How Private Equity Firms Can Find The Hidden Organic Growth

It’s time to pull out the most under-used but insanely useful growth tool of all time. It’s the ultimate formula for increasing sales, reducing costs and improving efficiencies in a key operational area. 

If this thing’s so great, why is it under-used?

Brain defects, no, we mean brain effects.

Brains are hardwired to crave certainty, stability, and consistency. Processes and systems provide this certainty, stability, and consistency.

Processes and systems are like cultures. Something needed to be done. We came up with a way to do it. It worked. When we run into that situation again, we remember what worked, so we do it again and again and again. A belief is a thought we keep thinking. A culture, process, or system are tasks we keep doing. It’s also known as the status quo. And, it’s not likely to change any time soon. “Everyone wants something different, but no one wants to change.”

It’s why most companies benchmark performance against the competition and industry leader. If you are the market leader, you’re happy that you are one step in front of the other guy when the lion comes after you. 

COVID 19 is giving companies a huge opportunity to shake off the status-quo-ness that creates unintentional inefficiencies. Because COVID is assaulting our notion of certainty, stability, and consistency, companies are ripe for innovation or new and improved ways of looking at things. 

Is this just another “let’s make lemonade out of lemons” article? 

No. Here’s why. This is a real game-changer. And the best part?

Hardly anyone will do it.

If you’re one of the few who sees the “reason why-ness” of this tool…AND…you utilize it, you win!

So, what is this insanely effective, under-utilized growth tool?

The Unknown.

Actually, it’s not unknown at all; it’s just been hiding behind the status quo.

If something is successful or unsuccessful, there is a specific way in which it is successful or unsuccessful.

Do you remember this from high school? 

 Us either, but, before this formula, all ships were made out of wood. Why? Because wood could float and iron did not. When Archimedes figured out the formula, they could make ships out of iron. Did anything change about water or iron or the laws of the universe? No. It’s just that someone found the specific way in which something works. Iron quickly became the material of choice for rugged ships.

Every industry has a way in which it limits the customer. Every company has a way in which it limits more buyers from buying. 

When you know, and you do or can easily acquire this knowledge, you will use it to your advantage, significantly grow organic revenue and make the competition relevant. 

But hurry. The sooner things get back to normal, the less chance you have of pulling this off.

Because timing is essential, we’ll give you the 500 ft view here so you’ll know where to start.

Your Industry

Most every industry has a “way of doing business” that customers complain about. What are those complaints, and which of them can you “fix” (especially the most advantageous one) without investing a lot of capital or resources? Ideally, these “fixes” will be difficult for your competitors to copy right away. We guess that you have a lot of this intel in-house. Your sales, marketing, customer service, product folks face these issues often. Industry associations and industry forums are also excellent sources of information.

Examples include:

The Printing Industry — Customers complained for years about having to buy in bulk to “get the best price break.” Unless NOTHING changes in your business while you are getting through all that inventory, all is good. It turns out, this isn’t the case, and boxes of business cards, brochures, pocket folder, sales sheets, etc. end up in the trash. This is where digital printing presses came into being. One of the first companies to offer this kind of printing press required you to purchase two machines — because the technology was so new, and they knew they had reliability issues, but, if you wanted in the game, you had to buy two machines. These were VERY expensive machines. And, companies who saw the digital printing goldmine bought two machines and thrived and thrived and thrived. 

Clothing Manufacturing Industry — They have a similar problem to the printing industry. Customers have to buy months ahead of the season, they have to guess what is going to sell, and they have to buy a LOT of it to get the “price breaks” or even the merchandise. Manufacturers require high minimums of the same thing to do business with them. This leaves a lot of clothing stores with a lot of unsold inventory. Manufacturers who figure out how to shorten the supply chain and provide only the clothing their customers need, thrive. The Goldratt Group (Theory of Constraints) has been helping savvy manufacturers do this very successfully for years. 

Copier Industry — Their customers complained about the cost and the service of large copiers. Xerox figured out how to sell the service vs. the product. No one owns a large copier anymore, they lease it, and the lease comes with automatic maintenance. 

Domino’s Pizza — They understood people did not like waiting for their pizza, so they invented the “30 minutes, or it’s free” solution. Since then, wise plumbers, electricians, and HVAC business owners have transformed their businesses.

Sephora — They watched and saw that women like to try on makeup before they buy it. Rather than scheduling an appointment with a department store, they created a store around this behavior.  

Risk Reversal — Many companies understand the barrier of risk for their customers, and now they thrive because they offer 100% money-back guarantees or “pay for performance” models. 

Industry “Issue” Ideas to Consider:

Conveyor Belt Manufacturing Industry — Industrial conveyor belts can cause serious injury and death. The MSHA (Mine Safety and Health Administration) states that over 40% of conveyor injuries are caused while a worker is performing maintenance. Another 30 to 40 percent are inured while cleaning an area next to the conveyor. Forty-eight of the 200 fatal mining accidents involve conveyors. Innovation in this industry is almost non-existent, and the problems that existed in the 1930s are the same today. 

What is the single most effective tool to prevent injury and death? Training. But, no one really thinks something terrible is going to happen in their company, and besides, managers are too busy to attend training, so they send a junior team member. This person has little to no authority or influence when it comes to training, so... Even though they train new employees, there isn’t enough focus on conveyor training. 

What can conveyor manufacturers do to help? Here are some ideas. These are “value-add” ideas that will decrease the cost of ownership for the buying companies. Additionally, they are decisive competitive advantages that solve a BIG problem and will command premium pricing and attract new customers.

