Pause for thought: Why strategy matters
- February 12, 2016
- Posted by: Alan Feldberg
- Category: IBIS News
When change comes to an industry, businesses quickly fall into three groups – those that make it happen, those that watch it happen, and those that wonder what happened. So how important is strategy in determining which business you will become?
That was the question posed by Robert Snook, co-founder and director of Business Success Global and owner of multi-award winning vehicle accident repair centre MG Cannon, at IBIS Middle East 2016, held in Dubai.
Everyone knows the automotive industry is changing, and that an avalanche of evidence is mounting up and ready to topple down on some businesses, but, said Robert, ‘Ideas and information are nothing without implementation, it’s what you do with them that produces your results.’
He argued that too many people rush headlong into action without due investment in strategy. Concept-strategy-implementation are the first three steps to initiating or reacting to change. But he believes people fall into the trap of feeling like they are spending time on strategy, rather than investing time in it. So they bypass the strategy stage, preferring instead to be seen as proactive and go straight to implementation so they can ‘just get on with it’.
‘If they do that it’s already too late, their results will already have been determined,’ Robert said. ‘A robust strategy in times of change is crucial.’
He introduced delegates to a business function framework called the business revenue stream:
Essentially, this is about proactive management of an evolving industry. Robert explained, ‘We’re in a globalised industry, repairing exactly the same car throughout the world. Change will eventually reach you. It’s how you move first and manage those changes that will decide your future.’
Products or Services
Robert says the profit is in doing something to present your products and services that you’ve never thought of doing before. ‘Change isn’t about doing the same things everyone else does slightly differently. That’s what your competitors are doing. It’s about doing different things than your competitors are doing. That’s what customers notice’
When you think of the top companies, they can be summed up in a word – Volvo means safety, Heinz means beans – and consumers only know the top two or three brands. Robert said, ‘In highly consolidated markets, like soft drinks, 89% of the profit goes to 11% of the brands. The other 89% of brands are fighting over 11% of the profit. I’d rather be in the first group, where sales come to you.’ But when there no standouts, it all starts to look pretty similar from the outside, so why wouldn’t customers just go for the cheapest? ‘They don’t know what you know, and they don’t know what they don’t know’ Robert said.
Like everything in the industry, routes or channels to market is changing. Businesses need to assess their routes to market in today’s environment, and then prepare for what will be required in five and ten years’ time. They are not the same so how are we planning for the changes?
Where the sales lead is converted. For bodyshops, this is the estimate. But while that’s the case now, will it still be the case in the future? It’s possible that in the future the person who most influences if a customer comes to you is someone you’ve never met and never will meet, but someone who has spoken to the car owner on social media. This could mean do don’t get a chance to do an estimate.
Robert said, ‘The way people choose to buy will change. The way we create sales opportunities today will not be the same as it will be in the future.’
This is where the work is done. It’s easy to think our factories are a money magnet, and twice as many factories equals twice as much money. Actually, one plus one doesn’t always equal two. It can equal three, four or five, and for some in the industry one plus one will equal one. Strategy is the difference between the result you choose and the one you get by default.
This is about delivery on our promises to customers. The promises we make at the sales stage or even before that in our brand and marketing. Robert said, ‘We all know how we feel about companies that don’t live up to their brand promise. We only buy from them once.’
We know it’s easier to resell to an existing customer but, according to Robert, most bodyshops ‘wave happy customers out of the door with no plans to ever talk to them again.’ Client services is about influencing future purchasing decisions and building a lifetime relationship with the customer. Robert added, ‘It’s not our customers’ job to remember to buy from us. It’s our job to remind them. In future, if you don’t have a system to sell to your target customers, you’ll be at the mercy of their system for buying. And that system is like nothing you’ll have ever seen. Experience of a past industry can’t protect you against the technology of the future.
‘People buy on emotion. We’re a technical industry so we think it’s a rational process. It’s not. Seventy per cent of purchasing decisions are emotional, only 30% is rational. In the future, our young customers of today, their ten closest advisors on their choice of repairer may not be from this industry and never have had an accident. Facebook for me is like a fan base sales force that never asks to get paid for any referrals they provide for us.’
Robert summarised it as, ‘The only difference between a high and low performing business is implementation. Everything else is just an excuse.’