Driving Market Share :: Lean Sales and Marketing thru Service Design Thinking

Archive for Driving Market Share

Jan

Have you been told to increase sales this year?

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Increasing or sometimes just maintaining sales is a major challenge for a company these days. Many companies will receive an edict that we want to increase sales 10% this year. But really how are you going to do that? The mechanics are one thing. Gaining consensus and understanding is a totally different thing and maybe your biggest stumbling block.

The central theme of 5Cs of Driving Market Share is to provide a direct line of sight to customer value. That line of sight is actually from the customer’s point of view. I am going to walk you through the program mostly for the reason to explain the diagram I have included for you to demonstrate how and where you increase in market share will come from.

The first things we do in the program is identify your customer buying segments, the product/market relationship that exist and where you most profitable market opportunities are. It is based on not only how your customer defines value but also how the market defines value. We take this knowledge and identify competitive value and performance gaps that enable you to create and implement the processes that we think are needed to reach the targeted goal. This is basically the Plan and Do phase of a PDCA cycle.

After implementing the initial efforts, we Check (phase) those efforts to against the targeted gap. If they have been met, we continue to the Act Stage and standardize the process and move forward. If they are not, we return to the Plan phase and start the cycle over.

I know this sounds simple and to a certain extent it is. Most of us complicate much of it with shortcuts and a lack of true understanding of customer value. We just don’t take the time in the planning phase that is required. However, I want to use this explanation to discuss what is needed in gaining market share. Simple or not, few companies can really define correctly how the customer and market views the value that they add and are willing to spend money for.

Most companies seldom have one value stream. They will have numerous ones based on Customer Segments and product/markets. After analysis many times these segments and product/markets are reduced to a critical few. We don’t walk away from all the others but our focus and energies go towards what is paying the bills now and in the future.

These models can be used to determine quite easily what efforts and budgets must be created to increase market share. For example, if we have one very significant product (service)/market and our best opportunities are in that area, we may dedicate 50, 60 percent of our marketing budget and resources to it.

In the picture I show that the gap we are trying to increase or maintain is 1 million dollars. Through analysis utilizing tools opportunity and loyalty matrices for example we divide the dollars up between customer retention and acquisition. We then take a look at dividing that again by utilizing your existing value proposition and maybe a new product innovation proposition. We can further divide these up as we dig deeper into our customer segments or product/market. Just utilizing a very simplified value stream such as this it starts giving you a feel for how you will increase sales. As you drill down through these various stages, you also become much more targeted and focused on what your customer values.

As you drill down and segment your list don’t just think about percentages of budgets and resources. Using real $ if you can versus %. It not only adds more meaning to the conversation but when you start looking at your expectations from customer segments and the value proposition you are offering them, well are you being realistic?

This is where continuous improvement efforts, PDCA and A3 problem solving come to the forefront. Starting A3 before you drill down into a very tight cycle is useless. Your efforts will not be defined enough to pay off.

Some Potential A3’s that may come out of this exercise would be:

Reducing churn (Customer loyalty matrix)
Focusing on most important customers for growth (P/M Matrix)
Loyalty of customers (Customer loyalty matrix)
Brand’s value proposition (Value matrix)
Competitor vulnerability (Competitive vulnerability matrix)
Targeting markets (market opportunity matrix)
Identifying people product and processes for improvement

Customer Value – Developing an Outside In Strategy

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This is a transcription of the Business901 podcast, Outside in Strategy– Customer Value with Christine Moorman. She is the co-author of the book (Amazon Link) Strategy from the Outside In: Profiting from Customer Value.

Outside in Strategy– Customer Value ebook –

Excerpt from the transcription:

The other point is the fact that we try to make clear, which is I know something really important to executives is that the world just keeps changing from underneath you that you have this position of value. And as soon as the competitor comes in, they teach the consumer something new and their perception of what’s valuable or not valuable starts the shift. Maybe also that competitor takes the position that’s more attractive on that particular value than you’ve been able to achieve.

So, it’s a case in managing this position of customer value leadership that is really being very vigilant, staying in touch with what’s going on in the market, what are competitors doing. More importantly, how customers see those competitors and what they’re doing. Do they see them as taking that position that’s greater than yours?

That’s a very important aspect of this outside in mentality, and profiting from customer value that a lot of companies aren’t willing to do over time, to really take seriously that we are going to have to monitor the market, monitor what customers are thinking on a continuous basis, and find a way that makes sense of that so that we know how to move at which direction, at what time, in response to what’s happening out there.

Christine Moorman is the T. Austin Finch, Sr. Professor and founder of The CMO Survey at The Fuqua School of Business, Duke University. Professor Moorman is the author of over 60 journal articles, reports, and conference proceedings.

Faster, Better, Cheaper is the Norm. What are you doing different!

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That’s right the old Mantra; Faster, Better, Cheaper is the norm nowadays. It really is not separating you from the crowd, it is only the average. How are you going to build Market Share? How are you going to be increase revenue? When you are only average?

People start utilizing methodologies like Lean and Six Sigma and start showing remarkable improvements. However, the market is a living thing and most companies have a tendency towards improvement which means that the bar is being continuously raised. As a result the “average” continuous improvement project gets you absolutely nowhere. Unless you can make significant improvements there is only one way to make those improvements effective.

In any given product/market there are Critical to Quality components that are important to the customer that makes them buy your product over another. You may have the WOW, availability, price, etc. The market may define those CTQ’s or other CTQ’s differently and that is why they buy another product. The acronym may make it sound complicated but it really is not most of the time. I mean really does anyone buy an iPad for reliability or price. No, they buy it because it is cool and seemingly will make their life easier. You still have to be competent in other areas but they are not the driver of sales.

That dirty little secret is that most companies take an inside out approach to improvement and really don’t concentrate on the CTQ’s of the customer for retention and the CTQ’s of the market for acquisition. So if you take an outside in approach in improving quality you will improve more than the average guy and as a result improve market share and/or profits. It really is that simple.

I had three recent discussions on this very subject and they all took a slightly different approach but all had a central theme of Customer Value.

Dr. Eric Reiedenbach when we discussed Best in Market on the podcast Applying Six Sigma Marketing to become Best In Market. Eric discussed finding the Critical to Quality Issues that determined how a Customer defined Value in your Product(Service)/Markets.
Mike Bremer co-author of Escape the Improvement Trap: Five Ingredients Missing in Most Improvement Recipes. Mike discussed tying all improvement efforts to the CTQ’s components and more specifically to your Value Proposition.
Christine Moorman co-author of Strategy from the Outside In: Profiting from Customer Value. Christine discussed developing your strategies and the deployment of those strategies through an Outside in approach.

These are three very unique perspectives that really approach the issue of customer value totally different. They all take a different path, disdain average but arrive at the same place. They even agreed on the same metrics: Market Share and Profitability. I wonder if all three of them have found the Holy Grail?