DIRECTIONS - Architecture for revenue growth

February 2014

NOTE FROM THE DIRECTOR

Richard (Dick) Van BelzenWelcome to the first issue of DIRECTIONS. This monthly newsletter was created to keep you updated on key topics, success stories and discussions on matters related to revenue growth.

The value of DIRECTIONS is to provide unique insights to you and members of your team. We aim to be the newsletter you can’t wait to open each month! So please feel free to spread the wealth and share this with anyone who might find it helpful.

As you know, 2014 is mixed with optimism and challenges. Our clients are looking to effectively grow and strengthen their market position. As trusted advisors to some of the world’s top business minds, we’re prepared to help you achieve your objectives. If you feel stuck and concerned, please give us a call. We can help by providing a listening ear and helpful lift.

Sincerely,
Signature
Richard (Dick) Van Belzen
Managing Director

Phone: 585.233.6707
Email: dvanbelzen@northpointadvisors.com

CURRENT EVENTS

With Satya Nadella recently being named the new CEO of Microsoft, it ushered in a lot of thought on what the company can do to renew itself. In a recent article by Gannett, reporters Alistair Barr and Scott Martin listed the five things Microsoft’s new CEO must do. One of the key points they made, as did former founder Paul Allen, is that the leader needs to step back and take a fresh look at where Microsoft can win. Now it’s always easy to Monday morning quarterback and comment from the sideline. But these points aren’t entirely invaluable. Their recommendations:

  1. Embrace the cloud
  2. Free its software from Windows
  3. Fix mobile
  4. Woo developers
  5. Focus

As consultants and advisors, we’ll never be compared to journalists. But we will continue to study the situation and provide you with updates. We also think the suggestions above didn’t have to wait for a change in leadership. So in addition to identifying what can be done, it’s our role to help leaders embrace the selected changes and support them throughout the buy-in process.

INSIGHTS

Closing the Guessing vs. Knowing Gap

Picture this: You’re early in 2014 and ready to turn over a new leaf. You have a renewed level of optimism that your new approaches and strategies will resonate with customers. Your expected outcomes are based on lots of meetings, sound thinking, and senior management sign off/investment. Now it’s in the hands of your sales force/channels. So how can you know more about how those new approaches will resonate vs. trial and error, or wait and see?

Here are some applications for a tool we call the Simulated Sales Call (SSC).

Value Proposition Stress Test
How do I know the value propositions resonate?
Expecting to get feedback from your sales team is a slow, costly and difficult-to-sort-out process. And just because the elements of your value propositions across several offerings seemed to work months and years ago, that doesn’t mean they will in 2014. We suggest you consider reaching out to a small sample of economic and technical buyers. Then conduct specific interviews in webinar fashion with each. This will allow you to learn which attributes resonate and why, plus what it’s worth to them. Again, this is the value to them in 2014. The SSC will also help you learn about how your offering compares to other alternatives in the space.

New Offerings Stress Test
How do I know a new product’s full offering and marketing array will hit the mark and sell vs. alternatives or current state solutions?
Our experience is that the ramp speed of new offerings is 50% of expectations in many cases. This isn’t to say that your collective wisdom, hard work and smart people aren’t valued. Without a short straight line to the customer, logic and assumptions can be off the mark. A few years ago, a large client was launching a product with a value of over $500,000. The justification and ROI to customer was based on several assumptions. Our model was based on a plug-in number in the 4% area, only to learn that this percentage assumption was 3x too low and that the price could be adjusted upward in the amount of approximately $85,000. Our SSC confirmed the solution would be a top priority, and it fit several customer’s needs. We learned that the messaging, value proposition, promotion, and positioning needed to be adjusted. In this case it was based on a sample size of 24. The result was that the new product performance exceeded an aggressive revenue plan by 38% in the first year. Note that this process is effective for solutions of lower value and complexity.

New Opportunities for Growth

When exploring new opportunities with clients, we find it helpful to ask the following questions. Ask yourself and your team these questions to identify areas of new opportunity for growth.

