Groupon, the daily deals provider, has generated so many customer complaints about how it markets its deals that it could face legal action unless it improves. Why? The portal maintains that rapid growth is at the heart of its problems - its internal processes and procedures had struggled to keep pace with its expansion. This is certainly not the first time a brand has become a victim of its own success. So, how can high growth businesses ensure that its functions keep pace with its growth? We put our heads together to come up with some advice:
Learn to say no: Just because you can doesn’t mean you should. This sometimes means denying the customer for a bit. Yeah. Heresy. The ‘customer’ is not an excuse for treating suppliers poorly, being underhand, or pursuing a business model that is actually inherently unsustainable.
Decide what you are going to suck at: Nobody is world class at everything. It’s a mistake to try to be. For Groupon, striking fair deals and marketing with integrity would probably be the ones to focus on…
‘Going public’ means just that: If you want to be treated like a big adult company, don’t expect to get let off because you’ve had to grow up fast. Make sure you’d be happy if everyone knew what you were up to. Adverts that make light of Tibet and unrealistic offers probably won’t cut it.
And if you want to hear a little more advice for businesses on this issue, we just published 10 Tips To Cope With Rapid Growthin FreshBusinessThinking.com.
This October, a report was published by McKinsey estimating that the Internet has contributed more than a fifth of the GDP growth in mature economies over the past five years. That’s remarkable, especially at a time when these economies are struggling to get their populations back to work––producing and consuming the domestic product. So if the Internet is our ace in the hole for economic growth, and you and I are the prospective producers and consumers of the product in question, let’s take a look at the situation in front of us.
There is a huge opportunity in the world for brands to both build trust and create new revenues. And while the world may be getting more complex, this opportunity is in essence very simple: To do good things.
Trust in corporations to do what is right is hovering around a historically weak level. This is no surprise in a post Enron, post financial crisis, post BP world. However, what drives improvements in trust appears to be shifting from a narrow view around product and service quality to a broader view around transparency and honesty.
Against this backdrop, we also have huge social problems to deal with. Take the single issue of childhood obesity. Here, a third of America’s children are clinically obese, we have an epidemic of diabetes to deal with, and worst of all we have the first generation in 100 years who’s parents may systematically outlive their children.
Clearly, helping to reverse or even just reduce levels of childhood obesity is not just a worthy program of social good, but also a huge commercial opportunity. An opportunity with the potential to re-instill trust in those brands who pursue it. A win win, rather than simply a win.
The beauty is that we have the ingredients at our fingertips to make radical change happen. We know many of the reasons why our children have become so fat. One reason they’re fat is because brands have become so good at innovating, marketing and branding things that taste great, but aren’t very good for us.
There’s no reason in the world that we can’t use the exact same techniques and focus on things that are good for us. There’s no reason we can’t brand broccoli to make it sexy. After all, it’s no more a commodity than caramel flavored fizzy water spiked with high fructose corn syrup. Equally, there’s no reason we can’t use technologies like Xbox Kinect to create entirely new sports that people can engage with from their living room. Connected online, through Facebook, phone and more.
And childhood obesity is only a single datapoint. What about education, healthcare, managing our finances, reducing our impact on the planet and finding new ways to wean ourselves off of oil? The list goes on.
The commercial and social opportunities are immense. The solutions only as limited as our imagination’s. Just think about amazing that is. To do something good, make yourself feel good, tap into real commercial opportunity and rebuild trust in your corporation. And maybe even leave a legacy.
I was interviewed last week by Brand Week magazine who were writing an article about the sales success of Special K over the past year.
I’ve never really considered myself a CPG expert, we just don’t do that much work in this arena, but what really interested me about the subject is that this is a typical low-growth category.
The challenge for Special K, and anyone else in similar categories, is that innovations in new flavors and product types are usually destined to create marginal improvements in revenue at best, and dangerously fragmented low (or no) profitability extensions at worst.
Add to this the unsustainable levels of promotional spend that are required to create uplifts in market share and you’ve got some pretty dangerous economic factors at play:
- Micro segmentation of brand/product portfolios creating chaos on the shelf and increased marketing management and operational costs
- Unsustainable advertising costs and value destroying sales promotions designed to drive share (but usually at the expense of profits)
What this means is that it doesn’t really matter how good your advertising creative is, or how engaged in your campaign the consumer becomes, the net result tends to be a falling back to the status quo once the unsustainable level of marketing spend reduces to normal levels.
Which creates a massive growth conundrum faced by many, many brands. What do you do when incremental product extensions and marketing promotions are no longer enough to drive meaningful and sustainable growth?
Clearly there isn’t a silver bullet answer for this (if there was, I wouldn’t be here writing this) but one solution that more brands should consider is the leverage of their brand into new, higher growth categories that may require a new business model.
Mercedes Driving Academy is a great example of this that Wolff Olins worked with Mercedes to create. Here, the idea is to leverage existing infrastructure owned by Mercedes (test track and cars) and leverage it into a completely different growth model (a service to provide driving instruction for children)
One wonders what the Special K brand could leverage into?
If you take the view that Special K isn’t really a cereal or food brand, but is instead about healthy living, then this is a brand which could potentially leverage into dieting, fitness, wellness and more.
What the growth potential of these is I don’t know. But I suspect that if the US Military see obesity as a risk to national security because 27% of potential solidiers are too fat to fight, then there’s probably significant upside potential.
And if memory serves, I believe Curves was the fastest growing franchise in America for some time.
