ACCELERATED REVENUE GROWTH IN AN EVOLVING MARKET (Part II)
Last week, I introduced “Jumpstart,” a company that needed to re-position itself as a provider of a full-service application and implement a campaign designed to aggressively promote this new value proposition while rapidly expanding into new markets. In “Accelerated Revenue Growth In an Evolving Market (Part I),” I summarized Jumpstart’s market position and sales efforts at the beginning of the study period and outlined the transformational challenges faced by its executive team.
I also mentioned the results – a staggering 290% increase in annual revenue, which was achieved in the same two-and-a-half year period during which other companies in the field were experiencing either flat or declining revenue.
Because the strategy Jumpstart was pursuing was a complex one, the executive team broke it up into three stages, each involving several tasks. While the implementation timeline of these stages overlapped, it’s instructive to look at each individually. This post focuses on the steps the company took to re-brand and -position itself and launch into new markets.
Here’s Stage One: Branding & Market Positioning
Founded by some of the industry’s leading engineers, Jumpstart had long enjoyed a reputation for having set the de facto technical standard for providers of its kind. Jumpstart was a price maker in its core market, but that position was about to be eroded by the entry of a higher caliber of competitors than the company had faced before combined with a general collapse of application revenues. Moreover, Jumpstart’s price structure had been designed to provide services to a particular market vertical in which very expensive resources were used exclusively by larger companies. To control customers’ consumption, Jumpstart had actually attached an unreasonably high price those services to act as a disincentive to customer growth.
Jumpstart’s launch into new markets required the company to shed its image as a boutique provider of specialty high-tech solutions while leveraging its strong relationships with larger customers to attract their business partners and customers. To encourage these anchor customers to expand their business with Jumpstart and to promote growth across all verticals, Jumpstart implemented a two-tiered rate restructuring plan that at once broadened its discount program and rationalized its base rates for its higher quality services. Each of these steps was relatively simple, and their effects were immediately positive, resulting in an increase of 15% in billed revenues.
First, Jumpstart aligned its pricing structure with its customers’ operations by expanding its volume discounting program to give customers credit for their entire relationship with Jumpstart; previously, discounts had not been granted on a total usage basis. This recognition of an expanded market in its existing base helped develop stronger relationships with those national customers and drove the company’s expansion.
Second, Jumpstart provided pricing incentives to its growth-oriented customers by lowering the rates for its higher-end services and raising those for its more standard offerings. The incremental costs for provisioning the better application were lower at high volumes, so Jumpstart was able to profitably meet the immediate increased demand for them. By increasing rates for its lower-end products, Jumpstart brought them in line with those charged by competitors while encouraging customers to move up the value stack. These rationalizing changes in Jumpstart’s rate sheet decreased the differences between levels of services and encouraging customers to upgrade to higher-quality, more technically reliable products.
As market pressures increased, Jumpstart’s traditional engineering-focused customers became more cost-conscious, and the company’s sales and marketing leadership developed a new Jumpstart “brand” and strategy for attracting and retaining new business. Without abandoning the focus on technical expertise, Jumpstart positioned its offerings as solutions to its customers’ new business problems and embarked on a campaign to demonstrate how its customers could leverage the company’s applications to more profitably increase revenues with little additional investment.
New promotional materials and product packages targeted the sales and marketing departments of Jumpstart’s prospects and customers. The company’s standard seminar presentation was changed to focus less on the technical specifications required by the engineering community (which Jumpstart was already exceeding) and more on the ease with which customers aggressively and economically scaled revenue growth with Jumpstart solutions. For the first time, the company opened the channel, developing partner programs that encouraged its customers to either resell Jumpstart applications or make referrals to Jumpstart’s direct sales force.
Finally, Jumpstart developed success-based pricing and contract terms that offered temporary rate relief in exchange for broader-based and longer-term contracts. Adopting the philosophy of partnering with its customers to ensure their success, the company was able to help several customers stabilize and grow their revenue streams while reinforcing its reputation of being customer- and service-focused.
Successful implementation of the new Jumpstart brand required an overhaul of the company’s sales efforts; the sales teams needed to adopt a more service-oriented process and convey a stronger sense of urgency about resolving their customers’ business problems. (Note that this “urgency” is customer-focused, as opposed to merely urgency in attaining each month’s quota.)
