famously walk into his marketing class holding up an electric drill bit. He would tell the class that no one has ever purchased a drill bit, but what they bought was the hole. Some take it a step further and say that they aren’t buying the hole, they are buying the ability to hang a picture on the wall so they can look good to their friends. Others takes it even further, observing that the reason we want a picture on the wall is because of a primitive need to be part of a community, which will help ensure our very survival.

The point is, the buyer only bought the drill bit because they wanted the outcome the drill bit provided: a hole, a picture on the wall, the admiration of their friends, the ability to survive or some combination of the above.

What business are you in? When industries answer this question incorrectly, they set themselves up for failure.

Theodore Levitt also used the railroad industry as a case in point. The companies thought that they were in the railroad business when what customers were really buying was transportation. Had they seen this, they might not have lost business to transport trucks, buses, cars and airplanes. Instead, they would have seen the railroad as a means to deliver the outcomes their buyers wanted: getting conveniently and cost-effectively from point A to point B.

Gasoline stations can also be used as an example. Many think they are in the gasoline business. The reality is that nobody wants to buy gasoline. It is expensive, smelly and damaging to the environment. What they want is the outcome of being able to get to work, drive the kids to soccer practice or go on vacation. Gasoline is just a means to deliver that outcome. As soon as someone comes up with a better way to get the outcome, gasoline stations that don’t adapt are dead.

Dell thought it was in the computer business. As a result, it focused on creating an amazing supply chain that could deliver a cheap computer. Apple realized that it was in the business of helping people create ideas and share them. Computers (and iPhones, iPads, Apple Watches, Apple TV and the related services) are just a means to deliver the outcome its buyers want. As a result, Dell is struggling while Apple dominates the stock market.

Most businesses think they are in the business of delivering a product or providing a service. For example, if your business sells copiers, you may think that you are in the copy machine business. If you are an accounting firm, you may think that you sell tax preparation services. If you are an IT company, you may think you sell technical service.

The way to get the correct answer to this question is to consider the outcomes that our customers want. If you sell copiers, the outcome your customer wants may be an efficient office and professional documents so they can grow their business. This type of business might ask the question: What else could we deliver to help our customers get these outcomes?

If you sell tax preparation, the outcomes your clients want are to reduce their tax burden, get a faster return and reduce the risk of an audit. Rather than market the tax service, what if the agency’s message led with the outcomes they deliver.

If you sell IT services, your buyers probably don’t understand what you do. The outcomes they are buying are uptime so they don’t face the cost and frustration of downtime stopping their business. They are buying security so they don’t face the cost and embarrassment of a data breach.

What business are you in? What outcomes are your customers actually buying from you?

In the aftermath of the Covid-19 crisis, these questions will be especially important because the outcomes that your buyers want may have shifted. Recent Gartner research gave insight into the shift in outcomes buyers want. Before the crisis, 2019 research showed that “55% of organizational redesigns were focused on streamlining roles, supply chains and workflows to increase efficiency.” After the crisis, the desired outcomes have shifted to things like agility, flexibility and resilience.

Avoid being short-sighted. Focus on the outcomes your clients want and you have a much greater chance of earning their attention and their business. In the process, the shift of perspective might also allow you to see new ways to deliver the outcomes your clients want, creating new business opportunities.

Originally published on Revenue Growth Engine.

What We Can Learn From T-Mobile About How To Keep Customers and Grow Revenue Following an Acquisition

What We Can Learn From T-Mobile About How To Keep Customers and Grow Revenue Following an Acquisition

The reason to buy a company is to take what you purchased and grow it. Unfortunately, what often happens is that companies let the customers of the companies they acquired slowly get picked off by the competition. Instead of growing the new base of customers, the new base dwindles away.

You can buy a business but you cannot acquire customers. Keeping customers requires trust. After an acquisition, that trust must be built.

When we buy something big, we all experience buyer’s remorse. It’s that moment of time where we are nervous that we made a bad decision. (You may have some buyer’s remorse on the company you bought!) At that moment, the sale is very vulnerable to cancelation.

The same thing happens to customers after an acquisition. The customers of the acquired company get acquisition remorse. They are nervous. The customers of the company you acquired are vulnerable.

Sprint has provided my cellular service for over 10 years. Recently, T-Mobile acquired Sprint. Personally, I identified with the Sprint brand, seeing it as a maverick against the giants, AT&T and Verizon. I enjoyed the benefits of unlimited data and good pricing. 

