By Stephen Kozicki & Gary Peacock
Over the past three years, the world has changed dramatically, and forever from digital disruption, Brexit and Trump. Your industry and your top clients are feeling the stress as their markets change, fast. These fast changes mean that your business needs to be more agile in response to the market. For companies unprepared for these changes this means lower revenue and lower profits.
Our blogs are usually short and punchy to grab your attention. This blog is a little longer than usual because delivering growth is just too important and too urgent to reduce the ideas down to a page, so we have split it into two parts.
To Grow – Act Now!
To be frank, every year senior executives, will at their strategic planning meeting, present wonderful growth targets that bear little resemblance to their markets and competitive threats.
Many managers secure resources for their next financial year and postpone to the future tough decisions about changing priorities for growth. They are focused on succeeding in this job, so caution reigns and they make growth wait. But to grow, senior managers must act now.
Growing your business, your market share and your profitability is not an operational priority, growing your business is a leadership priority. If your strategy is to grow, then growth is driven by value and deep client insights, not by racing your competitors to the bottom with a price war.
Our mantra is always: growth is more important than cutting costs. We consult and run global workshops across five broad themes:
- Competing with Value for Rapid Results
- Managing Strategic Accounts for Results
- Negotiating for Immediate Results
- Persuading for Results
- Rapid Innovation from Teams
A good test for growth is to randomly meet key individuals and teams across your business, start a conversation and ask three questions:
- What are the top 3 strategies for our business over the next 18 months?
- Can you share our unique value proposition for our top 10 – 20 clients?
- As an individual and team, what value do you create every day for our top clients?
The insights from these discussions will change how you and the C-Suite lead your company. Through quality initiatives like Six Sigma, lean and agile companies have similar products and services to yours.
Your competitive edge is not just the products and services themselves; your edge is in how your top clients use your products and services to make them successful. Help your company understand this clearly, and you will outperform your fiercest competitors.
Four factors drive growth
Over the past few years, consulting with B2B companies in banking, pharmaceutical and top end manufacturing, we are spending more time on how to compete in competitive markets using value. Working with global clients, we see how the best companies perform across sectors and countries, and we see four factors that give them a competitive edge that drives growth:
- Intimately manage your top 10 – 20 key clients.
- Identify and manage your exceptional & strategic suppliers.
- Focus on your unique value proposition for your market – your competitive edge.
- Align throughout the company around the top 3 factors, always— allocating resources, developing talent & managing operating costs— for growth.
In this blog we will explain the first two factors.
1. Intimately manage your top 10 – 20 key clients
How can you manage your current key clients more strategically? When was the last time your leadership team examined your current clients to decide who is strategically connected to your business and how to leverage the value that you deliver? No one is immune from competitive prices, however top companies we work with focus on their unique value proposition and their top clients.
So, successful leadership teams have become more sophisticated in their key client management strategies. Rethinking and adapting approaches for your top clients is imperative. This can only be achieved with an intimate knowledge of your top 10 – 20 clients.
This knowledge moves the approach from operational effectiveness to identifying strategic opportunities and enables business teams to plan successfully, to better understand and to build sustainable relationships with their existing key clients. Our book, Managing B2B customers you can’t afford to lose, provides a framework and a set of tools to allow you to develop that intimate relationship.
So, the C-Suite can better allocate time and resources to generate even greater profits. A clear objective of this process is to meet current sales targets and to set up for success in the future.
Build relationships with your clients and with their executives, understanding their changing needs and increasing their loyalty. Important ways to take the pressure off price are managing relationships with your top clients and solving their most difficult business problems.
Let’s look at a global example – Rabobank, which is among the world’s 30 largest financial institutions. Globally their commitment to feeding the world is inspiring, because their focus is on helping the world’s food and agriculture industry be successful. They focus on creating value for their customers by understanding them deeply, and where they fit into the world of farm to fork. Also understanding deeply, the interests and ambitions of their top clients.
That value is not only about today, but they have done some great work through conducting global business workshops for their top clients and looking into The Farm of the Future.
This is not achieved through anything more than managing their top clients in their different markets better than their competitors, through their rural branches and their online presence. The rural managers take a hands-on approach with the top clients, working alongside them to grow their business.
This combined with their expansive local and global network allow them to help their top clients spot new opportunities and them help them achieve sustainable growth.
Regardless of your industry, building a solution for your top clients, you are also building a barrier to competitors. When your top clients know that you are in it with them and in it for the long-haul, your relationships will transform with clients as your value takes precedence over your price.
2. Identify & manage exceptional & strategic suppliers to your business
To identify and manage exceptional and strategic suppliers you need to be able to answer the question: “Beyond products and services, what value do your suppliers provide you every day?”
For a banking client, we changed their vendor management program, which was all about squeezing price concessions from vendors and all their conversations were managed by procurement. We started a new conversation – identifying their exceptional and strategic suppliers – who created value for our client beyond price.
Interestingly we are seeing an all too familiar example being played out in the UK, when executives make decisions about suppliers based on price and not on their critical connection to the success of the business: KFC. Many media outlets have covered the story in detail, joking about how KFC’s customers are now eating at McDonalds. For executives the story has a real wake-up call on the importance of working with strategic suppliers.
Last week, KFC chain switched its delivery contract to a new supplier, who had promised the world, but then blamed “operational issues” for the supply disruption. The C-Suite at KFC are defending switching to the supplier. However, shortly after changing the contract, KFC had to close more than half of its 900 UK outlets because they ran out of chicken.
Let’s look at an example of what happens when exceptional and strategic suppliers are managed differently.
Instead of a traditional spend analysis, our unique process uses a six-part selection process, and from their thousands of suppliers, two suppliers stood out. A technology supplier with a spend over $500 million a year and a software supplier with a spend of $4.5 million a year.
In a traditional spend analysis, the $4.5 million company would be just a supplier hiding in a long tail of spend, but it was an exceptional and strategic supplier to the bank.
In contrast, everyone saw the $500 million technology company as a significant supplier. However, when our team interviewed their key executives, they struggled to answer this question, “Beyond your products and services, what value do you deliver each day to this bank?”
So identify your exceptional and strategic suppliers, invite their executive team to a meeting. Ask them to share in a conversation, without a 50 slide deck presentation, ‘Beyond products and services, what value do you supply to us every day.’ It will be a very interesting meeting.
Focus on Growth – Now
Time is running out because the global marketplace will be cruel to companies that do not change!
Your bold reshaping of your business based on client intimacy, market realities and the unique capabilities of your company will drive growth. A motivated team with a clarity of focus will beat every time a competitor only using ‘price’ as their weapon of choice.
Discussions around growth is a leadership responsibility. Value creation happens when talent is energised and released to grow your business.
If you need to discuss any or all of the four factors, please contact Stephen or Gary on +61 2 9450 1040 or firstname.lastname@example.org.