Business Strategy: Desperate For Revenue
This is a picture of a monkey backpack my wife bought for one of our grandsons today at OfficeDepot. He’s not yet 1 year old, but as you can see, the backpack is quite small. It’ll probably hold a diaper or two and a tube of mushed pea baby food. It was on sale for $6.49, including tax. Her choices were a dinosaur, a shark or the monkey.
When she got to the counter, the gentlemen who checked her out said … wait for it …, “Would you like to buy the extended warranty?” It was an extra $2. My wife said she was speechless, but the salesperson kindly waited for her to stammer, “Aahh … I don’t think so.”
I guess there must be significant risk of the monkey backpack refusing to eat bananas or having an ear fall off.
Companies desperate for revenue do silly things, such as selling an extended warranty for a $6 backpack. I’m sure the poor salesperson was just following the rules. (I wonder if they sell warranties on gum?)
Harder to see, and more dangerous, are the circumstances where the “any revenue is good revenue” sales force starts to bend strategy and drift from the core customer, core products or value pricing to make the easier sale, perhaps selling on price.
It’s easy to blame the salespeople in these situations, but senior leadership needs to look in the mirror. If the dogs don’t like the dog food, you won’t get repeat sales!
If you push hard enough for revenue, people can get creative in the wrong way. If you offer an extended warranty on a monkey backpack, someone had to set up the process for taking the warranty claim and repair or replacement. Perhaps they built a monkey backpack refurbishing center. Maybe they could leverage that expertise and refurbish shark and dinosaur backpacks also. You’d think someone would ask, “What the hell are we doing?”
This is an extreme example, but you get my point. If you spend more energy on creating a product or service that your core customer is wild about, or if you focus on deeply understanding and responding to customers’ pain, you’ll get further than if you try to trick them into buying something they don’t need or beating up your sales force.
Continued growth requires constant renewal, and that’s challenging. By all means, improve sales tactics, upsell fries with burgers and peddle hassle-free maintenance plans with new vehicles. But to achieve growth, you eventually need a strategic shift, additional product development, geographic expansion or additional services.
coaches CEOs to higher levels of success. He is a former CEO and has led teams as large as 7,000 people. Todd is the author of, Never Kick a Cow Chip On A Hot Day: Real Lessons for Real CEOs and Those Who Want To Be (Morgan James Publishing).