The Purpose of Business – Competitive Intelligence May Be the Key

Lately, I have been reading about business, business development, and the relationship of marketing in the entire mix. So many different thoughts… So many different ideas.

I found one idea while researching the topic, “The Purpose of Business.” Below, I’ll share a little bit with you:

Dr. Peter Drucker: A business enterprise has two basic functions: marketing and innovation

If we want to know what a business is, we have to start with its purpose. And the purpose must lie outside the business itself. In fact, it must lie in society, since a business enterprise is an organ of society. There is only one valid definition of business purpose: to create a customer. The customer is a foundation of a business and keeps it in existence. The customer alone gives employment. And it is to supply the customer that society entrusts wealth-producing resources to the business enterprise.

Because it is the purpose to create a customer, any business enterprise has two – and only two – basic functions: marketing and innovation. These are the entrepreneurial functions. Marketing is the distinguishing, the unique function of the business.

ACTION POINT: Find out what needs your customers want fulfilled today. Determine how well your products are meeting the needs of your customers.

If the idea is to create a customer, I don’t want to just stop there. In marketing, I want to create a customer better than anyone else in my space. If there are a certain number of potential customers out there, I want to grab as many as possible. It’s not that I’m greedy. It’s just the nature of business.

And, if (as the article says), there are two basic functions (marketing and innovation). The most important tasks will be focused on marketing and innovating better than anyone else in your industry.

Where does CI fit into understanding the marketing and innovation of your competitors? I’ll give you an example that has provided Primary Intelligence and dozens of our clients with powerful insight into these two areas: Win Loss, Post-implementation and Account Loyalty & Retention.

Win loss
The ultimate study of creating a customer. Win loss is a competitive intelligence effort that focuses specifically on the process of building the customer relationship, conveying value, presenting a solution to a need and comparing your performance in those areas to that of the competition. “Why isn’t the business growing?” “What aren’t we creating customers like we thought we would?” If those answers are important to you, win loss is generally the most effective answer.

Primary Intelligence has a very sophisticated win loss system the rivals the results of just about any in-house program we’ve seen. Yes, I’m bragging. Talk to me and find out why.

Post-implementation
Just after the customer has been created, you should be very close to them to determine: a) how life has changed for them now that they have your product/service/solution in place and b) What are the additional bits of service they wish you provided now that the initial needs have been met.

Don’t think that these conversations should happen only with your own clients. If you know the customers that signed with the competitor, make sure you’re talking to them 60-90 days into their experience. You still own a relationship built during the sales process and that relationship can be leveraged to understand whether the grass really is as green as originally thought. What would your sales guys give to be able to say, “You can choose [competitor x] and they have a good product, but the people we talk to say that [competitor x] consistently falls short in these three areas…

Account Loyalty and Retention
There is no argument that keeping a customer is often more important that creating one. Account loyalty and retention show you how to be more effective at keeping a much higher percentage of clients when it is time to renew. I’ll explain the difference between the two:

Account loyalty studies are conducted during the client life-cycle. This research helps you see where the customer experience has helped your chances of renewing a client and where the gaps may be. These efforts should be taken throughout the client lifecycle, but are traditionally administered a few months before accounts begin their renewal considerations.

Account retention programs are conducted just like win loss studies. However, in this case, the study attempts to answer “Why do our clients renew/defect” rather than “Why do our prospects choose us or the competition?” Primary Intelligence has a powerful set of predictive analytics that can be applied to this type of study; just like our win loss.

Be the Best
In the final tally, you’ll have to ask yourself: “Are you in it to do just well enough or to generate customers better than the other guys?” Be in it to win. It’s much more fun that way.

Then, look for the tools that will give you the biggest chance of creating a new customer at the expense of the competition.

Thoughts? Let me know. (cdalley@primary-intel.com, 801-838-9600 x5050)