Rcl mc kaskill 4 2011

BreakthroughStrategies Engineering High

Growth Potential

Dr. Tom McKaskill

BreakthroughStrategies

Personal Experience

• Twenty years experience as a practicing entrepreneur.• Founded three software ventures – one in the UK and two in

the USA. • Management buy-out of a further software business.• Two acquisitions.• Raised venture capital twice.• Sold all four businesses at a premium.• The leading authority on how to sell a business to a strategic

buyer. Author of 22 books for entrepreneurs.• Former Professor of Entrepreneurship, AGSE, Swinburne.


Objective

Identify the strategies ofHIGH GROWTH VENTURES

which result in increasedgrowth, resilience and profitability.


Short and Long Term Focus

• In the short term we focus on existing products in existing markets.

• In the long term we look at changes we can make in the product/market interface and organizational changes to improve growth capability and capacity.


SHORT TERM IMPROVEMENTS


High Growth Ventures Are Different

• High referral rates.• High repeat sales.• Higher profitability.• More resilient. • Very customer focused.• Lower cost of marketing per sale transaction.


Referral Rates Drive Growth

“In most industries, this one simple statistic (the Net Promoter Score) explained much of the variation in relative growth rates; that is, companies with a better ratio of Promoters to Detractors tend to grow more rapidly than competitors.”

How likely is it that you would recommend [Company X] to a friend or colleague?

Source: www.netpromoter.com


The Net Promoter Score

Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth.

Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.

Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.


Observations

• Customer satisfaction drives repeat sales.• Customer satisfaction drives referral rates.• Unsatisfied customers will shop around.• Very unsatisfied customers will damage your brand and

reputation.

What creates a satisfied customer?


Buyer Behaviour Model


High Growth Marketing Model

STIMULATE NEED

SEARCH

EVALULATE

BUY DELIVERY

USE

HELP DISPOSE

ENGAGE RE-BUY

REFER

Satisfaction relates tothe entire process


What Problem Do You Solve?

The most important role of marketing is to clearly define the problem you solve.


What Is The Problem Or Need?

• Few firms define the problems they solve or needs they satisfy.

• Too much focus on products, features and functions.• Their messages are too vague or too technical to help the

customer decide.• They fail to use the words or descriptions which their

customers use.


Ask Your Customers

• How did they define their problem?• What outcomes were they seeking?• Where did they look?• What search words did they use?• Who did they talk to for advice?• What prior experience did they have? • What would have happened if they had failed to find a

solution?


Who Is My Customer?

Target a clearly identified and reachablecustomer who has the problem you solve

or need you satisfy.


Who Are The Best Customers?

• Who buys quickly?• Who refers the most?• Who buys with the least price pressure?• Where do you have the highest competitive advantage?• Where do you have the best fit?


Describe Your Ideal Customer

• Who are they?• Where are they?• What is their demographic and socio economic situation?• Where and how do they shop?• What else do they buy?• What do they read?• Who do they associate with or define themselves as?• Who advises them?• What level of prior knowledge do they have?


Evaluation

Make it easy for the customer to ascertain that your product or service is the right choice for them.


What Matters

Do you understand my situation?Have you solved a similar problem before?Do you have the skills to do the job?

This is the threshold issue. If you can’t convince prospective clients that you can solve their problem, nothing else matters.

Source: Spiraling Up


Evaluating Benefits

• How does the customer assess the value proposition?• What is the payback period?• What are the problems, costs, delays, risks in the solution?• What information or tools are your competitors providing?• Do you offer a consulting service to map out benefits?


Expectations

Customer satisfaction is directly related tothe customer’s expectations.

You have to ensure thatthe correct expectations are set.


Customer’s Expectation

• Prior experience of similar products.• Discussion with friends and family.• Public information (newspapers, articles, internet blogs).• Vendor content (brochures, webpages).• Vendor contact.


Satisfaction

• Related directly to expectation.• Small problems, mistakes and mis-communications can

have a big impact.• Don’t ‘exceed the customer’s expectation’ – you make it

harder for the next sale.• Be consistent, reliable and predictable.


