3 Strategic keys for success (VFC)
- Posted by: Admin MeGoBS
- Category: Business plans, Business Strategy, Innovation
In today’s world where we receive competitors from around the world, our companies have much more stress financially and personally. However, to prevent from losing market share, the company has to analyze and create actions to defend themselves and survive. The answer is simple and at the same time so complex. First, keep in mind the customer has many options on hand, and he’ll choose the one that gives the more rate of value possible.
However, in this blog, we conclude after analyzing many companies that are succeeding now that there are three common factors all have, the VFC. The Value of their products and services, The Fidelity they receive from the customers, and The Control they have over their operations to maintain and improve the first two.
1. Return of Value of products and services (ROV)
First of all, What is Value? The value is the rate of return a customer has from the money (resources) they decide to give to obtain a product and service. Let’s use a more fundamental way to see it. How much money a customer will receive from his customers for every dollar he invested in the product and services he acquired.
Taking a look at these sentences the conclusion is an arithmetic equation for the Rate of Value: money received divided by the money paid. If your products or services have a high ROV, your customers will prefer to obtain it from you instead of someone else.
This example is clear to see with cheap products. The cheap products are not responsible for the consequences you are experiencing, are the customers who are deciding to acquire cheap products.
Let’s make the example more sophisticated. You found out the ROV is better on your products, but still, the market share is low. Well maybe now in the equation must enter the volume of the market. If the market is limited, the value is less because the factor of the potential amount of money your client expects to receive from your product is not attractive.
Now the equation is a complex one because now considers the market volume. ROV equation could be now like this: (money received divided by the money paid) multiplied by (volume of sales divided by market volume).
The analysis is as complex as your market and your competitors. But if you maintain a dashboard that contains this index you’ll know at any time how is the position of the company.
2. Fidelity From Customers (FFC)
Fidelity or loyalty of customers is fragile as glass. If your products or services brake the delicate balance of the ROV, your customers will fly away to find the ROV they need. Even if you think your products or services are maintaining the ROV defined before.
In consequence, this is the result of the first key factor in conjunction with the customer dependency have over your company. So, the fidelity is the result of the ROV plus some other factors that make you the only vendor for the product in the way the customer expects.
Now the perfect example comes from smartphones. There is one brand that provides a unique value to the market in some way any other competitor can’t offer. By doing this, the fidelity they have is so powerful that the customers make whatever is necessary to acquire the product. But if the product is a commodity, the customer’s loyalty will be weak and easy to break from another competitor.
The course of action to fortify the customer fidelity resides in the ability of your analyzers to find what makes your customers stay with you at all time. Start activities that make your company unique, like the last water bottle in the desert.
Elaborate a list of attributes that make you unique, prioritize them, and define actions to make them a reality. Next, make sure your customers know your differentiation from competitors. Finally performs periodic studies with your customers and competitors to see if your unique attributes are still unique.
3. Control Over the Business (COB).
The first two success factors are excellent, but useless as an empty bottle if the business processes are not under control. The ROV with FFC is strong depending on the time the company can sustain them. Well, the control over the business plays a crucial role to capitalize on the first two factors.
However, What is control over the business? Let answer the question in two phases — first phase control. It is the capability you have to know what is happening in the company — second phase business. The expression “Over the business” meant to define the ability of oversees the company in terms of the structure, the roles, the policies, and so on.
So, “Control Over the Business” means the level of knowledge the top management has to identify situations that could or are affecting the Value of the products and services, and the Fidelity received from customers.
Imagine the situation where customers complain about the customer service or quality on the product, and you don’t know why this occurs. The level of control is weak, and the potential of losing the customer is very high. However, if you have documented processes and key performance indicators that allow you to define the accountability on the results, well you are perfectly safe.
So it´s a good time the first analyze how safe you are and how controlled is your business model. Makes a matrix that aligns your ROV and FFC attributes with the processes, people, KPI’s, and so on to identify what activity is supporting what key factor (ROV and FFC).
These graphs are an example of a possible interpretation of the three strategic keys for success. But for every company could be different for its characteristics and the market, in combination top management will define the weight of each variable. The following graphs are possible scenarios and the situation the company could face in his market.
VALUE; FIDELITY; CONTROL.
The first graph, It’s a balanced scenario when the value, the fidelity, and the control has the same impact on the success.
The second graph, a strong position shows that the company has the complete fidelity of the market, nevertheless the value is enough, and the control on the company’s processes could be weak. Base on the strong fidelity, success is guaranteed.
The third graph, the company is weak or vulnerable because no matter the value is high, the control over processes is high, but the weakness comes from the fidelity. The reason is their product and services could come from a different vendor.