Market-share vs. profit strategies

The joys of dating…

We all know a friend who at some stage in their single life has dated anything with a heartbeat.  (Let’s be totally honest, some of us are those friends).  Dating anything with a heartbeat is essentially a market-share strategy—getting your brand out there any way you can, learning from experience, polishing your image while honing your products and services.  The strategy serves a purpose—you discover what you do want by exploring what you don’t want, you work out who you are and what matters.  And eventually, for most us, we outgrow it.  It serves its purpose and we move on.  Why? Because a marketshare strategy is exhausting.  It demands a lot of resources—it requires us to spend time with people who we aren’t really compatible with, to invest money in programs and events that aren’t always our cup of tea, and to constantly make exceptions in our system to accommodate an endless array of idiosyncrasies.  Most of us only endure this because we intend for it to lead to that one special account where, having found it, we can invest all of our energy and resources while enjoying the mutual benefits of genuine compatibility. (Wistful sigh).

Business is very much like dating, especially so in the B2B service sector.  A market-share strategy will serve its purpose as long as you have a clearly defined notion of what that purpose is and for how long you plan to sustain the effort and investment.  And it does take effort.  Your marketing team can get wrapped in their own riddles trying to be everything to everybody, your sales team can be demoralized by high maintenance and underperforming accounts, and your administration team can be run ragged building systems for an eccentric collection of clients.   If you have a good reason for recruiting any customer that has a pulse, be certain to communicate to your team why this is so, and for how long you intend to play the dating game.  (It keeps people from feeling cheap and nasty).

At some point, even pathological daters acknowledge that real reward comes from quality relationships.  When you transition to a profit strategy you shift your attention from the quantity of accounts to the quality of accounts.  Are you compatible? Is there mutual benefit? What level of maintenance is required for this relationship to work?  Is the relationship profitable?  If not right now, when and how will it become profitable?

As painful as breakups are, at some point you may need to call it quits with some of your low profit accounts.  Your marketing and sales teams will be more motivated because of it—finally they can focus their attention on the existing accounts that matter, and prospect for new clients with discretion and integrity.  Your admin team will be equally ecstatic because they can develop systems that serve a specific and constant set of requirements.

Go on, burn your little black book.

Written by Kylie Hughes for Concentric Marketing’s ‘Breakout: brand’ blog.

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