Your business was humming along: sales were great, generating year-to-year double-digit growth; cash flow was positive; customers were happy and employees were content.
But, for some reason, you have hit the proverbial brick-wall: growth has slowed to a trickle, customers are restive, and company morale is suffering
Unfortunately, what worked for you before isn’t working now.
Welcome to the land of growth chokepoints–those aspects of your business that can put the skids on fast growth or stop you dead in your tracks.
The purpose of this new column is to help you navigate your way around, through, and over the landmines, tar-pots, quicksand and other growth chokepoint dangers that lurk ahead.
In today’s column, I focus on a subtle chokepoint I call, “Opportunistic” selling, which has significant consequences that afflict many CEOs.
“Opportunitistic” selling is a sales strategy—sometimes not recognized as such–where each and every prospect represents an opportunity, no matter the consequences. If the prospect requires some major change to your software product, so be it. If the prospect requires a new product or service, so be it. In other words, “Any sale is a good sale.” After all, when you close a sale, it brings in cash.
Early on, especially if you are bootstrapping your business, this strategy might make sense.
But, if you want to grow your business beyond $3 million, $5 million or $10 million in revenue, this sales strategy needs to be retired.
Why? This belief creates a series of problems:
- Since any prospect may be a good prospect, your lead generation isn’t focused and generates too much chafe and not enough wheat.
- Since your leads are poor, not resulting in sales, your folks spend too much time chasing down leads that are a waste of time.
- Since each customer may have new requirements, your software product can’t be stabilized and as such, you release software with too many bugs in it
- Since you are trying to satisfy a wide array of customers, you can’t build mindshare in a particular business niche, so it is hard for prospects to distinguish your product from others
- Since each customer requires new changes, too much time is spent on customizing each customer installation which limits how many customers you can handle at any one time.
All of these problems culminate in daily fire-fighting directing your focus away from growth.
What to do?
It’s time to become a market-driven company. It’s time to make hard decisions about what markets you are in and which ones you are not in, and who are your good customers and who are not.
Here are four steps to help you on your way:
Identify your best customers: which of your current customers love your product, provide great references, and make you a profit to boot?
Interview them. Ask questions that allow you to discover why your product is a compelling one for them. For example, how do they use your product? What problems does it solve? What measurements demonstrate how your product is successful?
From these interviews, identify the most compelling customer problem you are solving, who is your best customer that has this problem and in what markets.
Now, laser-focus your company’s total energies on marketing and selling to these markets and customers.
As an example, recently I spoke to a software company CEO. He told me he was having trouble with his lead generation campaign. Our discussion made it clear that he hadn’t discovered yet who his real customer targets were.
To help, I asked who was his best customer and what problem was he solving for that customer? He identified a customer who struggled to handle 4,000 to 5,000 invoices a day. His software allowed his customer to reduce an accounting department’s headcount from eleven down to three and reduced the time to process an invoice from seven to ten days down to one. He now had a compelling story and could now focus his sales and marketing efforts on selling to similar customers.
“Opportunistic” selling can be addictive since it brings in cash. But, like with any addiction, to become healthy again, you need to kick the habit. To do so, you must be able to say no–that is the wrong customer for us—while saying yes to those prospects that you have identified as being in your sweet spot. Doing so will allow you to return to growing your business successfully.
(If you would like to evaluate your company against a list of growth chokepoints to see where you stand, e-mail me and I will send my Growth Chokepoint Checklist.)rategies.com