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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Pioneering growth strategist Cliff Farrah reveals how to grow revenue like a Fortune 500 giant Growing the Top Line: Four Key Questions and the Proven Process to Scaling Your Business delivers the step-by-step approach to topline growth used by some of the word's most successful companies. In this book, leading growth strategy consultant and author, Cliff Farrah, reveals the copyrighted growth strategy that he has developed over the last twenty years through 1,400 successful client engagements and input from leaders at Fortune 500 organizations. Featuring interviews from current and prior leaders at major corporations like Intel, Nike, Chase, Oracle, Raytheon, and the WHO, Growing the Top Line demonstrates that regular business growth isn't a mystery to be "hacked." Instead, Farrah distills revenue growth into a simple methodology that readers can use to successfully plan growth at their own companies. Readers will discover: * The four questions each business leader must ask him or herself when formulating a growth strategy * The sixteen different pathways to growth that those four questions unlock, and how to follow them Interviews with key leaders and executives who bring the author's framework to life Perfect for executives, managers, and entrepreneurs tasked with growing revenue, Growing the Top Line also belongs on the bookshelves of business enthusiasts and employees who hope to make a quantifiable impact in their work.
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Seitenzahl: 334
Veröffentlichungsjahr: 2021
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Table of Contents
Cover
Title Page
Copyright
Dedication
Introduction
Growth Strategy: What It Is and Why Companies Fail at It
Chapter 1: The Growth Matrix and the Four Key Questions
Customers
Goods and Services
The Revenue Matrix
The Four Key Questions: Customers
Chapter 2: Which CUSTOMERS Will I Serve?
Chapter 3: Which GEOGRAPHIES AND LOCATIONS Will I Serve?
Notes
Chapter 4: What GOODS AND SERVICES Will I Sell?
Note
Chapter 5: What BUSINESS MODEL Will I Use?
Chapter 6: The Growth Framework: The 16 Ways a Company Can Grow
Growth Pathways Defined
Some Examples to Consider
Notes
Chapter 7: The Process Overview: How to Build a Growth Strategy
Chapter 8: Creating the Team
The Three Critical Groups
On Trusting Your Gut
Necessary Grit
Chapter 9: Defining Business Objectives
Financial Objectives
Timing Objectives
Value Rules of Engagement
Strategic Objectives
Chapter 10: Internal Assessment
Who You Are
What Are Your Corporate Values?
Can You Pursue Inorganic Growth?
How Flexible Is Your Business Model?
Chapter 11: External Assessment
Political Factors
Economic Factors
Customer Analysis
Customer Acquisition Models – or How Clients Buy
Competitor Assessment
Chapter 12: Select Growth Pathways
Step 1: Pre‐distribute the Four Key Questions Worksheet
Step 2: Bottom‐Up Growth Framework Drill
Step 3: Share the Results
Principles of Use
Chapter 13: Select Strategies
Strategy Development Classics to Consider
Chapter 14: Model Returns
Model Revenues
Model Direct Costs
Assessing the Outcome
Iterative Loop
Chapter 15: Map Strategy to a Timeline
Harmonograms
Disruption of Existing Initiatives
Hiring Needs
Flawed Financial Modeling
Once You Complete This Step, You Have Finished!
