It’s natural and often advisable to get excited about “the next big, new thing” and focus your energy and revenue growth emphasis accordingly. However, just as there is continuing truth to the old business axiom, “Your best revenue growth opportunities are often with current customers”, it’s also true that companies abandon “old platforms” too quickly.
Many companies miss opportunities for revenue growth and profits in their own backyards. For example:
- Avery built a strong business in the 70’s on office labels and other products printable xerographically. However, with the PC becoming mainstream in the latter 80’s and resultant desktop printer explosion, Avery rushed forward into laser and ink jet printable products and essentially orphaned their “Copier” platform. The company did a great job exploiting PC technology for new products, but left a lot of unrealized copier sales behind in the process.
- The Xerox story with the graphic user interface (GUI) and other PC-related innovations is more sobering. Xerox’s Palo Alto Research Center (PARC) developed early PCs, the first GUI, the early computer mouse and laser printers, and other innovations during the 70’s, but Xerox never commercialized these. Instead, Apple ran with the GUI and incorporated it into their revolutionary Macintosh platform in ’84, which catapulted Apple’s revenue growth into the world’s largest market cap company and now a member of the DJIA.
- 3M avoided the Xerox PARC trap with its revolutionary Post-Itâ adhesives innovation and associated family of products in the 80’s. A 3M research scientist mistakenly came up with an unusual “removable permanent adhesive” technology in 1968. However 3M, not knowing how to tap this technology, did nothing with it for years…until they parlayed this “mistake” 12 years later into what’s become a $1+ billion business.
One company, (a current client) has to upgrade their software interface to Windows 8. They see this as required update rather than a revenue growth opportunity. They need to create a plan to add new features and functions to the existing product which are salable. This will give them an opportunity to go their significant installed base and extract more revenue from it. This is an example of not thinking through the “Product Lifecycle Revenue model”. Here are a few ideas for ensuring that you tap as much growth as possible within your current products/services lineup:
- Never call your own products “commodities,” nor allow your employees, suppliers or others to use “the c-word” regarding your products. Avoid the self-fulfilling prophecy of the “commodity” label.
- Know where your products are in their product life cycle. If their growth pattern suggests “mature” or “decline,” take a fresh look at customer compromises or other means of giving new life to existing products.
- If your products are consumables, figure out if there are “razors” you can offer which will drive the use of your “blades;” more on that here.
- Make sure that you pay close attention to existing products, their uses, and associated customer and market feedback that might lead to innovations. Unintended uses of your existing products often spawn adjacent channel opportunities.
- Ensure that your Selling organization and company culture enable both innovation and effective execution.
- Make revenue extension for existing platforms part of your business strategy and performance objectives.
Just about every product can be a revenue growth generator life after the sale: Auditing performance in the field, offering upgrades, training, complimentary products, additional services that build value, leveraging unintended uses, etc. Make it a point to understand the “Product Life Cycle Revenue model” and its opportunities post sale. New product development and associated market development are challenging and often costly, so make sure your innovation efforts also include ways to fully exploit the “precious” or “semi-precious” stones already in your offering and also exploit the post-sale revenue growth opportunities. If you don’t believe your products have a revenue growth opportunity after the sale, give us a call. We probably have a different idea. Subscribe below to Group50’s blog to stay on top of the latest trending topics:
About the author: Steve Sharp is a senior consultant with Group50® Consulting and heads Group50’s Strategic Execution practice. Steve and the Group50 team are all former executives with market-leading manufacturing and distribution companies who understand what it takes to drive innovation and related strategies, along with other aspects of product management and Sales effectiveness. Group50 has designed a series of strategic assessments, workshops and Strategic Execution tools that enhance business performance. Call us at (909) 949-9083 or send a note to email@example.com.
- Why Hire a Strategic Planning Consultant?
- Utilizing Continuous Improvement Tools at the Business Level
- Do You Need an Exit Strategy for Yourself?
- Doing Business in Mexico: Mexico’s Legal System
- The Pro-Business Mexican Government – Mexico as a Business Partner
- Brexit and The Impact on Business Strategy
- Customer Service Excellence Through Value Stream Mapping
- China vs. Mexico
- Operational Restructuring
- The Executive Conundrum With Hiring a Consultant