BreakthroughStrategies Engineering High
Growth Potential
Dr. Tom McKaskill
BreakthroughStrategies
Personal Experience
• Twenty years experience as a practicing entrepreneur.• Founded three software ventures – one in the UK and two in
the USA. • Management buy-out of a further software business.• Two acquisitions.• Raised venture capital twice.• Sold all four businesses at a premium.• The leading authority on how to sell a business to a strategic
buyer. Author of 22 books for entrepreneurs.• Former Professor of Entrepreneurship, AGSE, Swinburne.
BreakthroughStrategies
Objective
Identify the strategies ofHIGH GROWTH VENTURES
which result in increasedgrowth, resilience and profitability.
BreakthroughStrategies
Short and Long Term Focus
• In the short term we focus on existing products in existing markets.
• In the long term we look at changes we can make in the product/market interface and organizational changes to improve growth capability and capacity.
BreakthroughStrategies
SHORT TERM IMPROVEMENTS
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High Growth Ventures Are Different
• High referral rates.• High repeat sales.• Higher profitability.• More resilient. • Very customer focused.• Lower cost of marketing per sale transaction.
BreakthroughStrategies
Referral Rates Drive Growth
“In most industries, this one simple statistic (the Net Promoter Score) explained much of the variation in relative growth rates; that is, companies with a better ratio of Promoters to Detractors tend to grow more rapidly than competitors.”
How likely is it that you would recommend [Company X] to a friend or colleague?
Source: www.netpromoter.com
BreakthroughStrategies
The Net Promoter Score
Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.
Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
BreakthroughStrategies
Observations
• Customer satisfaction drives repeat sales.• Customer satisfaction drives referral rates.• Unsatisfied customers will shop around.• Very unsatisfied customers will damage your brand and
reputation.
What creates a satisfied customer?
BreakthroughStrategies
Buyer Behaviour Model
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High Growth Marketing Model
STIMULATE NEED
SEARCH
EVALULATE
BUY DELIVERY
USE
HELP DISPOSE
ENGAGE RE-BUY
REFER
Satisfaction relates tothe entire process
BreakthroughStrategies
What Problem Do You Solve?
The most important role of marketing is to clearly define the problem you solve.
BreakthroughStrategies
What Is The Problem Or Need?
• Few firms define the problems they solve or needs they satisfy.
• Too much focus on products, features and functions.• Their messages are too vague or too technical to help the
customer decide.• They fail to use the words or descriptions which their
customers use.
BreakthroughStrategies
Ask Your Customers
• How did they define their problem?• What outcomes were they seeking?• Where did they look?• What search words did they use?• Who did they talk to for advice?• What prior experience did they have? • What would have happened if they had failed to find a
solution?
BreakthroughStrategies
Who Is My Customer?
Target a clearly identified and reachablecustomer who has the problem you solve
or need you satisfy.
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Who Are The Best Customers?
• Who buys quickly?• Who refers the most?• Who buys with the least price pressure?• Where do you have the highest competitive advantage?• Where do you have the best fit?
BreakthroughStrategies
Describe Your Ideal Customer
• Who are they?• Where are they?• What is their demographic and socio economic situation?• Where and how do they shop?• What else do they buy?• What do they read?• Who do they associate with or define themselves as?• Who advises them?• What level of prior knowledge do they have?
BreakthroughStrategies
Evaluation
Make it easy for the customer to ascertain that your product or service is the right choice for them.
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What Matters
Do you understand my situation?Have you solved a similar problem before?Do you have the skills to do the job?
This is the threshold issue. If you can’t convince prospective clients that you can solve their problem, nothing else matters.
Source: Spiraling Up
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Evaluating Benefits
• How does the customer assess the value proposition?• What is the payback period?• What are the problems, costs, delays, risks in the solution?• What information or tools are your competitors providing?• Do you offer a consulting service to map out benefits?
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Expectations
Customer satisfaction is directly related tothe customer’s expectations.
You have to ensure thatthe correct expectations are set.
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Customer’s Expectation
• Prior experience of similar products.• Discussion with friends and family.• Public information (newspapers, articles, internet blogs).• Vendor content (brochures, webpages).• Vendor contact.
BreakthroughStrategies
Satisfaction
• Related directly to expectation.• Small problems, mistakes and mis-communications can
have a big impact.• Don’t ‘exceed the customer’s expectation’ – you make it
harder for the next sale.• Be consistent, reliable and predictable.