Chapter 16: Navigating in a Storm: Growth in a COVID World
Your Existing Assumptions Are Likely Wrong
You Probably Don’t Know How to Talk to Your Customer Anymore
Supply Chains Are Suffering
It’s a Buyers’ Market
Revenue Opportunity Will Align with Government Investment
Successful Growth Becomes a Relative Metric
Work from Home
Educate from Home
Remote Healthcare
The New New of Food Service
Planning for the Recovery
Applying These Rules with the Framework
Notes
Conclusion
Acknowledgments
Index
End User License Agreement
Guide
Cover
Table of Contents
Begin Reading
List of Illustrations
Chapter 1
FIGURE 1.1 The Revenue Matrix
Chapter 6
FIGURE 6.1 Growth Framework
FIGURE 6.2 Growth Framework Output: Fortune 500 Company
FIGURE 6.3 Growth Framework Output: Start‐up
Chapter 7
FIGURE 7.1 Beacon’s Growth Strategy Development Process
Chapter 12
FIGURE 12.1 Growth Framework Output
FIGURE 12.2 Total Revenues by Growth Pathway
FIGURE 12.3 Revenue Model
FIGURE 12.4 Total Revenues per Plan Year
FIGURE 12.5 Revenues by Growth Pathway by Year
Chapter 14
FIGURE 14.1 Growth Framework Output
FIGURE 14.2 Total Revenues by Growth Pathway
FIGURE 14.3 Revenue Model
FIGURE 14.4 Total Revenues per Plan Year
FIGURE 14.5 Revenues by Growth Pathway by Year
Chapter 15
FIGURE 15.1 Gantt Chart Mapping Strategies and Tactics along a Timeline
Chapter 16
FIGURE 16.1 The Full Growth Strategy Framework
FIGURE 16.2 Beacon’s Pandemic Framework
List of Tables
Chapter 14
Table 14.1 Growth Pathway ROI Model
Table 14.2 Growth Pathway ROI Model Results
Table 14.3 Growth Pathway ROI Model (Pathway 14)
Table 14.4 Growth Pathway Profit Model
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Praise for Growing the Top Line
“Finally, a book from Cliff Farrah! Growing the Top Line is not to be missed. A fresh and simple framework to effective strategy by one of the greatest modern practitioners. A must read with Cliff’s humble style throughout.”
John Seebeck, Vice President and GM, eCommerce, CDW
“The combination of experience, discipline, drive, strategy, customer orientation, vision, trust, and execution are rare combinations in a person, but embodied in Cliff. This is reflected in the work he does as well as the talent he attracts and grows. Based on this alone, I would be surprised that anyone could resist the desire to read Growing the Top Line. Insights based on this type of talent are hard to come by.”
Frank Soqui, Vice President and GM Desktop, Workstation and Channel Group, Intel Corporation
“I have known and experienced Cliff Farrah’s approach to growth strategy for twenty‐plus years. I can say with confidence that he is truly a national treasure when it comes to growing companies—his expertise is unmatched. Growing the Top Line is a ‘how‐to’ for anyone serious about growth using a structured process and strategy framework that set the parameters for success. For defense contractors, this book should be required reading. Enjoy.”
LTG Paul(Gene) Blackwell, Ret. US Army. Former Vice President, Business Development, Raytheon Corporation
“Cliff’s systematic approach to framing growth opportunity areas for your business is worth the read. And yes—I’ll buy 2.”
Martin J. Curran, Executive Vice President and Innovation Officer, Corning
“Growth strategies can often be complex, which can lead to poor internal communication and misalignment on company objectives. Cliff Farrah’s book, Growing the Top Line, is filled with useful insight and a framework that can simplify this process and clear the pathway for success.”
Rami Rahim, CEO, Juniper Networks
“It is a rare opportunity when you get the chance to work with someone over a span of 20+ years and learn something new at each encounter. Growing the Top Line introduces Cliff’s pragmatic approach to business growth and is a must‐read for large companies and even growing start‐ups. Too often consultants tell you what to do but it’s a rare gem who rolls up his sleeves like Cliff does and helps implement the strategy he recommends. A ‘win‐win’ for all!”
Sue Spradley, CEO, Motion Intelligence, Board of Directors Avaya and Qorvo Corporations
“Cliff Farrah’s book is a must read for any business executive looking to grow. Cliff’s intelligent insights culled from his 30 years of experience are boiled down to a growth framework that can be used for businesses of all sizes and industries. And it is a book that bankers should require their clients read!”
Kevin Watters, former CEO Chase Card Services, JPMorgan Chase
“In Growing the Top Line Cliff Farrah teaches how to think with an objective eye as you plan growth. He can seamlessly move from being an insider to an outsider. He understands how businesses operate and how to win in the market—a perfect and unique combination.”
Sheri Dodd, Vice President and General Manager, Medtronic Care Management Services
“A really excellent book. Growing the Top Line takes core concepts that are familiar but organizes them in a special way. It takes an important but murky concept and makes it simple, logical, and measurable. I recommend it for any strategist who is charged with ramping revenue, at any company.”
David Maister, author of Managing The Professional Service Firm and The Trusted Advisor
“Cliff and his team have built successful handcrafted growth strategies for many large companies—I’m thrilled he is conveying that experience into this book so any business leader can apply his practical and proven methods to achieve their goals.”
