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5 Essentials to Organic B2B Growth

How our work with Avery Dennison, GE Healthcare and Pentair helped them develop new levers for growth.

B2B growth leaders such as Avery Dennison, GE Healthcare and Pentair share a few common essentials that are the key to their success. They prioritize meaningful innovation. They target customers who appreciate value and are willing to pay more for it. They create and deliver solutions that are hard to duplicate.

Accomplishing this takes hard work, a belief in profitable growth and an unrelenting focus on the underlying needs of customers. Put simply, these companies think through where to play and how to win one application, one industry segment at a time.

We’ve worked with B2B companies with a strong track record of sustained, profitable revenue building and have since identified five growth essentials for success:

Focus On Your Customers

You have to focus on the customers who are the key decision-makers in the value chain. A manufacturer of labels has to think about the CPG company that determines how packages are labeled, not just the distributor. Commercial insurers need to add value to the companies seeking risk management who ultimately buy their products, as well as the brokers who sell them. Finding the right decision-makers and building relationships with end customers is crucial. Their insights will ultimately drive new product and service innovation at your company.

“Finding the right decision-makers and building relationships with end customers is crucial.”

Avery Dennison put its core label business back on a sustainable growth trajectory by supplementing its distributor-focused sales effort by identifying, understanding and addressing the needs of the end customer – packaging engineers who were the drivers of packaging decorating innovation. Segment teams learned where packaging engineers played and who advised them in different industries. The Avery Dennison segment teams determined how to tailor innovation and product information to meet their requirements. By making innovation and marketing more relevant, they boosted sales.


FINAL THOUGHTS

Sell Solutions

When we began working with GE Healthcare, scores of different P&L centers proliferated in a siloed pursuit of revenue growth. It was common for five or more different GE Healthcare sales teams to call on the same customers, each selling a different product or service. GE Healthcare leadership recognized the need to drive a more comprehensive value proposition to spark hospital engagement, loyalty and growth. Through careful research, the company identified the three top opportunity segments to receive unified messaging, targeted innovation and a cross-business sales support model.

The sales organization could now work as a single team to deliver an expanded, relevant value proposition that stretched across all healthcare units. The result: Exposure to higher-level decision-makers and communicating an integrated view of how GE Healthcare’s entire spectrum of products and services could work together on their behalf.

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Chick-fil-A’s Raving Fans’ Growth Strategy

New fans matter. But its real secret is deepening relationships with its most devoted customers.

As the Chief Growth Officer at Prophet, I see a lot of companies struggle with growth—both where to find it and how to manage it. And unfortunately, oftentimes marketing isn’t even part of those conversations. That’s why I never stop marveling at the way Steve Robinson, Chick-fil-A’s senior vice president and chief marketing officer, and his team combine their role as marketers with the businesses’ broader goals and growth targets.

Recently, I sat down with Steve to talk about what he’s learned in his 32 years at the fast-growing QSR chain. Between gains from its existing restaurants and opening new stores, the company has been growing at the enviable rate of roughly 13 percent annually, which means the business doubles every five to seven years. Not jealous yet? For the last several years, it’s even managed to do so with no borrowing.

“Our growth is based on two things,” he says. “The first is brand relevance, which includes everything from menus, buildings, service, technology, packaging and sustainability. And next, we have a strong focus on our Operators to ensure they have what they need to grow same-store sales.”

Here are six of Chick-fil-A’s marketing strategies that apply to the many companies looking to find new paths to growth:

Build your “raving fan” base

Long before social media experts talked about WOM and brand ambassadors, Chick-fil-A had identified a type of customer it nicknamed “Raving fans.” Of the 7 to 10 million people eating at its restaurant each week, this is a rabid subset, about 10 to 15 percent of its total audience. They visit Chick-fil-A four or more times each month, and are so jazzed about the company that they even dress up as the brand’s famous cows to celebrate “Cow Appreciation Day” to win a free sandwich.

