No doubt you have all heard of the Golden Rule, which is often summarized as, “treat others, as you would want to be treated yourself.” The beauty of this rule is in its simplicity. It turns out there is another simplistic rule–the mnemonic is GoLDeN–and applies to how you can help turn your organization into a reliable growth machine. This is a structured approach that you can use as you plan for the upcoming year and how you are going to achieve year over year growth.
Let’s unpack what the four elements of this new Golden Rule of business are:
G = Growth. What we mean here is planning on growing business in your existing accounts or customer base. If your sales people who go out and land new customers are considered hunters, growth here is the responsibility of your farmers–your people whose focus is on growing an existing customer relationship by, say, selling them new services, products, or even by expanding into a new division. Don’t overlook how important, and cost-effective growing your existing accounts can be. This is the cheapest customer acquisition available to you and hence the most profitable. But can’t live on growth alone as eventually you saturate your customer base.
L = Loss. This is a category that counts against your organization’s growth, such as when you lose a client entirely through a bidding process or if someone phases out the use of your product. The key here to focus on two areas: How can you win back this customer the following year? And how can you work to prevent losing them in the first place? In both cases, you’ll need a team of people who are allocated to putting real thought and effort into finding ways to win-back these customers back into the fold where you can again think about growing their account.
D = Decline. Customers that are declining are those who haven’t left yet, but are clearly placing fewer orders and becoming less prominent in your business. Your goal here is to connect with these customers and find ways to turn them into growth opportunities rather than see them continue to dwindle until they, in a worst case scenario, become a loss. This one is the job for our farmer sales people, working relationships and finding problems your firm can solve.
N = New. This is the fun category that everyone enjoys thinking about–winning new business. This is all about letting your hunters loose to track down fresh meat to bring back to the pack. These are new relationships with firms that have not done business with you before, or at least, not in a bunch of years. But it’s worth noting that sales and marketing to land new customers is expensive. Just think about the cost in time and money for travel, entertainment and filling our RFPs. That’s not to say it’s not a crucial part of your business–it’s just a reminder that growing business from existing customers can more cost effective at times and thus should not be overlooked. So it’s worth being thoughtful about how much time and effort your organization devotes to landing new business. Set goals about how many new accounts you need to hit your numbers as a way to stay in balance.
With our definitions in hand, it’s time to do some math. If you want to know if your business is growing or not, just fill in the equation: G–(L+D) + N = Growth (+/-). That’s your Golden Rule for growth. Sure it’s a simplistic way to look at your business, but it’s also a highly effective way to identify where you strengths and weaknesses lie. It also serves as a great diagnostic tool to see where you need to make more of an internal investment. Use this as a scorecard for your business where you measure the pluses and minuses each year compared to what you planned and forecasted for. Then make the adjustments necessary to make sure you have a nice and healthy positive number as a result. Are declines up–why? What can we do to staunch the bleeding? Are new accounts up and growth revenue down? How can we bring that more in balance?
The more time you spent finding good answers to questions like these, I promise that you’ll be even more pleased with the end result. You’ll be GoLDeN.