Rob Hays, Vice President and Chief Strategy Officer, Lenovo Data Center Group
“Our longstanding partnership with Beacon has produced fantastic results for Qorvo. We have consistently grown faster than the markets we serve by implementing their growth framework.”
James Klein, President Infrastructure and Defense Products at Qorvo
“Cliff has built Beacon into a highly successful strategy consulting firm with a unique set of capabilities and attractive value proposition. In Growing the Top Line, he shares some of his secrets for success. Well researched and well written, it lays out for the reader a practical, robust, and comprehensive set of methodologies for driving profitable growth. Enjoy.”
Pat Burns, COO, Gibraltar Industries
“Cliff Farrah has developed and road‐tested a powerful approach to planning growth. Four simple questions and a repeatable process force traditional and non‐traditional leaders to examine the universe of growth paths and prioritize them based on business objectives and expected ROI. While this sounds simple, experienced strategists know just how difficult this is. With Growing the Top Line, we are all better equipped to achieve our growth objectives.”
Nancy Lyons Callahan, Global Vice President Services Strategy, SAP
“I have been living Cliff’s growth framework for the last decade at Beacon and am thrilled to see it come to life in Growing the Top Line. Cliff is sharing his simple yet comprehensive process for driving growth that has been benefitting Beacon’s clients for years.”
Oliver Richards, Chief Growth Officer and Senior Vice President Healthcare, The Beacon Group
“With many years of strategy, innovation, and transformational growth work under my belt since Cliff introduced me to the Beacon Growth Framework, I am even more impressed with its comprehensiveness and utility in cutting through the fog of complexity to reveal actionable insight than I was in that first aha moment.”
Rick Waldron, MOBE VP Strategy, Insights & Innovation
“For the past 20+ years, Cliff Farrah has dedicated his immense talents to better understanding the dynamics of company growth strategies. He is recognized as a true pioneer in the field. And now he’s sharing with you his proven blueprint to successfully teach and execute growth strategy development.”
Don Scales, Global CEO, Investis Digital, author of How to Lead a Values‐Based Professional Services Firm and The M&A Solution
“I have worked with Cliff and the Beacon team for over twenty years while leading growth at Pratt & Whitney, Eaton, and Trojan Battery. Each time I have found Cliff’s agile approach and insights to my business challenges to be on‐point and actionable. Cliff’s new book does an outstanding job of synthesizing their approach in a simple and usable way: a go‐to tool for leaders charged with driving substantive growth.”
John Beering, President, Arch Channel Retail, LLC,
“Cliff Farrah is one of the most innovative business strategists of today. Growing the Top Line is a must-read for every leader searching for the next growth opportunity.”
Doug Fletcher, author, How to Win Client Business, co‐author, How Clients Buy
“Cliff’s strategy advice and business savvy are naturally in tune with human behavior, and he has an innate ability to understand—and articulate—how systems, processes, and people come together within an organization to create culture and drive growth‐focused outcomes. Needless to say, I highly recommend Cliff as a strategist, a teacher, and a friend.”
Michael Woodfolk, President, University of Virginia Darden School Foundation
“Cliff’s success comes from an uncommon blend of data‐based evidence, market insights and intuition, and highly developed skill at questioning key tenets which contaminate growth plans with unreasonable expectations and flawed assumptions. Any plan you build for growth must incorporate Cliff’s approach, or you will surely be disappointed in the results.”
Dave Murashige, Senior Vice President, Aria Solutions
“Once again, we’ve learned that hope is not a strategy…rather it is a focused and deliberate set of actions that focus on the needs of our business today and into the future. In Growing the Top Line, for the price of a good meal, Cliff Farrah gives us a pragmatic, useful tool as growth strategists.”
Bob Roda, President and CEO at HemoSonics, LLC
“Cliff is a perpetual student of business strategies… dissecting the context, decisions, and outcomes they yield. He appreciates how well‐developed strategies integrate decisions about markets and offers and structures, and he gets that modern businesses are challenged with a ‘grow or die’ reality. As a result, Growing the Top Line goes way beyond traditional strategy frameworks to outline a rich array of growth pathways. It’s an indispensable roadmap for any business leader focused on enduring growth.”
