Why is it that people can give more thought to a fishing expedition than they do their business?
If you want the best chance of catching fish you go where the fish are and you use the most appropriate bait. Good fishermen (and women) research this before wetting a line. Poor fishers don’t. It’s the same in business. If you want to catch clients you have to be prospecting where your ideal client ‘hangs out’ and have the right bait – what will your target customer value? How will you deliver ‘gain’ or help reduce ‘pain’? It all comes down to strategy.
Every successful business, large and small has a strategy. A strategy is a means of giving clarity, focus and direction to your business, and to your staff. Working to a strategy helps ensure that your time, resources and actions are not wasted and you achieve the best returns on your investments.
Put simply strategy is about choices, and the choices need to be kept simple. In my years consulting on business strategy and development, I find that all too often businesses don’t understand or overcomplicate strategy. So it’s not surprising to see a person as successful as former Proctor and Gamble CEO, A.G Lafley define strategy by 2 simple questions: Where to play? and: How to win? (Photo credit Choices by Miguel Escobar Toledo_Flickr)
Answering the ‘Where to Play’ question helps narrow the competitive environment in which your business will operate. This includes, among other things the markets, locations and types of customers you will target. By doing this you increase your chances of success – no business can be all things to all prospects. Understanding your ‘ideal client’ will allow you to identify where you should be concentrating not only your marketing and sales efforts, but also R&D and other business resources. it is a key element of understanding ‘where to play’ and from a sales perspective helps you focus your time on the opportunities with the greatest chance of conversion.
And to understand your ideal client you must first understand what your business is and what it does best – this needs to be from your customer’s perspective. What are the wants and needs of your prospective clients that you can deliver? What is it you can deliver that your ideal client will see as ‘value’? There are many templates available to help you identify your ideal client, but again, this is not something that needs to be overthought. Start by considering your current ‘best clients’ and ask yourself these simple questions:
- What industry are they in?
- How many employees do they have?
- What is their turnover?
- Where are they located?
- What VALUE do I bring? What problem does my business solve and benefit can it deliver?
By defining your ideal client you are able to determine ‘where to play’. Your marketing and sales efforts will be more effective – you will be fishing in the right pond.
Knowing where to play is just the first step, because if you don’t also know ‘how to win’, it doesn’t matter what field you play on. To understand how you can win, you must first understand what value you are able to deliver to your market. And this value must be recognised and acknowledged by your prospective clients. It’s about how you can create a competitive advantage – for you and your prospect/client. You must also understand the competitive environment and the trends in your market – they are never standing still. Answering this question is often over-complicated by business owners and managers, as is done with much business planning. Ultimately there are only two ways to win business. You compete on price or you compete on product/service differentiation. “Do I make it for less or sell it for more?” Are you going to be at the low-end as far as cost is concerned, or are you going to be at the high-end and provide ‘added value’?
Competing on price means your business needs to focus on increasing volume to achieve reduced cost of manufacture. If you choose to win through differentiation and added value, you need to clearly understand what your customer sees and defines as value. Many argue that to compete through differentiation you require a ‘uniqueness’ that clearly differentiates you from your competitors, but ultimately it is about having a value that is recognised by your prospective customers and for which they are prepared to pay a premium. And you need to understand that as your product or service becomes commoditised (as all do), determining ‘how you will win’, will change. For every price-point your target market will have an expectation of what they define as value, meaning that what can be sold at a premium today, may become a cost-sensitive offering tomorrow.
Determining where to play and how to win will define your marketing and sales approach. The next 2 questions you need to ask will define your business – “what capabilities do I need?” and “what structure and systems do I need?”
Research is fundamental to developing any strategy. Knowing where to play and how to win can only be determined if you understand your own strengths and weaknesses, those of your competitor and value as defined by your target market.
Defining strategy and ensuring successful execution enable businesses to find value in an ever-changing marketplace.
This article was previously posted on Linked In.