A technology services company CEO recently asked me to list, off the top of my head, five goals he should be sure his team includes in the 2004 company plan. I told him what I would tell most other companies in this industry.
Resolution 1. We will improve real and perceived value enough to justify at least a 20% price increase by the end of the year. Too many companies (and their investors) are focused on revenue growth at the expense of healthy margins, and the equation should be flipped. Increase margins in order to fund and enable top-line growth.
Price is rarely the real issue in a selling situation – the problem is usually lack of differentiated, adequate value. Focus this year on how to increase the value of what you provide vis-à-vis competitive alternatives in order to justify price increases that new and existing clients are happy to accommodate.
We know it intellectually and yet fail to apply it in practice: The best, most profitable business is business you already have. Yet most technology services companies still put the majority of their sales and marketing investment into new customer acquisition. Develop a plan for how you will further penetrate the companies you already serve, either by expanding into additional business units or broadening the services you provide to existing buyers.
The percentages I mention above are somewhat arbitrary; do an analysis and figure out which clients have genuine growth potential and set a target; drop the others. And this leads us to our next goal…
Do a thorough profitability analysis. Be sure to factor in allocations for overall marketing expenditures, selling costs, training and personnel administration, and the investment required to manage and administer the account and your business in general.
If you are honest with yourself, you will probably realize that 40-60% of your clients are either unprofitable or barely breakeven. Some of these may have strategic value that makes them worth keeping anyway (e.g., marquee reference or publicity value; beta site for a new service or the development of intellectual property; foot in the door of a large, high-potential account). Others either need to become profitable or go. But instead of immediately dumping them, tell them what's going on.
You might be surprised to find they are willing to help fix the problem by either paying slightly more or expecting less. If they aren't, help them find an alternative provider. Whatever you do, don't burn a bridge or leave them in the lurch. It's a small world.
On the surface, this goal sounds counterintuitive. But if your target market is too broad for the size company you could ever hope to become, you will never become a market leader and achieve sustainable, high-margin growth. You will always be a relatively small, commodity player with shrinking margins.
Ten percent here is only a guideline, but the point is that you need to aim to be a big fish in your pond. As you grow, your pond (target market) can grow. Start with an appropriately narrow market, become known and profitable within that market, and then expand into related markets.
As the saying goes, if you try to be all things to all people, you will be nothing to anyone. You must find a way to be unique with defensible, obvious differentiation that speaks to an urgent market problem. You want to become the Go-To that people seek out. Otherwise, you are a Me-Too. And Me-Too's go out of business as soon as supply exceeds demand. Defining a Go-To market position is not a trivial task. Designate a formal internal strategy initiative, fund it, and spend whatever time it takes to research market needs, lay out your Go-To market position, and test it in the marketplace.
Imagine what life would be like if you achieved even just a couple of these goals in the next year. Higher margins would enable strategic and tactical investments in talent, intellectual property, acquisitions, strategic partnerships, marketing and other initiatives. Revenue growth would excite your investors and give clients confidence in your long-term viability. A more visible market presence and clear positioning would allow you to stand out and effortlessly attract new business.
These are five specific goals you can set to help you on your way. There are lots of other ways to get there. But one way or another, resolve to make it happen.
Theresa Lina Stevens specializes in market dominance strategy and marketing for IT and professional services companies. She is CEO of Lina Group Inc., which helps clients gain and sustain a unique and high-profit, high-growth market position through a proprietary approach called the Apollo Method for Market Dominance. You can reach her at theresa.lina.stevens@linagroup.com or click here to visit the Lina Group website.
Feb 4th 5:34 PMFinding Myself My Own New Adventure - So this is my last column with Channel Insider. After selling my MSP, Ive take... http://t.co/XGWd1Ryl
Feb 2nd 5:39 PMLevel Platforms to Offer Mobile Device Management - Answering the call of so many MSPs, Level Platforms is expanding... http://t.co/hsqwAFxN
Feb 2nd 3:45 PM10 Key Ingredients That Have Made Apple So Successful - Apple is one profitable company. The firm announced recently... http://t.co/ipuOvDig
Feb 2nd 1:55 PMChannelEyes: Will It Transform the Channel? - If the 2000 decade was about automation for the IT services channel, t... http://t.co/SrvhN2xG
Feb 1st 11:45 AMIBM Expands Mobility Management, Security - IBM has unveiled a solution to mitigate the risk that comes with a bring... http://t.co/VcyVQ4HA
Feb 1st 5:43 AMXerox Expands Cloud Services, Data Recovery for SMBs - The cloud backup and data recovery services are designed to p... http://t.co/DloBWniQ
Jan 31st 1:45 PM10 Reasons RIM`s New CEO Won`t Fix the Company - Research In Motion, at long last, has a new CEO in Thorsten Heins. ... http://t.co/JGo2Z9ar
Start the New Year with business intelligence—it’s a smart move
Join us on February 1 for an encore rebroadcast at either 5 am or 12 noon EST and discover how business intelligence (BI) supports companies in uncertain business and economic climates. Get expert advice on how to create a strategy that fits your organization's needs and budget and see how quickly it can pay for itself. Click Here
Commentary 