Of course, Robinson says the company always strives to bring new fans in at the top of the funnel. But these die-hards “are crucial to the health of the business and help us grow. Our goal and strategy is to build special relationships with them.” To that end, Chick-fil-A Operators go to incredible lengths. They might follow a customer out to their car, holding an umbrella on a rainy day. A recent example: After Auburn’s recent defeat of the University of Georgia, some homebound fans phoned in an order, even though the store was about to close. Not only did the restaurant stay open, when the Operator discovered they were bereft “Dawg” fans, he gave them the meal for free. “No one told the Operator to do that,” Robinson says. “They create these fans themselves every day, and we’re constantly amazed at the innovative ways they think of to deliver this level of unexpected service.”

Know what will make your customers happy tomorrow

Whether it’s a Peppermint Chocolate Chip Milkshake, ever-more-clever cow “Eat Mor Chikin” ads, or a new mobile payment app, Robinson says the company tries never to lose sight of what delights its customers.

“Yes, great crave-able food is the most important thing. But how do we plus-it-up with great service, interactions, and experiences?”

Steve Robinson, Chick-Fil-A

That also means reaching beyond known pleasure points to discover new ones: “Sometimes customers don’t know what they want yet. Our job is to uncover those things and get out ahead of them. It’s like my favorite Wayne Gretzsky quote, ‘We need to go where the puck is going, not where it’s been.’”

To that end, Chick-fil-A recently opened “Hatch,” its 80,000-square-foot innovation center, to explore new ideas in food, design and service. Among its breakthroughs so far: Streamlined technology to make ordering and payment faster and easier, and a new way of fixing chicken that actually required patenting and building a new custom grill. “By May, you’ll hear us talking a lot about this new platform for grilled chicken. That is a hardware innovation, but it is key to our marketing message of relevant menu improvement.”

Build relationships, not transactions

Selling more sandwiches is a good thing, but to Robinson, almost beside the point. Real growth, he maintains, comes from rich relationships, not minor sales blips. College football is one of his favorite examples, and the company has been involved with college sponsorship for 17 years. “It’s our sweet spot,” he says, “a demographic and lifestyle fit.  College fans, alumni, and viewers index very high for Chick-fil-A.” The company tracks engagement by measuring reactions to digital offers made during games: Some 75 percent of Chick-fil-A customers watch with a second screen in their hand.

“We also activate on the ground, giving away food at Chick-fil-A Bowl games, and at events on campus. Our Operators strike vendor relationships with stadiums. We have Operators in the communities who have great relationships with over 200 athletic departments where we provide catering.” Yes, it’s an expense, and not always an easy one for everyone to grasp. “But for us, measured in terms of relationships built and enjoyment for fans and our customers, it’s worth it.”

Stand up for your customers, even when it’s difficult

Robinson, who is also on the executive committee, says marketing has earned its seat at the table primarily “by being a relentless advocate for the customer.” Sometimes, he concedes, that requires tenacity. A current example: Building restaurants that are LEED-certified, a sustainability certification that carries greater expense. “That may not sound interesting to all of our leaders, but it is very important to our customers. Which makes it a priority.”

Decide how you won’t grow

Robinson and his team are keenly aware of the fierce battle for share of America’s stomach. More than half of the country’s meals are now eaten away from home. As restaurants proliferate, even convenience stores and grocery chains are now selling prepared meals, fighting for every breakfast, lunch and dinner. “But we know we will not compete on price. For us, the evolution has been how to do more than food. Yes, great crave-able food is the most important thing. But how do we plus-it-up with great service, interactions, and experiences?”

Bring grace to the table

Robinson admits he’s had to learn a lot, both personally and professionally, to roll with the punches that come with engaging on a political or social issue.  Last year, the company found itself embroiled in a controversy over remarks Dan Cathy, COO and son of founder Truett Cathy, made regarding same-sex marriage. The ensuing firestorm resulted in boycotts, protests, and even nasty Tweets from some mayors. The company eventually issued a statement that it would harken back to what has always been most important to Chick-fil-A – serving everyone with honor and respect. “The experience reminded me about the spirit of hospitality, of graciousness, that this company was founded on. Everyone is welcome at Chick-fil-A. Everyone should feel at home. The root idea is grace, and our Operators have really leaned in and stayed true to that model, even handing out food and water to protesters. Staying true to our core values can help weather any PR storm.