Tom Lattin, VP Product Planning and Strategic Technologies, ZT Systems
“I have known and worked with Cliff for 15 years, and seen firsthand how much Beacon’s clients—many of whom are quoted here—value and have benefited from the sharp analytical framework (and focus on the real impact of any proposed solutions) described in these pages. As one of the founders of a boutique litigation law firm, I can say that Growing The Top Line carries lessons and insights for not just Fortune 100 companies and their consultants, but any professional services business that wants to not just survive, but thrive, in a challenging competitive environment.”
Ray Austoras, Founding Partner, Arrowood LLC
Four Key Questions and the Proven Process for Scaling Your Business
GROWING THE TOP LINE
CLIFF FARRAH
Copyright © 2021 by Cliff Farrah and The Beacon Group. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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ISBN 9781119779209 (Hardcover)
ISBN 9781119779193 (ePDF)
ISBN 9781119779186 (ePub)
Cover Design: Adela Smailovic
Cover Image: © The Beacon Group
To my bride, Kim. Thanks for taking a chance on a Yankee and saying yes those many years ago. I love all that you are.
Introduction
Twenty years ago, in the aftermath of the 9/11 attacks, I started a growth‐strategy consulting firm called The Beacon Group. Like the business world, and the entire nation, we were in uncharted waters, the economy was a wreck, and we needed a path to recovery. I thought the name was fitting because, as a sailor, I knew that beacons were a critical part of safe navigation.
We were pioneers, breaking new ground in a field we called growth strategy. This was 2001 – there was no Blue Ocean Strategy, only The Innovator’s Dilemma books, to guide us. No class on growth strategy was offered at B‐School. We learned through trial and error by working with clients to help them scale, codifying the growth lessons we learned along the way, and by repeating them with other client teams.
Originally written as a training tool for our employees, this book began as a tool to teach consistency, a metric of quality in the services world. There are plenty of one‐hit wonders in the business world, but we’ve always been focused on how the best of the best think about growth. Consistency was our goal and, in 2010, we began using our model to show clients how we developed our growth strategies. This model has been accepted as a standard with leading c‐level strategy practitioners at Beacon’s clients. This book contains interviews from current and prior leaders at major corporations, including Intel, Medtronic, CDW, Johnson & Johnson, Juniper Networks, Nike, Pratt & Whitney, Eaton, Motorola, SAP, Chase, Raytheon, the U.S. Army, Corning, EDS, Oracle, Crate & Barrel, Texas Instruments, The World Health Organization, General Electric, and Cisco, among others. You’ll also see learnings from successful entrepreneurs and operators of nonprofit organizations. Our model applies to every form of business.
This book serves two target audiences, although I think all growth strategists will find it valuable. Audience one is a first‐time growth strategist. This is anyone new to planning the top line, or revenue growth, of a business. Perhaps they’re an entrepreneur at a start‐up or a freshly promoted employee in a Fortune 100 enterprise. If you fall into this category, this book was designed to teach you how to think about the development of a growth strategy and to give you the tools to build your own.
The second audience is the seasoned growth‐strategy practitioner, whether you’ve been elevated to run strategy across your organization or you are looking to standardize a stale or scattered planning process. It is amazing how many companies follow a patchwork approach to strategy development and struggle to maintain quality of thought and consistency of information as they consolidate plan across their multiple business units around the world.
The past 30 years have been a wonderful journey, and I’m grateful to have had opportunities to serve clients around the world as they built and executed their growth strategies. This book shares what I’ve learned throughout my career, but especially what we’ve learned at Beacon, completing over 1,500 projects in the past 20 years for our global client base.
Please read this book more than once. I’ve tried to keep the tone conversational, but the message is layered and takes some consideration to fully absorb. The stories, the process, the method are all things that, as you gain experience, you’ll find you can revisit to find learnings that you missed when you read it the first time.
Growth Strategy: What It Is and Why Companies Fail at It
Harrison sat in front of his computer, looking at but not seeing the monitor. His brain was racing, and he hadn’t slept well in over a week. A former engineer, Harrison had been put on a management development rotation. So far, he’d worked in product development, manufacturing, sales, and now was in a product marketing role. Always a producer for his team, this was an entirely new environment for him. He had done some training on marketing, but it was mid‐January, and he had been given the charter to lead the development of the strategy for his product line with a briefing due in 8 weeks for review with the business unit leadership.
