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Small Business Digest


Six Rules for Increasing Revenue and Profits

In today's business world, much of the work is focused on cost management.

What many businesspeople have failed to realize, however, is that almost any company has the potential to geometrically increase their revenue stream and profitability.

Moreover, studies of how "Alpha companies" come to dominate their product category or industry prove that businesses don't have to be the dominant company in their category to benefit from the Alpha model.

Almost any company of any size can create dramatic, sustainable growth-usually in a year or less-by following the same strategies and rules that Alpha companies employ.

Wes Ball, founder of The Ball Group and author of The Alpha Factor: The Secret to Dominating Competitors and Creating Self-Sustaining Success (Westlyn Publishing) offers these six rules that owners and managers of smaller businesses can apply to become - or at least act like - an Alpha company and navigate past the cost-management trap to revenue-side management.
Rule #1: Functionally satisfy at least the minimum; emotionally satisfy the maximum. If functional needs satisfaction were the true differentiator of top brands and survival brands, Coke would not be an Alpha-Pepsi clearly proved that it was preferred in blind taste tests. To work toward becoming an Alpha, companies must meet at least minimum functional needs and provide higher levels of satisfaction and significance than the competitors. They must make customers feel smart, appreciated, more attractive, more respected, and/or more fulfilled.

Rule #2: Don't compete on price. Alpha companies don't gain or maintain their Alpha status based on price alone. In fact, they compete less of price than their competitors do. Don't get confused about the importance of price. Price is the final value judgment customers make-it is the conclusion they create based on weighing all of the benefits a product or brand seems to offer.

Rule #3: Drive expectations. Companies must differentiate their brand not by what it does, but by what it makes customers want. If the company can satisfy those things better than anyone else and at a higher level of emotional needs satisfaction, it then generate controlling influence with customers and competitors. The company that can drive expectations-among customers, distributors, and/or referral agents-to the highest level has the greatest immediate influence in the marketplace.

Rule #4: Measure causes over outcomes. Measuring and comparing sales, profits, market share, brand awareness, stock prices, margins, or any of the other outcomes that businesses spend so much time worrying over only clouds the focus on the causes that drive those desired outcomes. It is far more productive to understand the company's performance in terms of causal factors, such as perceived satisfaction of needs (especially self-satisfaction and personal significance), than in terms of final outcomes. The list is long, but other key causal factors driving revenue generation include communications effectiveness, brand differentiation, and loyalty generation.

Rule #5: Critical change occurs once competitors start to follow the company's lead. This process of leading the pack starts with driving new and higher customer expectations. Once competitors discover that the company's customers are influencing customers of other products to buy the product because the company has set new, higher expectations, those competitors start to follow the lead. When this happens, the company has established a level of influence momentum that can be sustained for as long as they protect the "Alpha assets"  that got them there, such as product performance, availability, company personality, customer support, and so on.

Rule #6: Deep, sustainable strength takes time. Like almost everything else in life, developing deep sustainable strength takes time. Although a company can become an Alpha in a short period of time, to sustain that leadership status takes much longer. Customers, competitors, distributors, referral agents, and even employees need to become accustomed to seeing the company in the leadership role and following its lead. The corporate management also needs to accustom the company's culture to that new lead position. Companies that dominate their category make it a priority to maintain and protect their Alpha assets relentlessly.

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