FINAL THOUGHTS

Steve’s tenacity at growing Chick-fil-A in both a gracious and aggressive manner should give current and future marketing leaders something to think about as they head into 2014.

This post originally appeared on the Forbes CMO Network on Scott Davis’ blog, The Shift. To read related thinking from Scott on Forbes, follow his blog here. 

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10 Quick Ways to Drive Organic Business Growth

Of course, long-term growth strategies matter. But there are many ways to boost revenue–starting right now.

Quick wins are crucial to any growth strategy. They build momentum and fund investment for longer-term growth initiatives. Cost-cutting, acquisition and restructuring are important tools in improving short-term gains, but they often distract organizations from building revenue organically.

Immediate, customer-driven revenue gains are often overlooked in the search for quick wins. When combined with prudent cost reduction they yield tangible results and keep employees focused on the customer. They also build the marketing, sales and innovation competencies needed to grow even faster in the future.

At Prophet, we’ve developed a checklist of ten rapid revenue drivers based on the repeated achievements of successful growth organizations. But first, let’s ensure we’re all clear on what organic growth means:

What Is Organic Business Growth?

Organic business growth is achieved by using your existing resources to expand your business. On the other hand, inorganic growth is done through mergers, acquisitions, and takeovers.

Organic growth is a key method for yielding tangible results, keeping employees focused on customers, building marketing, expanding sales, and innovating.

10 Ways to Organically Drive Business Growth

To help you determine some quick ways to drive organic growth, we’ve developed a list of ten essential strategies, based on organizations we’ve seen grow successfully:

1. Sell More to Your Best Customers

It’s easy to believe your biggest customers are also your best customers. But, usually, it’s a myth. An analysis of profit contribution, cost-to-serve and organic growth potential can highlight key customers worthy of an intense, cross-company focus. We’ve repeatedly seen that type of full-court press on just 10 to 20 percent of the customer base (the best customers) boost bottom-line profit by 5 percent or more.

2. Make the Most of New Customer Relationships

The early days of a new relationship are critical, and yet one of the most overlooked parts of the customer experience. Clients across categories consistently express the greatest willingness to buy more and to try different products just after they come on board. Why not take advantage of that honeymoon period, offering more products, services and accessories?

There’s a long-term benefit as well. Our studies on behalf of clients have found that on average, customers who make a second purchase within 90 days of the first purchase are more than double the lifetime value of the average customer.

3. Focus on Your Sales Team

For immediate impact, adding or beefing up the sales team is one of the most effective drivers of organic growth.  This is especially true in industries with multiple sales channels. We’ve seen it work for a national insurance company, which got immediate results by resisting the urge to cut costs and instead adding sellers to its highest-growth market. And we have also found a consistent pattern of profitable revenue gains from targeted sales-strengthening moves in Fortune 500 companies. Many didn’t even increase headcount, but rather redeployed existing resources, using better training and better processes. Redeploying resources generates an almost instant payback versus the typical six to 12-month payback from new sales hires.

4. Optimize an Upcoming Launch

Too many line extensions and not enough blockbusters scheduled for launch next year? Prioritizing the most important introductions and focusing on execution is one of the simplest ways to organically boost revenue. It won’t create best sellers, but it avoids having a plethora of small launches dilute impact among customers.

It doesn’t happen as often as it should because it takes day-to-day diligence and a willingness of functional teams to work together. But when leaders focus on cross-functional priorities, time-to-market improves an average of 20 to 30 percent, mostly from avoiding the delays that build up in over-extended organizations. These gains require little to no incremental investment.