Next time, I’ll briefly discuss the tactical steps Jumpstart took to re-purpose its direct sales force while decreasing the sales cycle days by as much as 75%.
I also mentioned the results – a staggering 290% increase in annual revenue, which was achieved in the same two-and-a-half year period during which other companies in the field were experiencing either flat or declining revenue.
Because the strategy Jumpstart was pursuing was a complex one, the executive team broke it up into three stages, each involving several tasks. While the implementation timeline of these stages overlapped, it’s instructive to look at each individually. This post focuses on the steps the company took to re-brand and -position itself and launch into new markets.
Here’s Stage One: Branding & Market Positioning
Founded by some of the industry’s leading engineers, Jumpstart had long enjoyed a reputation for having set the de facto technical standard for providers of its kind. Jumpstart was a price maker in its core market, but that position was about to be eroded by the entry of a higher caliber of competitors than the company had faced before combined with a general collapse of application revenues. Moreover, Jumpstart’s price structure had been designed to provide services to a particular market vertical in which very expensive resources were used exclusively by larger companies. To control customers’ consumption, Jumpstart had actually attached an unreasonably high price those services to act as a disincentive to customer growth.
Jumpstart’s launch into new markets required the company to shed its image as a boutique provider of specialty high-tech solutions while leveraging its strong relationships with larger customers to attract their business partners and customers. To encourage these anchor customers to expand their business with Jumpstart and to promote growth across all verticals, Jumpstart implemented a two-tiered rate restructuring plan that at once broadened its discount program and rationalized its base rates for its higher quality services. Each of these steps was relatively simple, and their effects were immediately positive, resulting in an increase of 15% in billed revenues.
First, Jumpstart aligned its pricing structure with its customers’ operations by expanding its volume discounting program to give customers credit for their entire relationship with Jumpstart; previously, discounts had not been granted on a total usage basis. This recognition of an expanded market in its existing base helped develop stronger relationships with those national customers and drove the company’s expansion.
Second, Jumpstart provided pricing incentives to its growth-oriented customers by lowering the rates for its higher-end services and raising those for its more standard offerings. The incremental costs for provisioning the better application were lower at high volumes, so Jumpstart was able to profitably meet the immediate increased demand for them. By increasing rates for its lower-end products, Jumpstart brought them in line with those charged by competitors while encouraging customers to move up the value stack. These rationalizing changes in Jumpstart’s rate sheet decreased the differences between levels of services and encouraging customers to upgrade to higher-quality, more technically reliable products.
As market pressures increased, Jumpstart’s traditional engineering-focused customers became more cost-conscious, and the company’s sales and marketing leadership developed a new Jumpstart “brand” and strategy for attracting and retaining new business. Without abandoning the focus on technical expertise, Jumpstart positioned its offerings as solutions to its customers’ new business problems and embarked on a campaign to demonstrate how its customers could leverage the company’s applications to more profitably increase revenues with little additional investment.
New promotional materials and product packages targeted the sales and marketing departments of Jumpstart’s prospects and customers. The company’s standard seminar presentation was changed to focus less on the technical specifications required by the engineering community (which Jumpstart was already exceeding) and more on the ease with which customers aggressively and economically scaled revenue growth with Jumpstart solutions. For the first time, the company opened the channel, developing partner programs that encouraged its customers to either resell Jumpstart applications or make referrals to Jumpstart’s direct sales force.
Finally, Jumpstart developed success-based pricing and contract terms that offered temporary rate relief in exchange for broader-based and longer-term contracts. Adopting the philosophy of partnering with its customers to ensure their success, the company was able to help several customers stabilize and grow their revenue streams while reinforcing its reputation of being customer- and service-focused.
Successful implementation of the new Jumpstart brand required an overhaul of the company’s sales efforts; the sales teams needed to adopt a more service-oriented process and convey a stronger sense of urgency about resolving their customers’ business problems. (Note that this “urgency” is customer-focused, as opposed to merely urgency in attaining each month’s quota.)
Next time, I’ll briefly discuss the tactical steps Jumpstart took to re-purpose its direct sales force while decreasing the sales cycle days by as much as 75%.
posted by Ken Boasso at 10:32
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