After researching and testing what really creates Alpha status for a company to drive decisions and force competitors to follow its lead, we were a bit surprised at many of the findings. Some were completely counter-intuitive. Some directly contradicted well-established “rules.” Others seemed quite intuitive, until we learned how customers, distributors, and influencers expected them to be addressed.
Here are some of the BIG SURPRISES we discovered through the Alpha Factor research:
- You don’t have to be the biggest to dominate decisions in your category — Many smaller companies and brands are actually the decision leaders in major categories. That puts larger, better financed companies who could be driving higher profitability on the defensive every day. They believe that they are up against competitive pressure that they cannot control, so they find themselves in pricing battles that cost them millions of dollars in profit year after year.
- Price is the last decision criteria applied, not the first — Many marketers wrongly believe that price is the primary decision factor. Those marketers who recognize that price is only the cumulative conclusion of weighing all other decision drivers reap significantly more profit, generate dramatically greater customer loyalty, and increase their stock value.
- You don’t have to be the first to market with an idea to be the dominant marketer of it — Far too many marketers have fallen for the myth that first to market means first to the top. In fact, “smartest to market” is first to the top. That usually means the one that has the most “influence” among customers, distributors, referral agents, and competitors. Maintaining that position is also a function of continuing to be the most influential in the category, not history of being first there.
- You don’t have to be the “best” to dominate — Best quality has been the “holy grail” of marketers for more than two decades, while many producers of lower quality products dominate decisions and marketing in their categories. Quality is only one of two dozen possible differentiating factors, but it is not the definitive driving factor for success in most categories.
- Competition is desirable, because it can be used to support your own marketing ends — Competitors are your best marketing support mechanism…once you’ve learned how to get them to let you lead the pack. The trick is learning how to change drivers of decisions, so you control customer expectations and have everyone looking to you for leadership (even if you’re the smallest in your industry).
- Perceptions proven through practice drive decisions — Some marketers have wrongly believed that perception is the target. Only focused practice and delivery of what customers deeply want (vs. what they say they want) drives Alpha status. The real trick is in knowing what customers really want — no matter what they are using as drivers of decisions today.
- You can predict who has the potential to change their market share (and it doesn’t have to do with the factors you probably thought were important) — Changes in market share often occur without dependence upon pricing, new product introductions, expansion of distribution, or other traditionally-considered factors, even though those factors are often “blamed” for such changes. Knowing the real causes of share change and using them to your advantage can create greater growth and greater profitability for your company’s products.
- Dramatic shifts in market share can occur in short time periods, even in well-established and highly-competitive categories — Changes in market share often occur in such short periods of time that many marketers are seemingly surprised by those changes. (We have taken products from the number five or six position to number one in as little as five months without discounting or new products.) They can, in fact, often be predicted long before any share change starts to occur… not by watching what marketing strategies it is using, but rather by measuring its Alpha Factor, the earliest indicator of significant change (up or down).
- The customer decision process is extremely complex; but it can be understood, quantified, and influenced without depending upon price as the critical factor — Many marketers struggle with a deep-seated belief that customer decisions are often made for reasons that are unpredictable and uncontrollable (except through price tactics). In reality, the decision process is quite complex, but it is quantifiable and understandable, which means it can be predictably influenced without price as the key driver.
- Profitability is driven (at least on the revenue side) by how effectively you can influence the customer decision process and the strategic decisions of your competitors — As with the previous point, in learning how to control and lead decisions in your category, your price leverage (and, therefore, your profitability) is dramatically increased.
- Measuring outcomes often blinds one to the causes that drive them — Most companies measure the wrong things in order to drive growth in revenue and profitablity. Alpha Factor assessment lets you discover the critical causes that drive the outcomes you want to see, so you can measure them. You can only manage and affect causes, not outcomes.
- Differentiation is an outcome, not a cause — Many marketers wrongly look at differentiation as a “cause” that can and should be managed. It is far more effective for creating Alpha leadership to understand and manage other real causes of differentiation that will drive growth and competitive control.
- You can create a process for generating perpetual growth — It is not easy, but perpetual growth is possible, if you know how to manage your competitors’ and your customers’ decision-making process. The trick is in understanding what will continually give you leadership in driving customer expectations, which puts you in the controlling position to manage growth in your category.
- Innovation has to be more than new product development — Innovation is far more critical in areas other than new product development. The trick is in knowing which seemingly minor areas for innovation can drive dramatic new growth for both immediate sales and profit and for long-term enhancement of your Alpha potential.