Following the acquisition, I’m nervous about T-Mobile. I don’t know much about their brand. Right or wrong, I see T-Mobile as a discount carrier. I’m concerned about losing my unlimited data and favorable pricing.

Several months into the new relationship, I’m impressed with how T-Mobile is handling the transition. In this article, here are a few things I’ve noticed that we can learn from T-Mobile.

Explain the Main Benefit

The first thing T-Mobile did was explain the benefits of the acquisition. I received several emails and letters explaining that the combined resources of the companies will allow me to not only keep my unlimited data, but also get access to a more robust 5G network. They have backed this up by carpet-bombing TV commercials to reinforce that the new company has more 5G coverage than AT&T and Verizon combined. 

I’ll admit, as a customer I was nervous that Sprint was falling behind in the race to the fast internet that I want. The primary message of the acquisition is that we are not vaulting ahead of the established players. As a trailblazer, I like this.

What is the main benefit that your acquisition offers your customers? T-Mobile buying Sprint gives me more 5G meaning I get to stay ahead of the tech curve. This helps alleviate my nervousness. What benefit could you offer?

Offer Perks

The week that T-Mobile announced the acquisition to Sprint customers they rolled out T-Mobile Tuesdays. The very first perk was free access to the MLB Network for the rest of the season. Now, as I watch the Blue Jays, I feel goodwill towards T-Mobile. Since then, they have given me magazine subscriptions, 10 cents of gasoline, a T-Mobile face mask, and even a free Whopper. Every Tuesday, I look forward to the notification on my phone that tells me I have a new perk.

Another perk is Scam Protection. This handy app automatically screens out scam calls. I like that! 

What perks could you offer to your customers? How could you build goodwill and make the relationship fun?  

This may sound like unnecessary fluff. However, when you buy a business, the customers are nervous and afraid. These are negative emotions. If they are not overcome with positive feelings of goodwill, your newly acquired base is at risk of slipping away.

Build the Relationship

I hope you have a consistent cadence of meetings and touchpoints with your current clients where you stay in tune with their business goals and challenges. (If not, starting Periodic Business Reviews is low-hanging fruit you should go after right away!) Build the relationship with your new customers. Don’t just send them a letter. Learn about their business goals. Get to know their people. Offer Periodic Business Reviews as one of your perks. 

Building relationships into your new customers does two things. First, it protects the accounts. Second, it sets the stage for cross-selling additional products and services into the account. That’s where things get good. Not only do you keep the customers from the acquisition, you grow them! 

Make a Plan

Are you planning to acquire a company? If so, I recommend that you make a customer retention plan before you do the acquisition. It is probably a good idea for every company to do this proactively so that when they do make a purchase, the plan is ready to roll.

 

Why Your Sales and Marketing Teams Need an Outomes Framework

Why Your Sales and Marketing Teams Need an Outomes Framework

As we have previously written, Buyers Don’t Buy Products, They Buy Outcomes. I see a perfect example of this as I look out my window into my driveway. I bought a car to get to the places I need to get to support the outcomes that I need:  

  • Enjoying our home in the mountains to bike and ski
  • Get to the airport to fly somewhere to visit a client or an occasional trip for fun
  • Sustain day-to-day life at home 

I don’t drive very often, but the car I drive is reliable, it allows me to transport my gear and delivers the outcomes I need. Quite frankly, it is less than impressive for anyone that would consider themselves a car junkie. Sounds like I may be cheap but trust me that the outcomes I need require plenty of investment over and above a car.

The outcomes that your business delivers should be woven throughout the operational as well as the sales and marketing aspects of your business. Let’s focus on sales and marketing given this is your focus if you landed on this blog.

Outcomes are in play at each stage of the process that you have in place to help your ideal prospect to become an ideal client:

  • Marketing/Prospecting: Your marketing plan should be targeted to attract businesses that are looking for outcomes that your company can deliver. Remember, Buyers Don’t Buy Products, They Buy Outcomes, so product-centric messaging makes it challenging or impossible for the target to understand what outcomes they might get from your product.
  • Qualifying: The goal of the qualifying stage of a sales cycle is to determine if the buyer is a good fit for the outcomes that your company can generate and if they have resources to pay for your product or service.
  • Discovery: The idea with the discovery stage of the sales cycle is to explore areas of need that your prospects have. Needs for all potential outcomes that you can deliver should be explored. 
  • Proposing/Recommending: Your proposal should be communicated in terms of the outcomes that your clients will receive if they invest in you.
  • Enjoying your services: Your operational team should be focused on maximizing outcomes for your clients. From a sales perspective, you need to gather outcomes — actual, quantifiable metrics — from happy clients when you conduct periodic business reviews. Those metrics should then be used in the other stages of the buying process to help communicate your value.

