January 6, 2017
BE DiFFERENT or be dead.
The implication is that if you’re NOT DiFFERENT, sooner or later you will be irrelevant and you will “die”.
The path to organizational death is predictable.
Sales revenue declines because the value proposition of the organization is limp; it has no distinctive substance.
People stop buying because the company’s offerings are no longer relevant; they no longer serve a compelling need. They lose their “edge” that was the original reason people bought from them and not their competition. Their product portfolio is now common and indistinguishable from that offered by others.
Customers migrate away, looking for more value for their money; to get their specific needs satisfied.
Price cutting is invoked as the salvation, believing that lower prices will increase sales volumes. Footnote: with a limp value proposition, driving prices down also drives revenue down. Most products in the commodity category are price elastic folks!
With revenues going south, management decrees that costs be reduced to preserve operating margins. Across-the-board cost cutting is ordered as a “balanced” approach which means customer serving functions get whacked; fewer frontline people are expected to handle increased volumes of calls (from the price reductions).
Customer service suffers.
Customers look for alternative suppliers. Degenerating service creates an immediate disloyalty response. Customers find it easy to switch suppliers since so many alternatives are in their faces; they are coveted by many other providers.
Revenues spiral downward; margins are squeezed; more costs are sliced from company operations; customers are casualties.
It’s a relentless cycle.
Leadership looks for a short term strategy to reverse the trend; they are forced to abandon a longer term growth view.
The organization looks to acquisitions as a “fast and easy” way to expand their customer base and bolster their revenue line. This process burns valuable time and people resources and is limited by financial capabilities due to shrinking margins and an unhealthy balance sheet.
Acquisition activities shift priorities away from fixing the @home value proposition issues to assessing potential acquisition candidates and determine how to integrate the winner into the buyer’s overall operations and culture.
Revenues continue to decline; confidence erodes.
The cycle becomes entrenched; the organization explores selling off assets to improve financial results.
No investments are made in solving the endemic value proposition issue they face.
It’s not a matter IF they will die; it’s a question of WHEN it will happen - how long can they hang on.
When customers start to leave, they are telling you that you are becoming irrelevant; you don’t have any uniqueness relative to your competitors.
You are the SAME as them.
Fix THAT problem and the revenue line will take care of itself.
Check out my BE DiFFERENT or be dead Book Series
- Posted 1.6.17 at 06:15 am by Roy Osing
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