I had a think about who my competitors are in the financial planning industry in Adelaide, and listed out the differences between their businesses and mine.  I looked at things like pricing, service offers, how personal the service is, the investment philosophies etc.

I did a similar exercise a few years ago before I started this business.  In my old job, I managed a group of different financial planners, all of whom ran their own businesses.  I also met with a number of planners all over my city who ran different businesses that were not part of the group I worked for.

The thing that struck me this time was how difficult the task of producing a competitor analysis actually was. 

For almost two years I’ve been running my own business, and have been pretty detached from other planning groups.  I don’t meet with a lot of other planners so I’ve discovered I’m a little isolated from some of the things they’re doing.

I realised I don’t know how a lot of my competitors actually charge for their services and I don’t know what they offer.

I don’t really know who my major competitors are.  Sure, I know who some of the high-profile firms are, but they’re not necessarily my competitors.

I think it’s a very valuable exercise to do an analysis of your competitors.  It helps you understand how your business is positioned in relation to your peers, and helps you focus on the things you do that are unique to your business.

But it’s also important to make sure you do it well.

How well do you know what your competitors do?  Do you know what they offer and what they charge?  Do you know why some prospects use your competitors instead of using you?  Do you know how you’re different?

Have a think about this.  Then do your research and make sure decisions and assumptions you make are based on fact, not just your perception.

Comments are welcome – please let me know what you think.

The Ansoff Matrix is a tool a business can use to help come up with innovative ways to grow.  It’s divided into four quadrants and looks at the options of selling new or existing products to new or existing markets.  Have a read of my original article to get an understanding of it.

I was recently working with a local financial planning business and we used the Ansoff matrix to come up with some ideas they could use to grow their business.  In today’s article I’ll share some of those ideas.

Market Penetration

This particular business had focused on people aged 50 – 65.  The products it sold ranged from managed funds (mutual funds) to retirement savings products to insurance.  When we examined the client base we determined that many of the clients were unaware of the range of products the business provided.  Some clients only had one product when they were prime candidates to have more.  A huge opportunity existed for that business to meet with existing clients and see if any of the additional products were appropriate for them. 

You can see from this that the market penetration strategy could be the least risky for this business.  It involves meeting with existing clients who they already have a strong relationship with and suggesting things that could also help them.

Market Development

We then looked at the option of finding new markets for their existing range of products.  This may be appropriate for some businesses.  This business had two options – new markets could mean opening an additional office in another city – they decided against this option because it didn’t fit their vision.  They did decide however to begin to offer their services to a younger age group – the 30 - 50 demographic.  Many of their existing clients have children in this category so the business thought it would be a relatively simple process to begin offering advice to the children of their clients.  This also fits well with their vision of helping clients generate inter-generational wealth for their families.

Product Development

This was perhaps the most challenging area we discussed.  Whilst the business understood that there was still a lot of potential to sell more of it’s existing product range, it also acknowledged that there could be opportunities to introduce additional products.  The firm is now in the process of surveying its clients to find out what they want. 

A couple of options we’ve already discussed include introducing a new fee-based review service that provides a range of additional benefits to the client.  We’ve also discussed providing lending services to help clients with home loans etc.

Diversification

Considered the most risky of the four strategies, diversification involves selling new products to new markets.  The firms acknowledges that if it introduces new services in the product development quadrant, it has an opportunity to market and promote those services to people who would not normally have considered their firm.

For example, someone wanting a home loan could approach them for advice, and in the process they’d also be able to offer some of their traditional financial planning products to that person (market development).

How does it help you?

The Ansoff Matrix has enormous potential to help you grow your business.  You may not run a financial planning business – it doesn’t matter.  The point of this article is not to give you ideas to grow a financial planning business but to make you stop and think about the product or service you sell.

• Are their ways to sell more to your existing clients?
• What new markets can you aim at?
• Are there new products you can invent that you can offer to your clients and prospects?

Take time today to think about these questions.  Let me know some of the ideas you come up with.

He introduced a concept called CVS2BVS which I’ll explain here.

CVS refers to the Current View of the Situation.  In a sense, it’s your reality, how you perceive something.  It could be your values or standards…how you feel about something.  In business it could be your perception of a problem – ‘This business can’t do well when the economy is down’ or ‘It’ll never change…it’s always been like that’.

He explained we should never get complacent about things and should always question the way things are.  Which brings us on to the next part of the theory – BVS.

BVS stands for a ‘Better View of the Situation’.  Notice it doesn’t say ‘Best’.  Hewitt-Gleeson’s point is that you can never say something is the ‘best’ i.e. a best way to do something – because this implies that there is no room for improvement.

In all situations, there is room for improvement.  Even if your business is hugely successful, there are always ways you could improve in it.  But if you have the mindset that something is the best, you stop thinking about how to get better.

I found it to be a challenging concept.  There are countless things I do that I need to re-look at and see whether there could be a better way to do them.  Are there better ways to get new clients?  To look after existing clients?  To explain concepts to people?

Hewitt-Gleeson has a book on the subject called Software for your Brain.  It’s free to download and worth a read.

It’s a very challenging concept, but it’s also very rewarding to have the mindset that whatever you do, there could be a better way to do it.

What do you think?  Have a read of the book and let me know your thoughts.

The first one starts off with this text:

Ever notice that most car specs focus on acceleration, not braking? It’s more fun to focus on getting fast than it is on getting slow.