Purchase And Delivery

You have to make it easy for the customerto buy and take delivery of their purchase.


Purchase

• It is readily available?• It the purchase agreement fair, reasonable, understandable

and efficient?• Is it simple and straightforward to pay for?• Is credit available and easy to access?• Is there adequate help available at the point of purchase?• Is the payment process efficient for the customer?


Delivery

• Is it easy to have products delivered or to arrange the service?

• Is the delivery efficient, trouble free and stress free?• If you need to dispose of the old item, does the vendor

assist?


Product Or Service Use

Your objective must be to ensure you solve the problem or satisfy the need and provide support and help

throughout the use experience.


Customer Engagement

Long term engagement of the customerwill increase the likelihood of

a repeat sale or referral.


What is the Impact of Better Marketing?

• Reduced sales cycle by 10%? • Reduced the time between sales cycles by 10%? • Handle 10% more sales cycles at the same time? • Sell more products to the same customer? • Remove a number of steps out of the sales cycle process? • Receive unsolicited sales orders?• Improve conversion rate of leads to sales by 10%? • Improve the rate of qualified leads by 10%? • Grow overall leads by 10%?


Further Information

Marketing for High Growth Ventures –Forget the spin, apply proven strategies


LONG TERM IMPROVEMENTS


ABS statistics

High Growth is Rare!Only 9% will exceed 20 employees and

only 6% will exceed $2 million in revenue.


Market Issues

• Size and rate of growth of market.• Degree of competition.• Mature markets compete on price.• Most products compete for discretionary spend – high

marketing costs and low conversion rates.• Majority of products and services are not protected and can

be quickly copied.• Markets are imperfect and prospects often find it difficult to

obtain information on alternative suppliers. Very difficult to establish a leadership position.


Capacity Issues

• Building capacity is slow and requires access to funding.• Few private companies are suitable targets for venture/angel

capital thus sources of finance are limited, (1 in 10,000).• There are long lead times involved in building capacity

(recruiting and training staff, acquiring equipment, building new plant).

• Resources are often lumpy and thus stepping up to new activity levels is problematic (plant, office space, etc).


Capability Issues

• Few business executives have experience with high growth enterprises.

• There is little published information on how to manage high growth.

• Few advisors have the necessary experience to assist.• The command and control culture inhibits high growth.• Most small firms chase any business they can get and fail to

develop sufficient expertise or traction to facilitate growth.


Business Growth Realisation

Resilience

DistributionChannels

RightCustomer

Compelling Need

Profitable Time & Place

ScalabilitySustainable

CompetitiveAdvantage

InnovationStrategy

Vision

Management

RobustMargins

LOW

MEDIUM

HIGH

The Market

Makingit

Work

Realisingthe

Opportunity

Turning the

Wheel

The 14 Principles of High Growth Enterprises


Growth Potential

• Importance of problem being solved.• Degree of ‘fit’ of solution.• Degree of market spread.• Time taken to recognize need, search for solutions, evaluate

solutions, purchase, use and measure outcome.• Uniqueness of solution and degree of competition (and

ability to sustain competitive advantage).• Ability to scale the product or service.

INNOVATION


Growth Execution

• Access to distribution channels. • Ability to generate funding for growth.• Ability to control costs and quality.• Capability to plan and manage organisational growth.• Ability to recruit, motivate and manage staff.• Ability to develop vision, focus and strategy. • Ability to acquire and manage capacity.

CAPABILITY


Growth Rate

SIZE

TIME

High Growth Potential

Low Growth Potential

Growth rate is constrainedby growth potential

Size is determined by

capability


Potential and Execution

• Growth Potential– Time and Place– Compelling need– Right customer– Competitive advantage– Innovation– Sustainability– Scalability– Vision

• Growth Capability– Channels to market– Strategy– Robust margins– Resilience– Management– Profitability


Further Information

Ultimate Growth Strategies – A practical guide to engineer high growthinto your business

BreakthroughStrategies Engineering High

Growth Potential

Dr. Tom McKaskill

Rcl mc kaskill 4 2011

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