Category Archives: Uncategorized

• An Alpha’s New Year’s Resolution

  Saturday, January 2nd, 2010 by Wes Ball

  While most company owners/managers are resolving to increase their business next year by increasing “value” and/or “quality,” an Alpha is resolving to banish those two words from its vocabulary.

  You can bet that Steve Jobs is not whipping his team at Apple to create more value or quality.  No, he is entreating them to discover what people really want to buy and how they can provide that in a way that will make new customers pay almost anything to get it.

  What’s wrong with “Value” or “Quality?”  Just about everything that makes a company capable of dominating its markets and becoming an Alpha (or even gaining some of the benefits of being an aspiring Alpha).

  “Value” is undefinable in useful terms.  It is fine in concept as a final outcome that can be recognized in a product’s sales. But do you or your employees know what it really means to customers in your industry who are evaluating your products?  Can you or your employees define “value” from your customers’ perspective that doesn’t include the word “price?”  The problem is that “value” in its traditional definition means far too many different things to far too many people.  And the rule is: If you can’t precisely define what it is, you can’t hope to create it.

  “Quality” on the other hand means nothing, if it is not what a customer wants to buy; and in most industries quality has not proven itself to be the critical factor people wish to buy.  Even more devastating is the fact that the pursuit of quality is a process that limits variance or change.  Typically this is applied in the manufacturing process, but it is all too often carried over into the “value-creation” process, as well.  The result is that predictability and efficiency become more important than the flexibility and creation of greater potential that has to be at the core of every Alpha company (or company that desires to become an Alpha).

  So, what’s the alternative to using the word “value?” Start focusing upon discovering and defining what people wish they could be buying.  The best way to discover that is by understanding what experience people wish they could have, when they buy and use products sold in your category.  People don’t buy products for the product’s sake, except in survival situations.  And they REALLY don’t buy “price” (no matter what you have heard throughout your life).  They buy an anticipated experience and a set of internalized feelings about themselves.  The product is only the functional conduit that can deliver that experience or set of feelings.  (If you are new to the Alpha model concept, then you need to read The Alpha Factor in order to understand how these are the core elements of innovation that drive predictable, self-sustaining growth.)

  Turning “quality” into “growth potential” also requires changing your perception of how customers buy.  Limiting variance is fine in manufacturing, but customers don’t like limitations or lack of change.  The marketplace thrives and feeds itself upon change… in products, attitudes, perceived needs, and behaviors.  The company that locks itself into limiting change in its approach to the marketplace is dead before its starts.

  The Alpha company (or the aspiring Alpha) focuses upon understanding the core experiences and feelings customers desire and then drives change that constantly focuses potential customers on the next change.  When Apple introduces a new product, it only feeds the desire to know what the next new product might be.  When MacDonald’s introduces a new menu item, customers try to guess what the new trend being set is and what might be next.  What makes these work is that customers recognize a logic behind each new introduction that is a continuance of the constant striving toward delivering better and better experiences and self-feelings.  The Alpha “owns” this process, while competitors can only copy or try weakly to compete against it.

  Make your New Year’s resolution now.

  Drop the word “value” from your company’s vocabulary. Instead, start discovering what people wish they could be buying (in terms of experience and feelings about themselves).  Then discover how you can fulfill those desires with the “things” you offer in the marketplace.  The result will be far greater “value” perception that can demand much higher prices for longer periods of time with greater control over competitors.

  Drop the word “quality” from your concept of innovation. Focus upon driving change.  Create a process for constantly delivering the next logical step in fulfilling the experiences and self-feelings your potential customers want.  The result will be an increase in your control over the market and greater profit than you could ever have expected before.

  My wish for you is that 2010 will be the most profitable year you have ever had.

  Want to learn more about how you can apply the Alpha model to your company, so you can create more profitable, more dominating innovation?  You can get in touch with me either through the website at www.thealphafactor.com or by emailing me directly at w.ball@ballgroup.com.  I would be happy to talk with you further about how you can make yourself into an Alpha and sustainably grow your profits and sales.

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• Is there hope to grow right now? You bet. So get growing!

