Do Business Well

Not all of these formative impressions are under the direct control of the supplier, but that does not make them less powerful. Think about what is said in the press by industry observers or about word of mouth from friends or colleagues and how all of these affect a product’s or company’s credibility. That is why endorsements and testimonials are such powerful tools and why market leaders frequently showcase their most prominent and prestigious customers.

Glance through the press releases of market leaders and you would fine numerous references to other market-leading companies. Siebel Systems counts Schwab and IBM among its customers, and IBM makes it known that it not only is United Parcel Service, Inc.’s, supplier of choice but also is scooping up contracts with several new companies in the e-business field.

For market leaders to construct a larger-than-life market presence, their messages have to resonate with customers. Customers may understand your value proposition, appreciate how you are different, and accept your credibility on the basis of your well- respected customers. But unless they feel that you are committed to their well-being, they may still not pay attention to you. Continue Reading »

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New market leaders know the importance of building a larger than-life market presence.

The Discipline of Market Leaders talked about the value proposition—the notion that as long as a company provides the best cost, best product, or best solution, it will catch customers‘ attention. Though that idea certainly held true when only a handful of market leaders had distinguished themselves, today, offering the best cost, best product, or best solution has become par for the course. Why would customers settle for anything less than the best— whether it is in price, product, or solution—when suppliers are fighting one another to provide all of them? The fact is that unique value propositions such as Wal-Mart’s “Always the low price” are simply no longer unique (think of Target Stores, Inc.’s, or Costco Companies, Inc.’s, essentially identical claims). Likewise, McDonald’s isn’t the only place that offers a dependable hamburger experience, while Nike, Inc., isn’t the only athletic shoe positioned _as the best product. In the technology field, it is hard to find a vendor today that doesn’t claim to be a best-solutions company. Continue Reading »

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Market leaders choose their customers very carefully because they know that they will be judged by them: Nothing says more about a business than its customers. Unfortunately, conventional wisdom can’t help in this task. The first rule in sales is, go after the low-hanging fruit—that is, the easy-sell customers—rather than clamber for what is hard to reach. But this is good advice only if there is a plethora of fruit on the low branches, and in the era of customer scarcity, the pickings are getting slimmer. The real plums are in the high branches.

Market leaders deliberately pursue some of the most difficult and demanding clients they can find because they know that satisfying these customers will stretch their abilities and help them become better at what they do. I call these stretch customers.

But not all tough customers are desirable matches. Some of them are simply the wrong ones to have because their demands don’t play to a company’s strengths. That doesn’t necessarily mean they are undesirable for other suppliers. Picky, critical eaters who want personal service could be ideal stretch customers for a swanky full- service restaurant but a very bad match for McDonald’s. Continue Reading »

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Especially for companies on the cutting edge, the greatest challenge of the New Economy isn’t coming up with a new product but making sure that their customers understand what it can do and how to use it. The new market leaders have mastered this problem with powerful tools of persuasion and assistance. Not only do they focus on their customers; they also work hard to make sure their customers accept the new ideas, fully understand them, and benefit from any available improvements and innovations. This is no easy task.

Human willingness to change behavior is clearly limited. One example that comes to mind is the Massachusetts Turnpike. Some time ago, the Mass Pike introduced new electronic tollbooths for its fast lane. After arranging to prepay the toll fees or have them automatically deducted monthly from a bank account, drivers could zip through the toll gates while a windshield-mounted gadget recorded their passage. Continue Reading »

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Keith Krach, Ariba’s chairman, chief executive officer, and cofounder, told me that to launch the company, he focused on signing up a few large companies with nearly unlimited buying power. After attracting Cisco, FedEx, Bristol-Myers, Chevron, Hewlett-Packard, IBM, and companies of similar ilk, it wasn’t long before more than twenty thousand sellers registered to make their product lines available through Ariba’s network.

The collaboration with Cisco began even before Ariba had a finished product. Krach recalls, “They were about ready to develop their own [network, but when] we blindly exchanged product specifications, there was a ninety-five percent overlap. Then we had them meet our people . . . [who] wanted to review our quality assurance process, wanted to see all our product development schedules.” That initial effort eventually resulted in Cisco transacting $1.5 billion annually across the Ariba network. Continue Reading »

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The second strategy focuses on solutions that address the specific circumstances of individual clients who are eager to break new ground. In other words, this approach concentrates on exploiting new opportunities and resolving ad hoc problems.

Traditionally, this has been the strong suit of strategy and operations consultants, whose depth of knowledge and years of experience give them a well-honed capacity to solve knotty problems. For a critical perspective and fresh thinking, customers call on McKinsey, A. T. Kearny, BCG, or A. D. Little—to name a few of the larger firms—or any of multiple smaller specialists. Continue Reading »

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Consumers in this category—self-reliant, open to new experiences, and ready to spend a lot of time at the task—are consummate shoppers. They read Consumer Reports, examine stores and Internet sites, and constantly pursue sales, bargains, and innovative products. Some virtually live to buy; all regard shopping as time well spent.

Searchers relish the feeling that they are in charge of their lives and like to participate directly in whatever is the task at hand. Driven by curiosity, a sense of anticipation, and an itch to be in the forefront, they like to be first on their block to own a new product. They boast of getting the best deal and return home from an exhausting shopping trip with a real sense of victory: They have made their own decisions, and they were the right ones. Continue Reading »

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The horizontal axis of our matrix represents the degree to which customers are willing to seek advice or help.

The self-reliant people, in the left quadrants, like to mow their own grass, but those on the right prefer to hire a maintenance service and free up their time for other tasks. In a restaurant, some prefer to help themselves at the buffet or use the take-out service, while others don’t mind waiting to be served at the table.

There’s more at work here than time pressure alone: Customers clearly occupy a range of attitudes, from do-it-myself independence to a heavy reliance on others. A supplier who confuses one type (”I’m just browsing; I’ll call you when I need help”) with the other (”Could you show me what’s available and help me make up my mind?”) does so at her peril.

In the process of purchasing, a customer’s decision to rely solely on himself or to leverage others depends mainly on how complex he perceives the decision will be. Continue Reading »

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