In my last post I talked about the elements that would be beneficial to growth initiatives and now I want to touch on those things that can hold back growth initiatives.
- A belief that the market you want to enter is easier and less competitive that the one you are in. I have witnessed the ” build it and they will come” attitude a number of times. The starting point is a belief we can build a product/service and there is a market for it so we should be able to sell some. This fails to understand the different competitor value propositions, how they will react to a new entrant and the switching costs for a client to move from one provider to another (time, effort, risk, costs, distraction etc).
- Load the new business/service with a share of the overhead costs of the core business – including a hefty amount of support services costs – and add the bureaucracy of an established business. This will be a sure-fire way to kill a number of new initiatives and make them uncompetitive with smaller players who are not part of a larger business.
- Believing the brand will make the sale. I have yet to experience a client who will buy a new product or service just because of the brand. Maybe Apple can do it but there is only one Apple company. I think Microsoft have found it pretty hard to leverage their brand into mobile phones and Blackberry are under enormous challenge from Google/Android/HTC and have forecast falling revenues. Brand may be good enough to get you in the consideration set but will rarely be sufficient to make the sale.
- A lack of competitor analysis to provide a clear mapping of how your value proposition will differ on key attributes customers use to decide on which product/service they purchase. This is needed to provide a clear sales track for your business development team to use. (Cost, benefits, features, access, servicing, channels, functionality, flexibility, quality etc).
- A lack of a pricing strategy. There are a whole range of issues to consider associated with your strategy for the product or service and the volumes and nature of your product or service. If you are hoping to leverage an existing client base what pricing incentives are there to recognise existing clients? Do you need to achieve scale quickly to reach break-even associated with fixed costs? Are you using cost-plus pricing, competitor based pricing or customer based pricing? Having the wrong pricing strategy will impact on your success and even your survival.
- No CRM system to allow a targeted and focussed sales and marketing process to build awareness, interest and desire to the key segments that you have identified. Without a good CRM (they don’t need to be expensive) you will not have the data and tracking ability to drive results for your business.
What other traps do you think reduce the ability for businesses to grow?