  Sunday, November 22nd, 2009 by Wes Ball

  One company I am working with is in the midst of their best sales month ever.  It’s in an industry that is hurting badly.  Many of its competitors are closing their doors.  The difference is that this company is using Alpha innovation to drive growth.

  What is Alpha innovation?  It is the process of discovering what people really want to buy both in function and in ego-satisfaction, how they want to buy that, and then providing that to them.

  Truth is, almost any company in almost any industry could be growing right now, no matter what the economy seems to be doing or what prospective customers believe about their futures.  There are real needs among all customer groups.  You just need to understand better how to discover what they want to buy and how they want to have it presented to them.

  I’m not going to take you through the entire Alpha Factor model, which provides you with the template for finding such growth opportunities.  But I will share the core tool that will determine whether or not you even have a chance to become an Alpha.  I will also share three steps to making yourself more capable of becoming an Alpha.

  The #1 secret to creating sustainable growth in any economy at any time is to create a “culture of research” in your organization. All Alpha companies use market research to define growth opportunities.  So do many non-Alpha companies. Understanding the difference between effective research that leads to (and sustains) Alpha dominance and typical non-effective research is key to making your organization self-sustainingly successful.

  • Step #1:  Start by recognizing and believing that you don’t have all the answers… no matter how long you’ve been in the business.

  The biggest barrier to becoming an effective “learning” organization is the self-delusion that you know how your market works.  Here is the truth:  you may know how it has worked in the past; but you have little or no idea what tomorrow is going to look like.  I know, that’s hard to hear.  But here’s why it is true: tomorrow will be created by someone you don’t know, using information and insights you don’t know.  That is how industries are revolutionized and real sustainable, disruptive innovation comes about.

  If you can recognize and admit your own inability to think beyond what you currently know, then you have a chance to really find new answers.  I have been doing innovation-focused research for more than two and a half decades, and I still am surprised at what I discover in our research that neither I nor my clients knew or, in many cases, even guessed.  Customer needs and expectations are constantly changing, adapting, and being transferred from one part of their lives to another.  What was a critical driving factor last year may have little impact after new expectations are created.  Those new expectations could have come from the efforts of a competitor or from a completely unrelated area of the customer’s life.

  You will only discover these new insights by constantly listening to people who may someday buy what you wish to sell.  You won’t discover these insights from within your company’s walls.  They aren’t going to be found in a conference room.  Your employees don’t know.  Your suppliers don’t know.  Your distributors don’t know.  The answers are outside.

  The next time you have a meeting to figure out what to do, call off the meeting and go outside.  Talk to prospective customers.

  • Step #2:  Learn how to really listen

  I don’t just mean to stop talking; rather you also need to eliminate the self-talk that convinces you that you understand what prospective customers are saying or meaning.  Most market researchers (and their clients) hear through their own filter of how they believe decisions are made, which is often far different than how their target customers actually make decisions.  I am continually amazed that most research into drivers of buying decisions still comes up with function or price factors rather than the self-image factors that truly drive decisions.

  When you think you understand what prospective customers are saying and why they say it, make them explain it to you so clearly that you can repeat it back to them in different words and they agree that you understand. Then go further and prove that both you and these potential customers understand how they make decisions by suggesting different ways someone could address the things they described until you hear them agreeing that you really have it.

  But don’t stop even there.  Go beyond that to understand what the next step might be in the continuum of needs and expectations.  No one ever stops at the current needs or expectations described.  They will always change those needs and expectations over time.  While you can’t always define what will change as a result of another marketer’s efforts or changes in the economy, you can better understand where these customers think they are going with their expectations and what the logical end result might be.  Understanding this can provide far greater insights into longer-term strategic considerations.

  • Step #3:  Stop ignoring your greatest source for more profitable new growth

  This is one that always amazes me.  Most companies spend far too much money talking to current customers.  The real growth opportunity is among those persons who currently won’t buy from you.