It was overwhelming – where to begin? He had last year’s plan, and a template to fill out, but it felt wrong – formulaic, stale, checking the box. Who cared about market segment share, or average sales price, or all the other tables that he had to fill out? He knew what it meant to design a product and manufacture it and knew that both departments were stretched thin. He felt the challenge of selling something new as the company had a retiring sales force and a new requirement for a new “solution” sale. In his gut, he felt that the reality of feet on the street didn’t line up with these forms that the company had used for the past decade. His boss told him to just update for this year’s plan, but rather than mailing it in, he felt the awesome responsibility of doing a good job.
If you work in the corporate world, at some point you will be or have been Harrison. And you were right to feel the disconnect between what you knew the real challenges of the job to be and the traditional annual planning document you were given.
When you mention growth strategy, a few different reactions occur. If you are telling your friends what you do, their eyes glaze over. If you are being told you have a new role, you may panic a bit. If you are the one letting people know they are now responsible for developing it, you may be a bit concerned about what you will get back from them.
Growth strategy development is the application of strategic thought to the challenge of growth. In its best form, it clearly articulates how you are going to achieve an objective. What you will do, who will do it, when it will occur, and why it is necessary to reach your goal. It reflects the strengths and weaknesses of your organization, the market landscape you will compete in, the adversaries you face, and the resources you have.
In the past 30 years, I’ve been lucky enough to work with the best of the best at Fortune 200 clients in healthcare, defense, financial services, software, hardware, professional services, industrials, pharma, consumer goods, technology, energy, education, and retail.
There are several key learnings that emerge when I look back on their growth strategy practices.
Everyone has a slightly different approach, although the very best have a structured, teachable, repeatable methodology.
If you “know,” you know that it’s all about the team that is executing.
There are core market elements universally assessed by the best of the best.
New business models have become recognized as disruptive and powerful tools.
Where you play geographically matters.
Timing is everything.
Our process and framework incorporates these concepts in this book.
Successful growth strategists are clearly not dreamers. They recognize the challenge of implementation and are able to harness the knowledge and experience in an organization to mitigate risk. In fact, successful growth strategists are risk mitigators, not risk takers. They are pragmatic and know that successful growth is measured not by what you promise, but by what you deliver. And delivery is extremely easy to measure for most clients by answering a single question: Did you hit the top line revenues associated with the plan when you were supposed to?
If it were just about sales, this would be a relatively easy exercise, but sustainable growth has to also be about return on investment (ROI) and profitability. If I gave you an unlimited budget, then inorganic growth, or growth through acquisition, would let you easily hit any revenue target. You would just buy companies until their combined revenue hit the goal you had. Problem solved, right?
While for some companies acquisition is a core weapon in their arsenal, generally the mixed bag of acquired company profitability and the ongoing challenges of integration of the different companies would likely fail on sustainability and ROI. A reality of business, especially large enterprise, is the sensitivity to a predictable, defined return on investment, so we will consider that in our process. Cost matters, and as you think about a successful growth plan, it has to include the level of expenditure required to achieve that growth.
Simply put, growth strategy is a plan to drive revenue growth. More practically, it’s a way that leaders of businesses think about how they will align resourcing with opportunity to achieve a goal. As an optimist coming through the ranks in the consulting industry, I’ve always believed that there is no growth goal that is unachievable if the will is there. History shows that to be true, but it’s never without extraordinary challenge. For sustainable success there is always a balancing act that you find best represented in the profit equation:
You will always hear the critique from reviewers that a plan is “pie in the sky.” By that, they really mean that the resourcing to achieve the plan isn’t reasonable, or available, or within plan. We will come back to the cost side later, but what’s important to realize is that cost cutting is a finite game. You can only cut cost to what is required to produce the good or service being offered. Revenue, however, is infinite, limited only by imagination and determination.
That’s how you think about it, right? Entrepreneurs understand this well, as do newly minted general managers (GMs) or even those like Harrison, tasked with taking point on an annual plan. You can literally do anything to drive growth! It’s overwhelming. Hell, everyone today wants to be visionary, a disruptor, a magical leader of change in the markets. Consistent growth strategy development takes time, focus, effort, and knowledge.
