Three Steps to Profitable Growth - Part One

Now is the time for businesses of all sizes and types to develop a plan to begin growing again in 2011.  After the last three years, many companies have cut their costs to the bone and they now realize that it’s time to grow again.  Following are three steps to ensure that growth will be profitable, because who wants to get bigger and lose money?

I. Find The Zone
Just as major league baseball hitters concentrate on the part of the strike zone that is the most productive for their swings and strengths, businesses need to do the same when developing a plan to grow profitably.  Finding your zone and staying in it takes some effort but will produce many rewards.  Here’s what I mean by finding the zone:

• Find your most valuable customers:  Every business has what I call “most valuable customers” or MVCs, which are defined very simply as “your most profitable customers that your company matches up best with”.  Try this exercise to uncover who they really are, the results may be surprising because they may not be your largest customers:

• Gather your sales, marketing and production or fulfillment team - the ones that have the most customer contact.  Generate a printout of all of your customers for the last three years ranked by total sales.  Draw two columns next to the total sales column, one titled Margin and the other titled Hassle.  With your team, grade each customer using the scale  1 = Excellent, 2 = Good, 3 = Poor.  After this exercise circle all of the customers that you graded 1 for both Margin and Hassle, these are your beginning MVCs.  Your analysis should look something like the following table:

Customer	Sales	Margin	Hassle
Allied	$4,345,444	2	3
Bentbrook	$2,000,000	1	2
Chelsea	$667,000	1	1

• Identify what your business does best:  What does your business really do the best from the perspective of your best customers?  Armed with your list of most valuable customers, visit each of them and simply ask them what they value most about doing business with your company and what they think that your company does best. 
• Gather your customer team again and ask them what they think individually and as a group that your company does the best, in fact better than any other company in your market space.  Finally, reflect on what ownership and management thinks the company really does best and could even do better in the future.  This really needs to be a thoughtful dialog to get it right, not just an offhand observation.

• Confirm what the business really stands for:  The final step of identifying the zone is to   confirm what your business really stands for at its core, or what the “core values” are on which the business was founded and still are protected today.

You have now identified what “The Zone” looks like for your business.  A key part of the plan needs to be to stay in the zone.  This means identifying what not to do as much as what your need to accomplish

II. Innovate in The Zone
The next step is to find ways to innovate within the zone we’ve just identified.  This means asking your best customers again what they want in the future from your company beyond cutting costs, and how they would like to see your products or services improved.  However, don’t get stuck in the “voice of the customer” exercise because your company needs to identify how to truly innovate, not just incrementally improve your products or services.  This means getting serious about innovation and getting creative about how to “disrupt” the markets your business serves.  The focus needs to be on innovating in the zone, not on tangental business opportunities that someone is interested in taking a crack at.

III. Sharpen The Message
The final step in this process to develop a profitable growth strategy is to sharpen the message that everyone in your company is communicating to customers and the markets your company serves.  Make sure that a customer is never confused about your company and the offer you are making to them, rejection is a part of the sales cycle but confusion shouldn’t be.

In my experience there are three critical steps to developing a clear message:

• Overt Benefit:  What’s in it for the customer to do business with your company?
• Reason to Believe:  Why should the customer believe that your company can deliver on the promises and commitments you make to them?
• Dramatic Difference:  Why should your customer care about doing business with your company?

It’s more difficult than it may appear to answer these three questions accurately and succinctly.  Remember that this is from the viewpoint of your customers, not from an internal perspective.

By following these three steps, your company can begin developing a plan to grow profitably in 2011.  In Part Two of this series I’ll go into more depth on how to “Innovate in the Zone”, so stay tuned.


Charlie Alter owns Bentbrook Advisors LLC based in Sylvania, Ohio.  He specializes in Business Growth Strategy, Innovation, and Coaching and can be reached at calter@me.com. Visit https://bentbrookadvisors.com for more information on his business advisory practice.

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