BreakthroughStrategies
Purchase And Delivery
You have to make it easy for the customerto buy and take delivery of their purchase.
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Purchase
• It is readily available?• It the purchase agreement fair, reasonable, understandable
and efficient?• Is it simple and straightforward to pay for?• Is credit available and easy to access?• Is there adequate help available at the point of purchase?• Is the payment process efficient for the customer?
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Delivery
• Is it easy to have products delivered or to arrange the service?
• Is the delivery efficient, trouble free and stress free?• If you need to dispose of the old item, does the vendor
assist?
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Product Or Service Use
Your objective must be to ensure you solve the problem or satisfy the need and provide support and help
throughout the use experience.
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Customer Engagement
Long term engagement of the customerwill increase the likelihood of
a repeat sale or referral.
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What is the Impact of Better Marketing?
• Reduced sales cycle by 10%? • Reduced the time between sales cycles by 10%? • Handle 10% more sales cycles at the same time? • Sell more products to the same customer? • Remove a number of steps out of the sales cycle process? • Receive unsolicited sales orders?• Improve conversion rate of leads to sales by 10%? • Improve the rate of qualified leads by 10%? • Grow overall leads by 10%?
BreakthroughStrategies
Further Information
Marketing for High Growth Ventures –Forget the spin, apply proven strategies
BreakthroughStrategies
LONG TERM IMPROVEMENTS
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ABS statistics
High Growth is Rare!Only 9% will exceed 20 employees and
only 6% will exceed $2 million in revenue.
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Market Issues
• Size and rate of growth of market.• Degree of competition.• Mature markets compete on price.• Most products compete for discretionary spend – high
marketing costs and low conversion rates.• Majority of products and services are not protected and can
be quickly copied.• Markets are imperfect and prospects often find it difficult to
obtain information on alternative suppliers. Very difficult to establish a leadership position.
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Capacity Issues
• Building capacity is slow and requires access to funding.• Few private companies are suitable targets for venture/angel
capital thus sources of finance are limited, (1 in 10,000).• There are long lead times involved in building capacity
(recruiting and training staff, acquiring equipment, building new plant).
• Resources are often lumpy and thus stepping up to new activity levels is problematic (plant, office space, etc).
BreakthroughStrategies
Capability Issues
• Few business executives have experience with high growth enterprises.
• There is little published information on how to manage high growth.
• Few advisors have the necessary experience to assist.• The command and control culture inhibits high growth.• Most small firms chase any business they can get and fail to
develop sufficient expertise or traction to facilitate growth.
BreakthroughStrategies
Business Growth Realisation
Resilience
DistributionChannels
RightCustomer
Compelling Need
Profitable Time & Place
ScalabilitySustainable
CompetitiveAdvantage
InnovationStrategy
Vision
Management
RobustMargins
LOW
MEDIUM
HIGH
The Market
Makingit
Work
Realisingthe
Opportunity
Turning the
Wheel
The 14 Principles of High Growth Enterprises
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Growth Potential
• Importance of problem being solved.• Degree of ‘fit’ of solution.• Degree of market spread.• Time taken to recognize need, search for solutions, evaluate
solutions, purchase, use and measure outcome.• Uniqueness of solution and degree of competition (and
ability to sustain competitive advantage).• Ability to scale the product or service.
INNOVATION
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Growth Execution
• Access to distribution channels. • Ability to generate funding for growth.• Ability to control costs and quality.• Capability to plan and manage organisational growth.• Ability to recruit, motivate and manage staff.• Ability to develop vision, focus and strategy. • Ability to acquire and manage capacity.
CAPABILITY
BreakthroughStrategies
Growth Rate
SIZE
TIME
High Growth Potential
Low Growth Potential
Growth rate is constrainedby growth potential
Size is determined by
capability
BreakthroughStrategies
Potential and Execution
• Growth Potential– Time and Place– Compelling need– Right customer– Competitive advantage– Innovation– Sustainability– Scalability– Vision
• Growth Capability– Channels to market– Strategy– Robust margins– Resilience– Management– Profitability
BreakthroughStrategies
Further Information
Ultimate Growth Strategies – A practical guide to engineer high growthinto your business
BreakthroughStrategies Engineering High
Growth Potential
Dr. Tom McKaskill