Having a resource, let’s call it an Outcomes Framework, shared by the sales and marketing team that is updated regularly, and shared centrally between sales and marketing provides many benefits:

  • Alignment: Historically, sales and marketing teams are at odds with each other. Sales teams need marketing to communicate properly to prospects in a language they understand (outcomes and value, not product specs). On the other hand, marketing relies on sales to gather outcomes to help them create messaging. Both need each other to be on the same page, and an outcomes framework is a great place to start!
  • Effectiveness: Outcomes-based messaging resonates with prospects, so win rates go up when communicating in terms of outcomes.
  • Efficiency: Having a centrally-shared resource in place for an entire sales team makes it significantly easier for sales teams to prepare for all calls. Better yet, it can take fewer calls to achieve the same result. How happy would your sales team be if you were able to cut in half the time that sales reps spend preparing for meetings and helping them win more deals?

Leveraging an Outcomes Framework with real-world client success stories can be a game-changer for your revenue generation team. 

Download the Outcomes Framwork Worksheet

Buyer’s Don’t Buy Products, They Buy Outcomes

Buyer’s Don’t Buy Products, They Buy Outcomes

What you sell and what your clients buy may be two very different things. We think we sell products and services. What our clients really buy is outcomes.

Theodore Levitt, the father of modern marketing put it brilliantly: “People don’t buy drill bits, they buy holes.”

Your prospects don’t want to buy products, they want outcomes. For example, business owners don’t buy color printers, they buy color printouts. If you boil that down even further, they don’t really buy color prints. If they are printing invoices, what they are buying is the ability to collect money faster from their customers. If they are printing marketing material, what they are buying is competitive advantage and business growth.  (more…)

How To Make Your Message Appetizing in a Bland Market

How To Make Your Message Appetizing in a Bland Market

Having grown up in Canada, I love maple syrup. I remember Saturday mornings at the sugar farm. Each spring right as the snow was beginning to melt we’d head out into a grove of maple trees.

Each tree had a spigot with a small bucket attached. Sweet sap would drip into the bucket. We’d gather that buckets of sap and bring them the sugar shack.

Straight out of the tree, maple sap tastes like water with a few granules of sugar. When it’s distilled, delicious maple syrup emerges. It takes about 40 gallons of maple sap to make one gallon of maple syrup. It’s no wonder that maple syrup is so valuable—and tastes so good. (more…)

What Would Happen If You Told Your Prospects What Types Of Clients You Want To Serve?

What Would Happen If You Told Your Prospects What Types Of Clients You Want To Serve?

This week I’ve been creating the website content for the new suite of services our team here at Convergo will roll out this summer (can’t wait to launch this!) It’s got me thinking about what our ideal prospect looks like.

We all have ideal prospects. These are the future clients that are a great fit for your business. They value what you do. They align with your values and culture. They recognize the value you deliver and are willing to pay for it.

We also all have prospects that are not a good fit: They don’t value what you do. They don’t align with your values and culture. Instead of recognizing value, they want to grind you for a lower price. While you may make a little bit of profit on the deal, you’ll lose all and more of it as your employees get frustrated serving a client that is misaligned with your company. Usually, these non-ideal clients end up leaving and are often your most vocal critics.

Idea: What if you told your prospects what types of clients you want to serve?

I think if we were more explicit about who we wanted to serve, good things would naturally happen. Ideal prospects would resonate with your values, vision, and culture. They would say, “Yes! Finally! I’ve been looking for a partner like this!” The non-ideal prospects would be repelled. How helpful would that be?

As I’m writing the content for our new website, I thought it made sense to tell our prospective clients what type of companies we like to work with. The hope is that it will create resonance with our ideal prospects while repelling our poor-fit prospects.

This is a work in process, but I’d love to hear what you think. Here’s my message: (more…)