While most companies are struggling to improve their economic results, a fact comes immediately to mind: the net revenue line is the most powerful leverage to improve EBIT.
It is not easy to drive an increase in net revenues without increasing price, but it is possible and feasible. I have seen great companies doing it through product differentiation, smart segmentation, and improved channel focus; sharp consulting firms such as Globalpraxis are leading the charge in many sectors with outstanding results.
One of the keys to successful business today: understand the modern consumer, innovate regarding his/her needs, and communicate this innovation effectively. Result: more sales at a higher price!
To better understand modern consumers is essential. They are typically different from the traditional breed – multitaskers, who simultaneously swipe their iPhones, work on their iPad, read a newspaper, listen to loud rap music, drink a cup of coffee, and miraculously hold a conversation. We may not necessarily like such a person. Still, it is key that we try to better understand what he / she wants.
Keys to successful business today: understand the modern consumer
This brings us to the importance of coming up with relevant innovations – i.e. something that today’s consumer might need and appreciate. It would be better to bring these out fast (even if on their own, they may be relatively small) rather than to rely on major innovations that might emerge from a central lab, and on an infrequent basis. We could talk about new business models here, such as new routes to market, or developing innovative, more luxury-centric brands. Innovations could also come in the form of further modifications of one’s products, and so on.
Communicate a given innovation to the target customer group. Social media might be particularly key here.
The next step would then be to create an effective way to implement and communicate a given innovation to the target customer group. Social media might be particularly key here. This might be more effective for reaching the modern consumer than traditional advertising, for instance.
The amazing, and encouraging, result of all of this is that we might then be in a position to state a higher price, and to sell more! This is value-based selling, not discounting! Plus, our profitability would also grow – good news!
So, there are plenty of opportunities in today’s business world, but to benefit from them would require a focus across disciplines. The all-too-frequent silo thinking would not work!