5. Raise Prices Strategically

While across the board price increases may be inadvisable in competitive markets, there are usually groups of customers or clusters of products that can withstand a price increase without slackening demand. Our clients have repeatedly identified 20 percent of their lines with lower elasticity due to a different competitive set or different buyer profiles. Selective price increases are one of the fastest and lowest risk moves a company can take because almost all the benefits flow to the bottom line and the investment in analysis takes only a few weeks.

6. Implement a Measurable Media Strategy

Insufficient data is no excuse for not being able to assess the impact of media investments or failing to conduct marketing mix analysis. If media isn’t measurable, shift the mix to media that is. If it is measurable, dig in and start optimizing. We have found that companies who have shifted marketing dollars to digital mediums have been able to quickly launch, test and learn new value propositions and pricing, which can add 10 to 15 percent incremental revenue.

7. Consider Organizational Change

Organizational change can definitely result in greater working efficiency and increased productivity, but keep in mind that organization-wide restructuring is incredibly taxing for leaders and employees— it creates upheaval and usually takes a while to pay off.

The cross-functional dependencies required to innovate, sell and market are easily disrupted— so evaluate your goals and your timelines before you decide to rock the boat now, or whether you need to focus on short-term growth.

If your primary goal is long-term organic growth, consider an organizational change. But if your priority is short-term business growth, concentrating on encouraging and supporting the work of informal multi-functional teams will have a greater impact.

8. Refresh Best-Selling Products

When times are tough, supply chain leaders want the sales force to focus on over-inventoried products. Finance frets about margins. And product engineering looks to the newest thing – even if it doesn’t have a benefit. Don’t indulge. Take your best-selling products and focus on selling more of them.

Crayola increased crayon sales by 50 percent in a single year by renaming a few colors. Samsung boosted washing machines sales by 15 percent, simply by making them in bright reds and blues. Find ways to refresh the products through color, materials and packaging. Explore new marketing avenues through brighter merchandising, sharper messaging and more inspired promotions.

9. Rework Your Sales Pitch

It’s usually just a few highly skilled members of the sales team who produce the bulk of incremental sales. Use their experience and customer understanding to rework the pitch for the rest of the team. A sharper pitch, particularly when it shifts focus to customer issues and delivers solutions, can have an immediate organic growth payoff.

Avery Dennison generated remarkable results by doing just this for their reflective materials division. A single pair of salesmen sold five times the average. It turned out they talked about the advantages of the product in a totally different way than their colleagues. The revelation changed the way everyone else went to the market and transformed the marketing message.

10. Set Concrete Goals & Reward Success

It is amazing what people can do if they have a concrete goal to speed up a launch or introduce an important initiative. Detailed process redesign may be crucial to long-term speed-to-market improvements. But in the short term, there is no substitute for asking teams to go faster, celebrating their success and rewarding them for the additional effort. The secret sauce? Growth leaders at these companies take the time to find and unclog administrative and process bottlenecks their teams are facing.


FINAL THOUGHTS

Beyond the power to boost revenue in the short term, organic growth wins also provide key insights into your customers and their motivation. This customer focus will help sharpen your strategy every step of the way.

Learn how Prophet can help you implement a more successful growth strategy within your organization. 

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New Subcategories: The Path to Real Growth

Subcategory innovators account for a disproportionate percentage of revenue growth and market capitalization.

In my book, Brand Relevance, I argue that the only path to real growth, with rare exceptions, is to engage in transformational or substantial innovation that creates “must-haves” that define new subcategories (or categories). In virtually any product arena that you examine over a long period of time, from water to banking to computers, any growth spurt, (again, with rare exceptions) can be associated with such an innovation. For example, in the Japanese beer market, the market share trajectories changed only four times in over 40 years. In three of those instances new subcategories were formed, and in the fourth two subcategories were repositioned.

