The sweet spot. Every business has one. Sometimes, as leaders, we don’t even know we should be looking for it. If we find it, we can accelerate success and achieve sustained growth. The best news is that the sweet spot is unique—your company’s sweet spot is never the same as any other company—even those in your industry.
So what is it?
The sweet spot is the intersection of an organization’s unique capabilities with key needs of your target customers.
To identify the sweet spot, you must know a few key things about your customers and your business.
- You must be able to determine your organizations unique capabilities. When I work with clients they don’t have any difficulty saying what their capabilities are but often the list includes those things that they wish they did well, or things they do as well but not necessarily better than, competitors. This list is only those things your company does better than anyone else to the extent that a customer would call it unique.
- You must be able to identify your target market.
- Which companies most need what you offer? Specifically, which companies will most value your unique capabilities? Do you carry a wider range of stock and have more choices? Are you a low cost provider? Do you provide extensive after sales service? Remember, these are things you do in a unique way from your competitors. Different customers have different requirements—which ones require what you do best?
- Which companies do you make money on? You may think you make money on all of them but you don’t. Based on empirical research, author Jonathan Byrnes states that only 40% of customers are profitable in the average company (read the rest of the interview here). Which of your customers are truly profitable?
- Which customers can you grow with? As the market changes and technology introduces new business models, are the historical customers for your business going to be the same as your future growth customers?
Once you have identified the key capabilities and needs of your target customers, you look for where they overlap. This short list of “need” areas is your sweet spot and can fuel significant growth. Notice that in the above diagram, not all customer needs, as evidenced by the size of the “needs” circle, fall into the sweet spot. In fact, most don’t. Neither is the organization leveraging all capabilities—just those that are better or different in solving the specific needs of the targeted customer. This intersection is that powerful sweet spot that fuels growth.
So how do you decide which needs/capabilities to focus on?
It is admittedly part science and part art. Make a list of the top market needs and the top company capabilities. Look at the two lists together and begin to draw associations between them. How can a capability solve a need better than it is met today? How can a need benefit from a capability being applied to it in a new and different way? This iterative process will begin to open up opportunities to deploy strengths to better meet needs than has been done in the past. Often, there is no rocket science, no new invention, no heavy R & D; the opportunities already exist. The company just didn’t see them before because they weren’t consistent with traditional business practice and behavior.
Sometimes breakthrough opportunities are as simple as putting wheels on luggage. In 1972 Bernard Sadow invented the concept. Think about it. Wheels were invented around 8000 B.C. While man had found numerous ways to avoid being a pack animal in just about every conceivable situation, we still lugged our own bags through airports. But Sadow thought that was silly. Wouldn’t it be easier for everyone to put wheels on luggage?
At first, Sadow was ridiculed by luggage buyers who “knew” their customers wouldn’t want any such thing. However, once he got in front of Macy’s VP of merchandise, a frequent traveler himself, he found interest. For the first few years after luggage with wheels came on the market, male business travelers resisted it as “unmanly” (not unlike how women were slow to warm up to cakes mixes when they first came on the market), but with the high convenience factor it didn’t take long for its practicality to win them over. My thanks to Sadow for seeing what every other business traveler did not.
I have had clients double their businesses by simply entering new markets where the same need existed as they were currently solving in a different space; or by extending their product mix and being able to sell more things to their current customers; or leveraging different capabilities than they currently were—something they already did but didn’t realize the inherent value.
Coming soon, our CEO interview features CEO Chuck Koester on how Plastic Enterprises doubled their business in a few years by getting clear on who to serve and how to serve them. Be sure to tune in for that blog.
Ask yourself, what do my high priority customers need that I could provide that I am not? OR who should my high priority targets be and how can I reach them with what I do well? Find new growth opportunities by solving current and common customer problems—whether they ask for it or not.
Not sure where to start? We can help. Give us a call today.