Unlocking Growth - A New Approach
How targeting customer behavior unlocks growth in core markets.
In this issue #104:
The 3rd in a series on generating growth from existing markets and products in materials, a topic on executive minds as sustainability investments disappoint.
Post 1 - Beyond the Standard Playbook
Post 2 - Overused Growth Tactics
Post 3 - A New Approach
Post 4 - Changing Behavior
Post 5 - Business Impact
Key Insights
Limitations of Traditional Growth Methods: Traditional marketing and growth tactics assume that the main challenge is product awareness. However, they tend to overlook additional growth potential that exists outside of these assumptions.
Importance of Customer Buying Behaviors: Growth can be significantly boosted by influencing certain customer buying behaviors that occur "upstream" in the buying process, often before product evaluation begins. These behaviors, which are typically not product-related, can predispose customers to purchase.
Proven Impact of Behavioral Targeting: The effectiveness of targeting these upstream behaviors can lead to a substantial increase in conversion and close rates by 50-100%. A case study demonstrating demonstrating a 60% increase in closing deals when a behavioral targeting approach was used.
Strategic Focus Beyond Products: Organizations need to shift from solely product-centric strategies to those that also embrace customer behavior insights. This involves understanding and mapping the entire buying process to identify and target key high-impact behaviors.
Necessity of New Capabilities and Investment: To drive growth, companies must develop new capabilities to influence customer behaviors independent of the product itself. This may require investing in new resources, and pilot projects can validate these new approaches before wider implementaion.
Shifting from Product Focus to Customer Behavior
In our previous two posts, we examined traditional methods for generating growth and found the following:
Traditional marketing approaches often assumes the main issue is product awareness.
Traditional growth tactics are also typically product-focused.
While these methods are effective in keeping a product on customers' minds, they are limited. More growth potential exists beyond what traditional methods predict.
Where Can Additional Growth Come From?
When you thoroughly examine the customer's buying process, you can identify behaviors with two key characteristics:
they predispose customers to buy, often significantly
they usually have little to do with the product itself
Product-based approaches often miss these opportunities because they don’t focus on areas where the product isn’t involved. These critical behaviors usually occur upstream, before customers start evaluating products, and are rarely the focus of commercial teams.
However, the effectiveness of influencing these behaviors can significantly impact sales outcomes. Our experience shows this can boost close rates by 50-100%. For example, if current growth rates are 4%, they could increase to 6-8% with this approach. This effect is proven across product categories, industries and regions, offering ample opportunity to justify investing in this capability.
Bob Lurie, former VP of Strategy at Eastman and a collaborator at Growth Arc Advisors, discusses this approach in his book, "The Organic Growth Playbook."
Case Example: Commercial HVAC - Industrial B2B Sales
Impact: Revitalized growth for the commercial HVAC division of a large equipment manufacturer.
The division had a highly skilled sales team, quick to respond to new chiller installation requests and successful in securing contracts. However, growth had stalled, and the division was on its third general manager trying to fix the problem.
Upon examining the customer buying process, the team discovered that results varied significantly based on one action by the facilities manager: consulting a vendor during annual budgeting and cost-cutting periods. When facilities managers involved vendors for budget-saving ideas, they were more likely to proceed with purchases when it was time to install or replace a chiller. The conversion rate was 80% with this relationship versus 50% without it. This alone could lead to a 60% increase in closing deals. More impressively, customers were three times more likely to buy from a vendor they had engaged with during budgeting. By engaging customers even when chillers were not an immediate need, sales could increase nearly fivefold.
Focusing on fostering this engagement with facilities managers rejuvenated the division's growth and secured the third GM's position, succeeding where predecessors had not.
Here’s Bob to share the story.
The key insight from this case:
Some buying behaviors,
often unrelated to the product,
can greatly affect sales conversion rates,
if they can be influenced.
Figure - Impact of Influencing 1 Critical Behavior - Case Study
Growth Arc Advisors specializes in the implementation of the methods described in this series. We are former materials industry executives who understand the uniqueness of materials companies and have generated growth as industry operators.
If you would like to discuss your organizational needs, feel free to contact us or set up a complimentary consultation.
Capabilities Needed to Drive Growth
Organizations can't achieve growth by sticking to standard practices. To boost growth, they need new capabilities focused on customer behaviors.
Identify and Target Key Behaviors
In a typical B2B sales process, there are a multitude of behaviors spread across various influencers. Only a few of these significantly impact sales outcomes. Trying to targeting them all is too costly. Organizations must map the buying process and pinpoint high-impact behaviors that can drive sales.
Often, organizations only have a basic grasp of their customers' buying process. They often lack insights into the behaviors of different buying roles over the course of a product development cycle. Guessing which roles and behaviors affect sales is ineffective and leads to wasted resources.
Influence Behaviors Without Relying on Products
Once key behaviors are identified, they must be activated to improve sales. Traditional methods like communication and technical service need to extend beyond a product-centric approach. Since typical tactics don't focus on product-independent influence, crafting such campaigns can be challenging. This may require entirely new resources to address different buying process stages.
Investing in these capabilities is necessary but can be validated through demonstrations or pilot projects tailored to specific markets.
Figure - Behavioral targeting vs. Downstream Sales Focus
Next: how to influence customer behavior without using product.
Growth Arc Advisors specializes in the implementation of the methods described in this series. We are former materials industry executives who understand the uniqueness of materials companies and have generated growth as industry operators.
If you would like to discuss your organizational needs, feel free to contact us or set up a complimentary consultation.