Include Virtual Reality Training and Phone-in-Headsets with each purchase. Require operators to keep the headset with them at all times. When doing ANY maintenance or review, the headset will be accessed to review the necessary safety and maintenance steps. Update the headsets each year with any new education. Make them voice-activated so users can easily and quickly find the information they need NOW.

Include a Secret Shopper visit four times a year to watch what’s happening and offer solutions specific to the problems. 

Install video cameras and sensors to view and monitor the machines. Observing the speed limit and capacity ratings on conveyors are critical. Install sensors that detect overages and alert operators and executives. 

Put speed governors on the belts, so it knows the max speed for the given weight on the belt at any time.

Send trainers and technicians to each location twice a year for inspection and training. Create train the trainer programs so that operators train each other — maybe they get bonus money from you, vs. their direct employer, to be the trainer. Pay them to record training videos that reside on your website as well as their employers.

Send non-identifying questionnaires (one or two questions only) for employees to share concerns; call executives when you see a problem or pattern. Send daily texts to operators reminding them of the top issues: the speed limit of this specific belt, location of the shut-off system, how far away ancillary workers should be from the machine, etc. 

Invest in your sales and technical teams to ensure the company is buying the right belt system for their needs. 

Create a Technical Institute where you train and place highly qualified employees inside your customer’s facilities. 

If elevators, cars, refrigerators, filtered water pitchers (Brita Infinity Water Pitcher that automatically orders filters for you when it’s time), printers that automatically order ink (HP subscription model) ... all can trigger maintenance calls before anyone is aware there is a problem, why can’t conveyor belts? If you say, “price – no one will pay for this,” I’ll bet you are wrong. Price is rarely the issue salespeople, and companies think it is. Price is an excuse, and the last thing you want to be competing on. 

If you manufacture machinery where any stoppage or breakdown is expensive for your customer, include a 3D printer setup to make on-demand parts that are frequently needed for maintenance and repair. 

If you install and implement corporate CRM (customer relationship management) systems, include a voice-activated entry for all salespeople to use. Why? Because adoption is the most significant barrier to success, these technologies face. Make it as easy as possible for the sales team to update the system without obstacles. 

SOMETHING within your industry can change to create a significant advantage for you and your customers. 

Your Solution

You can also ask, “Are there companies that would never consider our solution, but could?” That’s what WeWork did. They looked around and saw a lot of business being done in coffee shops. Those people are not candidates for typical office space leases, and they wouldn’t want that anyway because they like the vibe of the coffee shop and the people around them. There are many reasons WeWork is struggling now, but none of them have to do with tapping into a previously unidentified market of need and desire. Had office building owners and managers seen what WeWork saw, the benefit would be all theirs. 

Your Buyers

How many sales have you lost that you don’t know about? Hard to say because you don’t know about them. But, they are out there. The buying process starts somewhere and ends somewhere. Sometimes you are included, sometimes not. But when you aren’t included, do you know why? And, if you know why, can you fix it? 

Would you be more visible to buyers if you knew

• Why were they doing okay then decided they needed a solution like yours? What happened? What broke that camel’s back?
• What ‘work-around’ are they using now to ‘deal’ with the situation?
• Who all is tied to this activity, and how entangled is everyone? 
• How the research started, what the buyer did, and where they ended up in the process?
• What the buyer believes is relevant to the solutions available to them?
• What solution attributes did the buyer compare, and why? What was the benchmark?
• What attitudes, processes, information, perceptions prevent the buyer from considering you?
•  What buying risks are they trying to eliminate or reduce?
•  Why did they buy from the other company? What did they value about this company’s approach?
•  What content your buyer trusts and uses in the decision-making process?
•  Who is involved in the decision, and what kind of influence do they each have?
•  What limitations solution suppliers, including you, place on them?
•  What your buyers are hiring your sales and marketing team to do for them?
•  What your buyers are hiring your product or service to do for them?

Unless you’ve had several unstructured calls purposefully guided to obtain this information from people who did not buy from you, please do not assume you, your sales or your marketing team know this information. It’s a limiting status quo kind of assumption. 

Find out. Then align your go-to-market, messaging, and sales processes with this intelligence and become visible to a lot of buyers.

You

What internal policies, procedures, and measurements are preventing you from having more business? Do your salespeople do things other than sell? Are they also writing the proposals, servicing existing customers, gathering requirements, etc.? If so, If so, this is likely causing unintentional inefficiencies. Is your marketing department only focused on inbound leads? Or too busy with projects to entirely focus on acquiring more qualified leads and buyers? If so, this, too, is likely causing unintentional inefficiencies. Where does the flow get hung-up in the process of acquiring new customers? Where is that bottleneck? 

Find out. Then do what’s necessary to feed or free that blockage properly. 

Look around — A small hotel in a resort area has a huge parking lot. It noticed cars were gathering there during COVID. Fearful of any COVID issues, they roped off the parking lot. When the hotel re-opened, it put out a HUGE sign saying, “OPEN.” The sign is right next to the parking lot, which they hadn’t un-roped. Quite simply, they had created a physical buying limit. (Eventually, they noticed and opened up the parking lot!) 

Reduce your investment in status quo-ness and increase your investment in knowing. 

KE

 P.S. We realize that we bypass all the messiness of the status quo-ness and make a big assumption that you can ‘just starting doing things differently.’ We know it doesn’t work like that, but start with understanding your buyers and see where it leads. Your team will immediately begin to see connections, connections you can take advantage of without much resistance. 

We are always rooting for you!