Be Different or be dead

January 29, 2010

Why a great business plan chooses ‘WHO to SERVE’ very carefully

Why a great business plan chooses ‘WHO to SERVE’ very carefully.

Traditional business planning methods have issues; they’re all screwed up.

The second question to answer in building your strategic game plan is “Who do you want to serve?” — which customers should be targeted in order to deliver your growth goals?

Choose customer groups that have the capability to generate the growth you are expecting. You may have the products and services they want, but if they don’t have the latent potential to meet your HOW BIG objectives, you shouldn’t be chasing them.

If you do, they will suck up your precious resources with little return. you will surely fall short of your growth goals.

HOW BIG you want to be should determine WHO you choose to SERVE. It makes no sense to continue serving customer sets that can’t generate the revenue you need. Getting caught in the trap of staying loyal to old unproductive customers may make you feel good, but won’t deliver the growth you’ve decided to go after.

There’s no such thing as a bad customer; its just that some are better than others.

Examine the customer groups — customer segments — you currently do business with. Can they deliver to your new revenue expectations? Are their market characteristics appropriate to give you the growth you want?
Apart from demand factors, what about the competitive environment? Is it intense or are there opportunities to enhance your market position?

And how fast and easy are they to engage and close? Remember, a 24-month plan period needs a relatively short selling cycle. You can’t afford to take 18 months closing a deal with any customer. 

Carefully evaluate your options and choose the customer segments that can deliver you both the growth you need as well as leverage the competencies of your organization.

WHO to SERVE rules

▪️ Choose customer groups in which your customer share position is low but growth potential is high. If you currently have a small percentage of their total business There is good growth potential for you if you are easily able to gain a better foothold in it.

▪️ Pick customers who are currently growing in the double digits and where you have an advantage over others. Look for clusters of customers who are already showing the desire to buy your products in healthy volumes.

▪️ Focus on geographic segments that are easily accessible at relatively low cost. Rather than have to travel at great distances to sell and fulfill your wares, try and identify segments that are closer to your sales offices and distribution centers.

▪️ Identify high lifetime value customer groups. These customers have likely paid higher prices, so continued resource investments in them will provide healthy returns.

▪️ Serve customer groups that have been loyal to you will likely continue to buy from you with less effort than those who will have to be convinced of the value you offer.

▪️ Pick segments where your competitive position is strong and where your advantage is clearly defined. This is the nirvana WHO tactic. If you are fortunate to have customer segments with high growth potential and where you dominate in the market, pour your resources on ‘em.

▪️ Choose the MINIMUM number of customer groups that will generate the revenue you want.
The more you choose, the more diluted your efforts are likely to be.
Choose the critical few groups rather then the “possible many”.

What do you do with customer groups you currently serve but can’t serve your growth needs? Be prepared to walk away from them. You have to let them go in favor of focusing on the few choice segments that will provide the revenue growth you need.

Cheers,
Roy
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• Posted 1.29.10 at 01:53 pm by Roy Osing
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