By Sid Chadwick
Q: “I hear your sense of uncertainty re. what to do next……..Does your senior management team know which customers value you most?................A: (After a 5 second pause)…”No, we don’t”……CEO Peer Group Check-in Discussion
That discussion occurred with a company that’s growing about 20% a year, and with a history of making well over 10% --- bottom line……however….something doesn’t “feel right” to them….and they can’t put their finger on it……
Is there a problem…..? “Yes…there is”…..Try to answer….when there’s no sense of market direction…………………….“What do we do next….?”
I’ve just finished a major project (for me), and had the opportunity to review “comparable pricing” --- on a series of products --- from five organizations.
Results were similar for all products and quantities compared. That is to say, the organization that was highest priced on one item, would tend to be the highest priced --- on most other items. (And all five organizations are moderately --- to outrageously --- profitable.)
For this example, I’ll use the one product tested that interests me most: Variable Imaging, for letters (8.5” X 11”). Quantity selected: 1,000, printed 1/0:
Organization Pricing General Location
Organization #1: $237.85 (Southwest Organization)
Organization #2: $200.00 (Northern New Jersey)
Organization #3: $237.00 (California Metropolitan area, with about 100 competitors --- within 30 miles)
Organization #4: $1,127.00 (NC organization, with very disciplined, slow growth)
Organization #5: $696.23 (Southwest Texas Organization)
Several editorial comments: Organization No. 4 ---does not want to grow fast. 5% revenue growth --- is about their average year. They know who they are most valuable to, and don’t try to pursue revenue --- for revenue sake.
Organization #4 has a history --- when they’ve maxed out their revenues on their equipment --- of raising their prices on their least profitable accounts --- and suddenly --- have room to purposefully grow --- again --- and more profitably.
Over the last 20 years, Organization #4 has developed a bullet-proof balance sheet --- with no debt. They also tend to direct --- any new account efforts, and do not allow their Sales Reps to prospect, without specific guidance.
I learned an important marketing principal --- first hand --- early-on --- in my consulting apprenticeship --- “Direction is more important --- than speed.”
Last weekend I listened to another consultant I’ve known for over 20 years (who was invited to speak to one of our Peer Groups). He’s a COO of a sizable publication printer. In his presentation, he pointed out that once he’d determined which customers valued his company most, he set about getting rid of several million dollars of revenue --- that didn’t “fit” where he wanted to take his company.
For over the last six months, he’s gaining --- one new publishing customer --- a week….!
“The artist is nothing without the gift…..but the gift is nothing without work…”…….Emile Zola