In a recent article in the Harvard Business Review, Eddie Yoon and Linda Deeken provide more evidence of this phenomenon. They observed that if you analyze Fortune’s lists of the 100 fastest-growing U.S. companies from 2009 to 2011, 13 of those companies were instrumental in creating a new category or subcategory. These 13 firms accounted for 53 percent of the incremental revenue growth and 74 percent of the incremental market capitalization growth over those three years. Such innovators benefit from higher growth in part because they can expand the marketplace. Chobani, for example, created a new subcategory of thick, creamy, high-protein yogurt that is now in excess of $1 billion in part by attracting new customers into the yogurt world.

These subcategories or categories can be created by substantial innovations that do not alter the basic business model. In the article, Yoon and Deeken point to Sara Blakely’s creation of Spanx slimming apparel and Kevin Plank’s development of Under Armour’s moisture-wicking apparel for athletes, both  $1 billion brands, as examples. Another is Crest’s Spinbrush, which created a new subcategory between the regular toothbrush and the expensive electric versions. All these products use the same marketing and distribution strategy as before, they just now contain a new “must-have.”

A category or subcategory that innovates can also involve a change in the basic business model. Yoon and Deeken describe several examples. Keurig pioneered the “cup-at-a-time” pod-style brewing in the 1990s as an alternative to the existing coffee pot for the office, and later for the home. With a business model around selling K-cups, which come in 200 flavors and sell for around 50 cents, they have created a U.S. business approaching $4 billion. Redbox DVD kiosks, which offered rentals in other stores, were transformational as was Microsoft’s Xbox Live gaming system which added a subscription-based online service to a video game console.

“Firms under-invest in “big” innovation and the product and market research that would support it and over-invest in incremental innovation.”

Transformational innovation can actually be easier to develop and implement than a substantial innovation. You have to have a lot of resources and luck to come up with the innovations that led to Spanx, Under Armor and the Spinbrush. But it just takes insight and creativity to offer a reward program that helps cell phones users in Africa earn life insurance benefits, like MTN. Or for a cell phone maker in China (Xiaomi) sells phones directly by bypassing the telecom firms (think of Dell bypassing the retailers). Both were transformational innovations because they altered the marketplace.


FINAL THOUGHTS

In my view, firms under-invest in “big” innovation and the product and market research that would support it and over-invest in incremental innovation. Yoon and Deeken note that Nielsen’s Breakthrough Innovation Report finds that only 13% of the world’s leading consumer product companies introduced a breakthrough innovation from 2008 to 2010.

It should be more. I don’t know how much more, but more. It is a “big” innovation that moves the needle.

BOOK

Developing Business Strategies

DAVID AAKER

Summary

A successful business strategy enables managers to provide organizational vision, monitor and understand a dynamic business environment, generate creative strategic options in response to environmental changes, and base every business effort on sustainable competitive advantages. Developing Business Strategies provides the knowledge and understanding needed to generate and implement such a strategy.

This fully revised and updated edition of David Aaker’s highly influential strategic manual offers copious new information on important emerging business topics. Numerous new and revised sections cover such critical areas as the big idea, knowledge management, the customer as an active partner, creative thinking, distinguishing fads from trends, forecasting technologies, alliances, design as strategy, downstream business models, and more.

“Developing Business Strategies” is available at AmazonBarnes & Noble, or wherever books are sold.

Highlights

  • A new chapter on strategic positioning
  • Many new illustrative examples from B-to-B, high-tech and the Internet
  • Increased focus on global leadership and global brand management
  • Using the Internet to develop and support business strategies

Endorsements

Robert L. Joss
Dean of the Graduate School of Business, Stanford University

Unquestionably the most comprehensive treatment available on the subject. I found this book unique in its capacity to benefit executives, planning staff, and students of strategy alike.

About the Author

David Aaker, is the author of over one hundred articles and 18 books on marketing, business strategy and branding that have sold over one million copies. A recognized authority on branding, he has developed concepts and methods on brand building that are used by organizations around the world.

Connect

Want to interview Dave or feature him on your next podcast? Please connect with us or David Aaker directly.

Explore how David Aaker and Prophet can help your business develop and implement business strategies.

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