This is the best time in decades to grow without big investment
This is the best time in years to create dramatic, sustainable growth without having to invest in technology or product innovation. In fact, we may see the most dramatic changes in decades in who the leading companies are.
I have had several conversations with business CEOs recently, and, not surprisingly, there is a common theme: Fear. There’s also a lot of wondering what the answer to creating growth is going to be. But the secret to growth is both easier and harder than you may have thought. It’s easier, because the answer is so simple and attainable by almost anyone. It’s harder, because few business managers will believe that it can be that simple and easy.
Why is there such a great opportunity for growth right now?
One reason is that most of your competitors are pulling back in fear. It’s easier than ever to steal share from your competitors when they are hiding out. And, as long as you don’t fall into price competition as your primary tool to create growth, you can see great gains in market share and profitability, no matter what the economy is doing.
Cahners Publishing has done decades worth of research to prove that recessions are the best time to jump past competitors. They have continually found that those companies who use the resources to create more non-discounted demand, while everyone else is holding back, grow much greater than their competitors during and after the downturn.
My own research and testing over more than 25 years has proven conclusively that you can dramatically grow market dominance and customer loyalty without discounting even more easily during a downturn than when things are good.
The real choice will be, “Do you want to be the one left behind to follow someone else’s lead, or do you want to emerge 6, 12, or 18 months from now as a dominant leader?” Act wisely now, and you can leap-frog past competitors.
Another reason is that there also is no lack of customer need. Despite the typical perception that “customer satisfaction” surveys measure how satisfied customers are, reality is that most customers are not at all satisfied. They just won’t tell you that. Most of what is measured by customer satisfaction surveys is what the marketer thinks is important, not what the customer really values. In fact, most customers won’t even reveal what is most important to them in a customer satisfaction survey.
I do a lot of innovation research, and invariably I uncover entire areas of deep need (functional and emotional) that customers have never revealed to anyone, because they never believed that they could fulfill those needs through a product in that category. And the marketers in that category are completely blind to it. It would be like never recognizing the opportunity for a Victoria’s Secret, because there are already so many other retailers that sell lingerie and pajamas. But such are the opportunities that dominate categories in a short time, no matter what the economy is doing.
The best part is that emotional, ego-satisfaction needs are the ones that create the greatest growth in a downturn, and they cost the least to address. Ego-satisfaction has two elements, according to a 15-year research study my company conducted into what creates sustainable growth: 1) how they feel about themselves (I call this “self-satisfaction) and 2) how they believe others feel about them (I call this “personal significance”). Every time I have helped a company understand and address these unmet needs, that company has grown dramatically without discounting… no matter what the economy is doing.
The real barriers to growth now:
The economy is not the real barrier to growth right now. Yes, people and businesses may slow their spending for the next several months, but they will not stop spending. And what they spend their money on will be defined by how they feel about themselves and what they think the product will do to change that self-perception.
The real barriers to growth are…
1. Believing that low price is critical – it’s actually the last criteria, not the first. It only comes into play when the customer realizes that there is no meaningful difference between products. Our research showed that approximately 90% of consumers will spend more for something they want, even though they may tell researchers that they won’t.
2. Believing that function is most important – improving quality or performance works best when it supports ego-satisfaction. In really tough economies, ego-satisfaction beats functional performance or quality. Almost every Alpha company we studied (companies who dominate their category and have greater price leverage) had lower quality or product performance than many of its competitors. Functional performance is only a rationale for justifying the emotional, ego-satisfaction basis for the buying decision.
3. Believing that customer expectations get lower in a downturn – they actually go higher. Customers actually demand much more, especially in ego-satisfaction, during a downturn. To really win, you must satisfy those emotional needs and then drive expectations even higher. The company that successfully accomplishes that will become the new leader.
4. Believing that measuring outcomes is how to manage success – “causes” are more important than final outcomes, because they let you modify and improve your process as you go BEFORE final outcomes. Measuring sales and profit is backward-looking. It’s like driving a car by looking out the back window. Look ahead at the emotional elements of the buying decision process, and you can manage improvement far more easily and cost-effectively.
5. Believing that when competitors follow your lead, you need to stop them – followers are your best marketing support. Our research into what creates sustainable success proved this. Every competitor who follows your lead or competes against you is proving your value, not theirs. Just don’t let them pass you in driving customer expectations. Incorporate the best things they are doing and overcome the weak things they do.
You can do better than just survive in an economic downturn. Be smart about shifting current resources into ego-satisfaction fulfillment, and you will grow, while everyone else wonders what happened to them. Recognize that this may be the best opportunity your company has ever had to grow dramatically and sustainably, and a year from now you could be the dominant success in your category.