If business owners stopped wringing their hands about how things have changed and started looking at how things are, they just might see growth and opportunity beyond what they could ever have imagined.
Rick Kash and David Calhoun, the authors of How Companies Win: Profiting From Demand-Driven Business Models No Matter What Business You’re In, see opportunity instead of doom for companies of all shapes and sizes. They give examples of familiar companies like McDonald’s, Best Buy and Hershey’s. But there are lessons in there for small business as well.
It’s All About Demand
“Demand is what customers possess in terms of the needs and desires – emotional, psychological, and physical – they want satisfied, and have the purchasing power to satisfy. For companies, demand is ultimately about profit. At the end of the day, whoever satisfies demand the best, profits the most.”
For decades companies have invested millions in optimizing the supply chain. And somewhere along the line, what the customer wanted or what was important to customers got lost along the way. When the economy faltered and customers cut their spending, some companies noticed.
How Companies Win offers several case studies of familiar companies and brands to illustrate the before, during and after of their customer demand pool analysis and how it affected their businesses. Here are a couple of examples:
– McDonald’s transformed its business model. When sales faltered, they finally noticed that adults wanted healthier choices. And when they provided them, profits improved.
– Best Buy dug deeper within an already strong customer-centric strategy. They targeted their highest-profit customers and looked for ways that they could enrich those customers’ lives with the products they carried.
One of my favorite aspects of this book is the guidance that Kash and Calhoun offer readers in the form of questions you should be asking yourself. In my opinion, this is where small businesses will really be able to take advantage of big business strategies and tools. I say this because big companies have so much complexity in their organizations that for them, answering these questions would be a big and unwieldy prospect. But small businesses that aren’t as diversified will find these analytical tools really helpful and insightful.
Kash and Calhoun Are Masters With Data and Consumer Behavior
David Calhoun has been chairman and CEO of the Nielsen Company since 2006. Prior to that, he was the vice chairman of GE. Rick Kash is the founder of The Cambridge Group and the author of The New Law of Demand and Supply. Both of these gentlemen have the breadth and depth of experience with consumer behavior, economics and corporate management to guide you through this transformational topic.
Questions to Ask Yourself and Your Business
Like all good consultants and executives, Kash and Calhoun start with broad questions that will make you shift around in your seat because it feels like they are poking you in the ribs — or in the sore spots of your business. These questions highlight how quickly and easily we get pulled into the daily running of our businesses and servicing customers’ immediate needs, while not being as clear as we need to be on strategic issues.
– How precise is your customer targeting across your brands, products, services?
– Will customer targeting based on demographics or industry verticals be enough for you to win?
– Which of your customer targets creates the most profit?
– How precise is your understanding of which media deliver what results and what’s the right mix of media to deliver the best results?
There are many, many more questions — and one element they all share is the need to get more precise about the “who,” the “how much” and the “why” behind your customers’ purchases.
More Lessons from How Companies Win
There are so many lessons in this book that I couldn’t possibly list even a fraction of them here. Here are a few of the overriding lessons and themes that you’ll get out of How Companies Win:
– In a world where supply is efficient and demand is flat or contracting, understanding demand is the new imperative.
– Find your most profitable customers and get to know more about what they demand. Dig deeper into what they haven’t said that they want.
– Too much traditional segmentation is done based on past behaviors. This is a waste of time and money.
Is This Book for You?
You don’t have to be a multibillion-dollar organization to benefit from this book. In fact, small businesses are in a better position to use the lessons of How Companies Win, because they can more easily do the analysis that the authors propose. It will be much easier for a small business with several hundred or a few thousand customers to implement the concepts in this book than it will for any of the mega-corporations that are used as examples.
Marketers will rejoice at this book because it will open up a whole new world of segmentation possibilities and ideas for new product offerings. And managers and owners will get their fill of analytical questions and charts that they can use to mine their existing data.
Overall, How Companies Win (book’s website here) is an essential read for 2011.