No one exemplifies these qualities better than James Klein, one of the most successful, accomplished strategists I know. James is the President of both the Infrastructure and Defense Products Division at Qorvo corporation, as well as their newly formed Qorvo Biotechnologies division. I can’t show you his financial performance in the decades I’ve known him due to disclosure restrictions, but if he was a major league ball player, he’d be in the hall of fame. James has created more value for his employers in his career than just about anyone I know, but he doesn’t forget how he got there.
I grew up in technology as an engineer early on and then really went into project management and program management. And then I took over a group. So now I had a “business” to run. This was the first time I had to think – “Okay, well, I’ve got this thing, now what in the world do I do with it? Where do we go? Where do we invest money? What business do we want to be in?” It may have come naturally to me because of my dad. He had retired from the Air Force and started his own couple of small companies and I remember what we would usually argue about was where we should invest money. So strategy was an early thing to me. Since maybe in my teens I’ve thought about how you grow a business and so it’s been a part of me for a long time, but probably reduced to practice when I first took over as a director of an organization.
James is a master of growth strategy development and execution. He’s pretty rare. You come across people who can think about how you could grow, but very few of them are capable of driving that growth. I really enjoy his recollection of where he started:
Early on… I was at TI (Texas Instruments) and I took over the space business. We were trying to decide what we had. We had started the space business on one very particular set of products, and we said, “now that we’ve got this, how do we expand it? Where else do we go?” So the first thing for me was just try to look at, what did the market look like, and it is particularly hard on the defense side to understand markets. What are we good at? What were the markets? How big could we be? What did we need to invest? And we went through that process. Now you know at TI and other large companies that usually have some guidance, you fill out these charts and so you get a little bit of guidance on how to move forward. But I would say it was really trying to understand what the market looked like and how did that intersect our technology.
I am a really big James Klein fan. And he’s representative of the people I sought out to participate in this book.
Throughout this book, I’ll share stories from varied perspectives at a broad array of companies. Companies matter, because they are all very different. Companies are literally “creatures” that are organically composed of people with a shared value system. You can’t say “Apple announced today…” and believe that it’s only a corporate act. Any announcement has been approved by legal, and not just legal: Katherine Adams, Apple’s General Counsel (at the time of writing). It was also likely approved by Luca Maestri, Apple’s CFO (at the time of writing), and I’m pretty sure that Tim Cook signed off as well. Investor relations, marketing, production, and sales all had to sign off on it, and because of the announcement lives are in flux. People will be hired, companies will be bought, people will be fired. Whenever I discuss the success of a growth strategy of a large company, I like to use the 50× rule. Take the number of direct staff involved in executing a strategy and multiply than number by 50. That’s how many people within the company it will take for a plan to succeed, and any one of them can potentially cause it to fail.
This book is meant to serve as your playbook to develop clean, clear, effective, pragmatic, and executable growth strategies. It’s for both new and existing practitioners of our art who aspire to become scientists of the discipline. Through the use of parable, framework, and process, my goal is to educate you about the method used by some of the most successful companies in the world. This method includes organic and inorganic growth, regional and global footprints, large‐scale enterprise, and entrepreneurial ventures.
The truths of growth are physical laws that we are all bound by. Ideally, you read this because you want to learn, but even if you’re being forced to read this for class, you’ll learn something that could create a market of billions for you someday. So, open your mind, be ready to think, and enjoy learning from some of the best and brightest business minds in the world as they tell you their story. This is incredibly fun stuff, and if you are lucky enough to be responsible for this function, then you know it’s pretty rarefied air and should be savored.
CHAPTER 1The Growth Matrix and the Four Key Questions
Growth is an infinite game, with the revenue line limited only by your ability to convince new or existing customers to buy the products or services you currently or will produce.
Ever think about how to bound the question of growth? I’m a growth strategist, so I worry quite a bit about the sources of growth. Where does growth come from?
Turns out the question has a simple answer.
All revenues come from two variables: (1) customers and (2) the goods/services they buy. Full stop. It’s really that simple: who buys and what they buy. Every business, from the first fish seller bartering his daily catch for salt to the world’s biggest consumer goods company, grapples with these two fundamental questions. Let’s talk about customers first.
Customers
There are all kinds of customers and they have different values to companies when considered over a time period.
