“Growth is Magic!”
Not my words, but the conclusion of McKinsey and Co in a recent article that examined the factors most correlated with creation of shareholder value and long-term business success.
Data shows that growing companies have lower costs, better margins, superior employee morale, an appreciating share price – and demonstrably longer CEO tenure. Its hard to disagree with McKinsey – growth is magic!
So why aren’t we better at it? It’s a strange paradox that, despite its crucial importance, many companies are downright bad at positioning themselves for sustained profitable growth.
A recent Bain survey concluded that “9 out of 10 management teams fail to grow their companies profitably” while, even more shockingly, academic and author James Allen found that “90% of companies fail to hit the growth targets in their annual reports”.
This strange Growth Paradox is the subject of my recently published book ‘The Growth Director’s Secret’ and poses the obvious question: “Why?”
My book examines a range of contributory reasons for this worrying failure, but perhaps the most significant is something I call The Big Growth Mistake – a fundamental misunderstanding of how customers make decisions and choose between brands.
The Big Growth Mistake is the assumption that most category purchases are up for grabs and the way to grow is to secure more of them than your competitors. This is just plain wrong.
Most purchases, in most categories, are simply not available to other brands. Many companies fail to understand this and waste time, resources and money chasing sales that they are unlikely to secure.
Here’s why: most of the time, to cope with complexity, we make purchase decisions on 'autopilot' from a small portfolio of favourite brands. ‘Autopilot ‘ brands are chosen subconsciously, for largely emotional reasons and, once chosen, we’re incredibly loyal to them - data shows they get more than 75% of purchases in all categories.
Crucially, our brains subconsciously ‘screen out’ attempts by other brands to lure us away – and that means huge wastage is inevitable in many companies’ marketing plans. The key to growth is to understand how to become the default autopilot choice for your target customers – that’s it!
But that’s tough.
Autopilot decisions are made sub-consciously, driven mostly by emotional factors.
The conventional research tools that the business world relies on interact with our conscious brains and work rationally, not emotionally – and so are of little use in understanding how to secure the autopilot preference conferred by our emotionally-driven subconscious brains.
Over the last decade new tools have emerged from the world of neuroscience that are able to make this connection – but most businesses have been slow to use them.
My advice to marketing departments everywhere is to get your hands on these Implicit research tools, use them to help you secure autopilot status for your brand – it’s the only way to make sure you’re one of the few who manage to avoid that Big Growth Mistake!
By Andy Brent, author and founding partner, Think Again Growth