How would you manage or market differently if you knew that you had to hit the brakes, and hard? Slowing one thing and speeding up something else.

 It’s an interesting thought.  Why do car manufacturers focus more on acceleration rather than the safety aspect.  It’s made me think about my industry and how we sometimes focus on the wrong aspects of the services we sell.

The second article called Whether or Which talks about how marketing is about either trying to convince a consumer about their need for a category of product (mp3 player), or for a particular product (an ipod).  Seth asks the question:

Are you trying to make the market bigger, or just grow your share?

Depending on the product you sell, it is worthwhile thinking about this question.  Since I’ve read this article I’ve been analysing more advertising to see which category it fits in.  In the financial planning industry, most of the marketing effort is spent on people who have already decided to purchase financial planning services – their decision is about which company to deal with.  However, there are some products we use, such as life insurance, that are frequently ‘sold’ and not ‘bought’. 

What’s it like in your industry?   How do you position the product or service that you sell?

When I was doing my MBA a few years ago I came across this concept in one of the marketing subjects and found it useful and have used it ever since.  I hope as you read this article you’ll see how valuable it could be in your business.

The Ansoff matrix is a tool to help you identify opportunities to grow your business.  It breaks things into four segments depending on whether they look at new or existing products and new or existing markets.  Have a look at the table below to get a feel for the four options.

The safest way to grow your business is by looking at the top left quadrant – market penetration.  This involves selling more of your existing product to your existing market.  If you’re an accountant this could mean selling your range of accounting services to either existing clients, or new clients who are similar to your existing  clients.  If you run an internet business selling e-books, it means finding new customers for your books.

The next area to look at is market development.  This involves selling more of your existing product to new markets.  The new markets could be geographical – i.e. opening a new store in a new location – or it could mean advertising in different media to attract a different type of customer.

The third option is product development where you look to sell new products to your existing markets.  You need to make sure that the new products are wanted by those clients so do some initial research and testing, but this can be a very effective way to achieve higher product penetration amongst your loyal customers.  Banks do this all the time where they try to cross sell a range of products – insurance, bank accounts, personal loans, housing loans etc.

The final option, and perhaps the most risky, is diversification, where you take your new product and aim to sell it to a totally new audience.  Whilst this carries the most risk, if you get it right it could be very lucrative.

How does this help me?

So what does this mean for you?  Take a few minutes out to think about your business and the types of products you currently sell, and the types of customers or markets you have.

Have a think firstly about market penetration, and think about ways you could sell more of your existing product to your current customers.  Get creative, don’t censor yourself and just write.  Once you’ve exhausted those options, think about what new markets or people you could sell the same products to.

Once you’ve finished the first half of the exercise, have a think about new products that could be suitable for your existing customers.  If you do any customer research, ask them what they’d want.  Look at other consumer research to find out what issues your customers face and look at ways you can fill the gap.  In our financial planning business we’re looking at ways we can introduce accounting and lending services to our clients.

Finally, take those new products and look at other markets you can sell them to.  Once you’ve done that, have a think about some totally new products you could sell to totally new products – forget what your existing clients want and instead dream up products that different groups of people need.

The takeaway

No matter what business you operate, the Ansoff matrix can be useful if you take the time to work through each of the four areas.  Each time I’ve used it with people we’ve come up with innovative ideas that we can use – starting this blog was the result of one of those sessions.

I invite your comments – let me know if this is helpful and useful for your business.  Share some ideas here about how you’ll use this in your business.

Seth had a few comments in a post titled “What To Do About Detroit”.  In it, he talks about the concept of having hundreds of car manufacturers, leading to increased competition and innovation.  Bob had a post where he talked about the similarities between Detroit and the music industry.

Alan Weiss had a podcast where he talked about the problems with GM.  In it he makes the point that GM needs to get rid of all its senior management and get some new people in.  But he says GM needs “great leadership, not auto smarts.”  He makes a great point.  Companies like GM have their management full of car people – people who have years of experience in the auto industry.  The problem is that this may not be the right thing.

People who grow up in the one industry will be closed to the innovation happening in other industries.  Alan believes that GM needs to find the best, most innovative people from other industries so they can apply that knowledge to the car industry. 

It makes sense, doesn’t it.  Sometimes the best ideas come from outside your area of expertise and from people who you may think would know nothing about your business.

It’s got me thinking.

Through the financial planning business, I belong to a peer group.  We’re a group of planners who meet three times a year to discuss issues we’re facing and to share ideas.  There’s tremendous power in the sharing and collaboration, and I come away with some good ideas (and hope that I’ve also contributed some good ideas).  But we’re still all just financial planners with a financial planning focus.

I’m looking to create an advisory board to my business.  On it I’d find people who have business skills or knowledge, but not from the financial planning industry.  I’m interested in the ideas they can come up with for my business.  Maybe because they’ll know so little about the specifics of my industry, they’ll come up with ideas and thoughts that we’d never have thought of ourselves, or would have discounted straight away.

So how is it in your business.  Where do your ideas come from?  Do you have a method or process to get ideas from other people who are not as close to your business as you are.

One of the visions I have for the Better Service Blog is to open an online forum where we can experience the same degree of collaboration I’ve seen in my peer group, but on a global basis across a range of service business.  Imagine an accountant from Africa giving marketing suggestions to a lawyer in the US!

What do you think?  What are the best ways you know of to get feedback and creative ideas?  How do you stop your business becoming so insular that you become like GM?