Kevin Watters is blazing fast in every sense. Physically, he’s a marathoner who is a top competitor for his age group. He processes information quickly and insightfully. He is quick to offer his help, and his fast‐tracked career is an incredible success story. Currently retired and an adjunct professor at Tulane’s Freeman School of Business, Kevin started his career in consumer packaged goods working for Proctor & Gamble, where he received his “MBA on top of an MBA” through their training program. He then went on to dip his toe in entrepreneurial waters, got married to his amazing wife, Fern, had their first child, and then he needed to go back into the corporate world. He found his way into the world of online banking in 1999 and never looked back. He joined Bank One, and was noticed by Jamie Dimon, who asked him to take over as President of their Consumer Internet Group. From there Kevin took over wholesale banking. When Bank One was acquired by JPMorgan Chase, he took over as CEO of business banking and grew it to over a billion‐dollar business. Being one of the few businesses that managed credit well through the Great Recession, he was asked to fix the wreckage that was the mortgage portfolio, which he did. In his final role at JPMorgan Chase, Kevin took over as CEO of their credit card business. We talked about the true value of customers in the world of financial services.
Banking is a little bit interesting. It doesn’t matter what age you are when you go into Starbucks and you buy a latte. Whether you’re 25 or 65, your latte is the same price. Well, in banking chances are if you’re 65, you’ve got a lot more money than when you were 25. So part of the game is for your existing customers to stay with you, with the more money they have. In your 30s you’re borrowing for your mortgage, in your 40s, your investment account is growing so great, let’s make sure we’ve got your mortgage and your investment account. You know in your 20s, I want to make sure you’ve got a credit card and I have your checking account, but I’m getting everything else as you grow. Within your life I’m growing with you, and then I’m getting your retirement account. I’m growing up with you, which is a little bit different than other products where you know, like you’re buying your latte if you’re 25 or 65, is still $4 and thanks. Much different in the banking world.
I loved the insight Kevin’s example gave. This is just one industry. Every industry and business has their own version of this.
As strategists, there are a few important things to consider when you think about customers that I want to talk a bit about. Some basic rules of thumb:
All money comes from your customers.
All customers are not equal.
Customers buy differently.
All Money Comes from Your Customers
Sounds obvious, but unless you are a business owner, or tasked with top‐line growth, it is very easy for businesses to lose sight of this simple fact. Why? Because you get wrapped up in your everyday work process, and you can’t see the clear link between your customers and your paycheck. At Starbucks, it’s easy to see how customers fuel the business. It’s a direct transaction: A customer orders a latte, swipes a card, and gets a latte. Any employee can see how that customer relates to their paycheck.
However, in some industries there are indirect customers whom you serve. Healthcare is a great example. Depending on where you live in the world, most providers are reimbursed from either a public or private “payer” (insurance company). Money doesn’t come from patients, right? Well, ultimately, Medicare, Medicaid, and military insurance programs are funded through tax dollars. In those public programs, taxes come from the country’s citizens, who are, effectively, its customers. Private insurers are paid by employers or individuals, so even though it’s indirect, the customer still pays the bills. These are extreme examples, but you get the point.
We also have many clients who worry about their customer’s customer. That is, let’s say you manufacture a radio component that is part of the Tesla system. You aren’t really designing functionality for Tesla; you are designing for Tesla owners (the end users) or your customer’s customer. So even though your bills are paid by Tesla, without Tesla’s customer base you won’t get paid for very long. That means you likely work to understand the end user’s wants and needs. As we consider the source of all revenue – our customers – we have to be sensitive to the indirect trail that the money may flow through.
All Customers Are Not Equal
Every business has preferred customers. Starbucks has their regular early morning work crowd, and they also happen to serve any out‐of‐town tourists who strolled in that day. Amazon has major named accounts that spend billions with their Amazon Web Services (AWS) business, and they have Cliff Farrah, who spends a whole bunch during the holidays, but is otherwise pretty much a non‐event to their business. All customers are not equal. As a strategist it’s important to understand and grow the best sources of our revenue and make sure we are focused on them.
Customers Buy Differently
Not every customer acquires in the same way. Some pay cash, others use credit. Some want to own, some want to rent. Some pay by the month, some pay by the drink. As strategists, we have to make it easy for all our different customers to provide us with revenue.
Now let’s shift to the second question: What do the customers buy?