  Non-customers who are either buying from a competitor or who don’t buy at all (but have the potential to buy) are the fastest way to create dramatic new growth.  In fact, the most spectacular growth I’ve ever seen always comes from attracting completely new customers.  And when using the Alpha model to drive higher expectations that in turn drives higher price leverage, profit also skyrockets.

  The huge trend toward driving “organic” growth by major marketers has even further blinded most companies to the opportunity avaialbe by talking to non-customers.  Even a company with 30% share of customers has a pool of 70% of the market as potential.  Even eliminating the 10% (approximate) of people who say they are committed to buying low price (even though I have proven many times that most of them are lying), there is obviously a monstrous potential for almost any company to grow.

  I am always surprised that I have to convince a marketer who wants to grow to include non-customers in our market research. Yet, it is typically from those non-customers that we discover the biggest opportunities for creating new growth strategies.

  So, can you grow now?  Absolutely.  Can you do it by sitting in your offices? No.  Can you do it by listening to your self-talk.  No.  Can you do it “organically?”  Probably not.  Use the Alpha model to understand what people really want to buy, how they want to buy it, and how you can address those opportunities.  You will find yourself leading the way out of this recession… no matter what the rest of the economy is doing.

  Get your copy of The Alpha Factor at www.thealphafactor.com. Visit www.ballgroup.com and discover research toold you can use to apply the Alpha model to your business to grow right now.

  GO AHEAD… DOMINATE YOUR WORLD!

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• Grow your business right now; ignore everyone else – part 2

  Saturday, September 12th, 2009 by Wes Ball

  I am working with a company right now that is outperforming most of its competitors, while charging 50% to 100% more for the same products.  How is it accomplishing this?  The secret is that it offers “ego-satisfaction value” that customers really want to buy.  And this is for what most people would consider a completely non-emotional, non-ego-centric product.

  Big surprise, huh?  Yet you would believe this was revolutionary new thinking, if you look at what most of the marketplace is doing.

  Most businesses are creating their own personal recessions right now that will follow them for years. Discounting (because they think they need to in order to survive) is killing their futures more certainly than any government policies can.  The cost to overcome this “devaluing” that they are creating for themselves will far outweigh any possible gain they think they might have generated during the last year.

  Creating “value” has been the subject of conversation around boardroom tables for decades.  Sadly, in most cases, that conversation gets no deeper than adding more “features” or adjusting price for a product or service that really needs to be rethought.  Consumers and corporate buyers are more interested than ever in value, but their definition of that term is being modified to demand more Alpha-style fulfillment than our economy has experienced in a long time.  As consumers feel more pressed and corporate buyers feel more threatened with lack of job security, both are looking for more evidence that they are not just OK, but also  valued.

  Here are two critical things Alphas know about creating value that will drive growth (or limit loss) in any economy:

  • You have to understand who assesses the value of your product, and
  • Discounting is the quickest way to increase your pain rather than decrease it.

  Sound simplistic?  Then why is it that well over 90% of all companies get these two things incredibly wrong.  Even those who start off handling these correctly and build both market share and Alpha influence eventually fall into the trap of incorrectly assessing value and believing that discounting can save them from decline.  We are seeing it all too clearly right now throughout the marketplace.

  • Critical fact #1:  VALUE is in the eye of the beholder (that’s the customer)
    

  “Value” is an estimate by a potential customer of how much he thinks he will gain by purchasing what you offer minus the “pain” he thinks he will experience in purchasing it.  This “gain” vs. “pain” formula is critical to understanding how to strategically make your product or service more attractive.  The potential customer is making critical judgments about what you sell vs. what they want to improve in their lives.

  Psychologists have long held that people typically act either to move away from pain or to move toward gain.  It is the individual’s perception of what creates pain or gain that really comes into play in creating strategic differentiation and market growth.  Without this understanding, you don’t have a prayer of selling “value.”

  • Critical fact #2:  the “beholder” is not you

  More important to remember is that this pain vs. gain “valuation” is done by the prospective customer, not you.

  Businesses of all sizes are notoriously guilty of thinking that they know what customers want.  Sadly, that self-assessment is almost always proven to be false.