  • At the current time, what area are you looking to improve in any of your company’s performance or strategic initiatives? Are you convinced the gap will be closed?
  • How important is growth? How are you growing (CAGAR) vs. the average of your top competitors/market?
  • Are there areas you would like to explore, but are worried they may take too much of your time and if delegated, would distract members of your team?
  • Tell me about your strategic planning process. Is it making a difference and producing results? Is your team engaged with, and effectively executing on it?
  • What are your top 2-3 priorities for 2014?
  • Have you engaged external resources? How has that worked for you? What areas were they engaged in? What was involved? Were they autonomous or in need of constant interaction?
  • How good of a pulse do you have on your competitors and what they are doing to win? What are the levers to their growth beyond what is being told in industry meetings, is being observed, and from earnings calls, etc.?

THE LAST WORD

Choosing a Consultant

It can be difficult to ask for help. But an effective consultant can offer additional expertise and new perspectives on a business objective, or troubling issue. In addition, an effective consultant will complement the internal team and help them succeed. Here are just a few reasons to partner with a consultant:

  • Need for a new perspective and experience
  • Need for executive bandwidth with challenging projects
  • Support with process expertise so the internal team can focus on content (business, market and technology)
  • Expertise in areas such as commercialization, lean six sigma, market research, strategic planning, etc.
  • Help building consensus to reconcile various options that the internal team has developed and help build alignment and support, so actions are embraced throughout the organization
  • Assessments to pull together thoughts on how the company can better compete within its stated markets
  • Crisis support to strengthen a company’s response to major threats on their business and sustainability model

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CASE STUDY

Market Coverage Multiplier

Problem: Gross Profit decline of 4.5% in the past 24 months. Our client’s revenue engine—its sales force—was being routed to purchasing and marginalized from selling on value. This was driven by aggressive actions from a competitor that had a more extended value chain and set of offerings. Our client’s solution was still superior based on technical strengths and performance, but their products were being marginalized.

Solution: Our client’s sales team needed to gain access into the C-suite of its top 50 accounts, to sell more effectively on value. To do this, they implemented a successful test, and now are in a full launch of former C-Suite executives into six vertical markets. These leaders and experts were able to reach the top 10 executives of the accounts. This process involved the development of a profile, creative resource identification, setting expectations, training, solutions development, presentation tools and process management. A key part of the solution was adding customer-centric knowledge experts that could speak a similar language and drive a broader view of our client vs. just purchasing pieces and parts.

Results: In first 12 months of the program, 14 of our client’s top 50 accounts increased business by an average of 18% from YOY and 5.1% GP growth. Those accounts saw the value of not buying on a piecemeal basis and buying into more links in our client’s value chain.

FOR YOUR CONSIDERATION

Customer Satisfaction. Most companies continually monitor and try to improve the overall satisfaction of their products, services and support. And yes it’s often a race without a finish line. In order to maximize customer satisfaction, it’s important to make the tie to employee satisfaction. Several studies have shown that 50% of customer-facing representatives (from customer service, technical support, sales, etc.) have unfavorable dispositions to their very own customers. How are your customer-facing representatives doing?

Fearless Growth. Achieving growth levels is one of the most difficult challenges of any business. And unless you have a hot product, it can be hard to do. At Northpoint, we believe the same passion is required for growth as it is for cost reduction. Over the past five+ years, extraordinary attention has been paid to surviving a tough economy and driving down costs. Much of these efforts were prudent and needed. But the same relentless and fearless intent needs to be placed on all phases of the revenue engine. It takes a lot of innovation, effective go-to-market efforts and market access actions.

Context Questions. When framing projects, it’s of great value to start by defining the key questions (some 4-6, no more) that need to be answered. When we work with clients, this is often the starting point of discussions. It helps us frame the situation, test for understanding, and then develop a proposal of ideas that solves for these context questions.

An example of a broad question: How do we grow beyond the aggregate average of our peer group with a 5% CAGAR? How do we exceed by 3% and get to 8%?

An example of a more narrowly focused question: Why are sales of Product or Service xxx off by 10% on a YOY basis in the U.S. and 8% in Asia Pacific?

NEXT MONTH

For March, we’ll focus on solutions to enable Chief Technology Officers (CTO) to accelerate time to black.

Northpoint
19 Sylvan Glen, Suite 300, Fairport, NY 14450
Email: info@northpointadvisors.com | 585.233.6707
Visit us online at www.northpointadvisors.com

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