|Six Rules for Increasing Revenue and Profits
Too much of American business is focused on cost management, the Achilles heel
of American industry. What most businesspeople have failed to realize, however,
is that almost any company has the potential to exponentially increase its
revenue stream and profitability. Moreover, studies of how Alpha companies
come to dominate their product category or industry prove that you don’t have to
be the dominant company in your category to benefit from the Alpha model. Almost
any company of any size can create dramatic, sustainable growth—usually in a
year or less—by following the same strategies and rules that Alpha companies
employ. [Editors note: See June 2008 issue of the Business Edge for the article
Eight Myths About Alpha Companies and the May issue for the article
How to Become an Alpha Company.]
Here are six rules CEOs, senior-level executives, executives at second- and
third-tier companies, and owners of smaller businesses can apply to become—or at
least act like—an Alpha company, and navigate past the cost-management trap to
Rule #1: Functionally satisfy at least the minimum; emotionally satisfy the
maximum. If functional needs satisfaction were the true differentiator of
top brands and survival brands, Coke would not be an Alpha; Pepsi clearly proved
that it was preferred in blind taste tests. To work toward becoming an Alpha,
you must meet at least minimum functional needs and provide higher levels of
satisfaction and significance than your competitors. You must make customers
feel smart, appreciated, more attractive, more respected and/or more fulfilled.
Rule #2: Don’t compete on price. Alpha companies don’t gain or maintain
their Alpha status based on price alone. In fact, they compete less on price
than their competitors do. Don’t get confused about the importance of price.
Price is the final value judgment customers make; it is the conclusion
they create based on weighing all of the benefits a product or brand
seems to offer.
Rule #3: Drive expectations. You must differentiate your brand not by
what it does, but by what it makes customers want. If your company can
satisfy those things better than anyone else, and at a higher level of emotional
needs satisfaction, it can then generate controlling influence with customers
and competitors. The company that can drive expectations to the highest
levels—among customers, distributors and/or referral agents—has the greatest
immediate influence in the marketplace.
Rule #4: Measure causes over outcomes. Measuring and comparing sales,
profits, market share, brand awareness, stock prices, margins, or any of the
other outcomes that businesses spend so much time worrying over, only clouds the
focus on the causes that drive those desired outcomes. It is far more
productive to understand your company’s performance in terms of causal factors,
such as perceived satisfaction of needs (especially self-satisfaction and
personal significance), than in terms of final outcomes. The list is long, but
other key causal factors driving revenue generation include communications
effectiveness, brand differentiation and loyalty generation.
Rule #5: Critical change occurs once competitors start to follow your lead.
This process of leading the pack starts with driving new and higher customer
expectations. Once competitors discover that your customers are influencing
customers of other products to buy your product because you have set new, higher
expectations, those competitors start to follow your lead. When this happens,
you have established a level of influence momentum that can be sustained for as
long as you protect the Alpha assets that got you there, such as product
performance, availability, company personality and customer support.
Rule #6: Deep, sustainable strength takes time. Like almost everything
else in life, developing deep sustainable strength takes time. Although a
company can become an Alpha in a short period of time, to sustain that
leadership status takes much longer. Customers, competitors, distributors,
referral agents and even employees need to become accustomed to seeing you in
the leadership role and following your lead. Your corporate management also
needs to adapt your company’s culture to that new lead position. Companies that
dominate their category make it a priority to maintain and protect their Alpha
About the Author
Wes Ball is founder of The Ball Group, located in Lititz, PA. It is a
strategic innovation management consulting firm that helps companies ranging
from Fortune 100 to medium-size regional companies create dramatic new growth.
He is also the author of The Alpha Factor: The Secret to Dominating Competitors
and Creating Self-Sustaining Success (Westlyn Publishing, 2008). Wes can be
reached at firstname.lastname@example.org.