  This only gets worse during tough economic times.  As cash flow and profitability are pressed, the pain at the corporate level gets translated into movement away from strategic sanity and toward self-destructive tactics that actually work against the company.  More pressure is placed in panic upon “making the sale” with little regard to how what is being sold can become more attractive in ways that mean something to the customer.

  What means something to the customer is often far different than what means something to the marketer.  As customers move away from pain and toward gain, they make many assessments and judgments.  On the “pain” side is certainly monetary cost, but there are also many other factors, including how hard it is to get it, how hard it will be to work with the people selling it, etc.  Monetary cost only becomes a real factor when the buyer doesn’t have money and can’t get it.

  Luckily, we are still in an economy where that is not a significant factor.  Most companies and consumers are more careful about spending in order to preserve what they have, but most have money to spend on the things they believe they really want, need, and will fulfill core ego needs.

  We all know that if we were to discover that we have a fatal, but curable disease, we would find a way to pay for the cure, even if we did not have medical insurance.  In much the same way, we will find a way to get the things that overcome even less critical needs.  To a lesser extent, we will find a way to fund the purchase of something that increases our self-image and self-perceived value to others.  In the Alpha model, these ego-satisfaction needs are referred to as “Self-Satisfaction” and “Personal Significance.”  After these are satisfied, other monies available might be used to buy other things.

  So, here’s where the conflict comes in:  most marketers make their assessments of what customers will buy based upon THEIR avoidance of pain and desire for gain.

  There is little real understanding among the typical corporate marketer (other than Alphas and emerging Alphas) about what people really want to buy.  The result is that they try to create more value by adding features, adding amounts included, and/or lowering price to “increase” value.  The trouble is that customers just want to satisfy the basic functional need with something that also fulfills their all but insatiable need for self-satisfaction and personal significance.  Features, amounts, and pricing do little to address those emotional, self-perception needs in ways that cannot easily be overcome by a competitor who recognizes real buyer needs.

  If you want to increase value, you have to really understand more than the functional needs being addressed.  You also have to understand the core emotional needs customers want to fulfill with almost anything they buy.

  • Critical fact #3:  DISCOUNTING is almost all pain and little gain

  Why do most marketers fall into the trap of price reduction as a means to “increase value?”

  It’s easy, even if it is self-destructive.  It certainly doesn’t take much creative, strategic thinking to suggest discounting.  It’s also what most salespersons have been brainwashed into believing by buyers who manipulate them.

  Price only becomes a factor when all other things are equal OR when the buyer thinks he can get away with demanding a lower price.  So, the typical marketer gets lots of feedback about how they need to lower their price, simply because they have not differentiated themselves in ways that mean anything to real customers.

  The problem is not just a matter of poor marketing; it is also a matter of bad business management.  Profit is the lifeblood of a company.  Without it, the company fails.  People lose their jobs.  Suppliers feel the pain.  The economy falters.  More companies fail.  And a death spiral begins.

  A drop in price of just 5% across the board can mean a drop in profit for the company of anywhere from 10% to 50% depending upon the benchmark net profit.  In order to compensate for that drop in profitability, drastic cuts must be made on the cost side.  On the contrary, minor changes can create value that could drive prices upward by 10% to 25%.  In many cases, I have seen minor changes in value perception generate value increases of 30% to 100%, which drives even greater sales growth (which only increases net profit further).

  I know.  It’s easy to say, but much harder to do.  That’s only true if you hold to the premise that price is a critical factor in creating value.  Eliminate discounting from your vocabulary, focus upon self-satisfaction and personal significance fulfillment for your customers, and it is amazing what changes will be wrought by your salespeople, your marketing team, and even your administrative team.

  People naturally want to sell and buy real value.  Forget your old perceptions of value, and you will be shocked at what your people and your company can do.

  Wes Ball is president and founder of The Ball Group, a strategic innovation and growth creation company.  He is also author of The Alpha Factor – a revolutionary new look at what really creates market dominance and self-sustaining growth.  Find out how you can use the Alpha model to create dramatic, sustainable growth for your company no matter what the economy is doing by calling Wes directly at 717.627.0405 or email him at w.ball@ballgroup.com.

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