I recently spoke in front of 300 people, and one of them asked “What do you think is the most important thing the audience should consider in 2018?” Obviously, every business is faced with different challenges, but I think the answer is simple.
Positioning your company in a growth industry, market segment, or sector is crucial to the continued success of your company. There must be a target market that your products and services are focused on. It is ideal that this segment be growing.
Once you have figured out your segment, the next question you want to ask yourself is “What is the pain, gain, or problem you are solving that competitors are missing?” and then make sure you address that issue better than anyone else in your industry. When you do, you will assure yourself plenty of success.
Think about Ikea, Southwest Airlines, Apple, and the Container Store. All four companies have healthy growth rates and became the most profitable in their industries by focusing on market segments that are likely less than 10% of the overall marketplace, have become industry leaders, and generate billions in revenue. Apple and Ikea represent the majority of the profit in their industries, and Southwest has the 2nd highest valuation in the world and only flies to 101 airports.
You must understand that in most cases – less is more, and more is less. The more market segments you are in, the more complex your business gets and the higher your cost structure. Each segment causes you to have to adjust your sales, marketing, operations, and products and services. Most owners underestimate the impact on their company as they chase additional segments.
A concept popularized by Clayton Christensen at Harvard Business School, and published in a Harvard Business Review September, 2016 article, Know Your Customers’ “Jobs to Be Done”. It is important to understand that someone buys or rejects a product or service because in their mind it has a main “job to be done”. I am sure you have heard the saying, when someone goes to the hardware store to buy a ¼ inch drill bit, what they are really buying is a ¼ inch hole. Your customers do not necessarily want your product or service; they want to get a job done. It is likely you and your competitors are still failing to get that job done today, and someone else is going to figure out how to do it.
The only reason existing customers will keep using your product or service, switch to you, or pay a premium for what you are offering is that you best understand what the job is that they need solved, understand where the competition is falling short, and then solve that need better than everyone one else.
Here are some key questions I want to leave you and your leadership team with:
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