The Key to Business Growth Today
Business growth is eluding a lot of good companies today, as the usual approaches--acquisitions, alliances, pursuing cutting edge technology bandwagons, entering fast growth markets, etc.--turn out to be a tough slog. Here are some thoughts on how the dynamics of growth are changing:
1. The key to growth in the next 5 years will be community marketing.
Companies that get good at building and engaging with customer communities--and we are in very early stages of this compared to what's coming--will be the ones best positioned to achieve sustainable growth. These are the ones that will turn the "loss of control of the conversation" about their products and services into a marketing, sales and product development dynamo for their firms. Those that begin rapidly learning and building expertise now will develop a big advantage.
2. Companies must first dramatically expand their customer value proposition.
The value proposition that companies can now build for their customers is nothing short of a revolution--one that few firms yet understand. Even now, most firms and marketing experts speak assume that customer value means only that the firm provides a product or service that helps the customer "get a job done" and provide a pleasant experience in the process. But vibrant customer communities can create value that dwarfs the standard value proposition. They provide customers access to their peers, the opportunity to build relationships, learn and exchange ideas, and gain recognition and status. Saleforce.com's city tour events, for example--live events that put customers together with prospects and the media--allowed customers to show their expertise and how they were helping their own firms succeed. SFDC began calling outstanding customers "Heros" and touting their accomplishments in their advertising.
3. Companies can then harvest dramatically increased value provided by customers.
Companies that engage customers in such ways will then find it easy to harvest tremendous value from customers beyond what they purchase. Properly engaged customers will sell for you, market for you, participate in your community building efforts, spread positive word of mouth, provide valuable input into product development and firm strategy. Customer referrals at some firms, when totaled up company wide, can rival a company's total revenue from purchasing. Salesforce.com found that some 80% of prospects who attended its city tour events and interacted with customers (as opposed to just sales people) wound up becoming customers themselves--a superb "close rate" that founder Mark Benioff credits to such customer sales people.
4. To powerfully scale the harvesting of such customer wealth, companies will need to build a solid foundation of metrics.
Many companies today aren't even able to tell which of their customers are most profitable simply based on what they purchase--never mind the other value they contribute. But a reasonably robust CRM system, plus a good CFO, can help you put the measure in place that will keep track of this. (And CEOs are often astonished at the results. Very often, 20% or less of their customers contribute all of the firms profits.) Once that base is established, companies that lead the charge of growth in the next five years will then know who their most valuable referring customers are, which customers generate the most lucrative word of mouth, and so forth. The key to growth will then be to get under those metrics to learn how to create more such high-value customers. The key to growth, in other words, isn't out there with an overpriced aquisition or hard-to-integrate alliance; it's hidden under your own roof.