Every marketing plan needs to include an industry analysis. Why? Because it is of critical importance to understand the industry you operate in, and to identify and track your performance to key business success factors (KSFs) for your organization.
Understanding your industry and identifying your KSFs will help in building a successful marketing plan; one that is based on measurable progress and results. A key success factor is an element of a whole that affects your business’ ability to do well in your market. Most businesses focus on between three and five of the most important (to their business) success factors. From time to time, or year to year, these key success factors may change, as the industry or the market changes.
15 Examples of Key Business Success Factors (and this is not a comprehensive list) are:
- Number of new customers per year;
- Number of lost customers per year OR the number of customers retained (it is important to understand and measure the potential customer lifetime value for each customer on a regular basis);
- Hire and retain excellent employees (measured by employee turn-over, job vacancies, customer satisfaction);
- Successful new product introductions (measured by sales and costs);
- Successful promotional programs (measured by sales and costs);
- Good/healthy financial indicators: for example, working capital, acceptable ratios (in particular debt to equity ratios), profit margins, cash flow, receivables and more;
- If in the manufacturing industry, high operating capacity utilization;
- Strong supplier network;
- Strong distribution network or channel;
- Successful product positioning;
- Low cost structure;
- Niche product/service – track the number of competitors entering and/or leaving the niche. Is the cost of entry into the market high or low?
- Market leader or follower or challenger, and is your relative market position and why? Are you able to support that position if under ‘attack’?
- Product differentiation: Do you have technology or service advantages that others can’t easily copy? How unique and differentiated is your product or service?
- Time to market: is your product or service able to be delivered quickly and easily; from the first point of contact to the time shipped and subsequently invoiced?
Once you have identified your specific KSFs, build strategies around those factors and integrate those strategies into your marketing and business plans to ensure business success. Develop measurement programs to help you track your progress against your success factors. You also need to assess your competition and see if your competitors’ key success factors are similar or different than yours (depending on your strengths and weaknesses and your marketing and business strategies, they might be very different). One way of comparing and assessing is to do a competitive strength analysis; find out what your competitors’ strengths and weaknesses are and build your competitive strategy accordingly. (A sample swot analysis can show you how to analyze the strengths, weaknesses, opportunities and threats that your business faces.)
For example, if retaining your existing customers is a key success factor, your business objective must be to grow sales with your existing customers. How do you do that? First, do a customer satisfaction survey to assess how satisfied your existing customers are (or aren’t). Then determine what needs to be changed and what you need to focus on. Make sure that you understand how your customers chose between competitors: is it price, service, quality, knowledge, reliability, relationships, or all of these factors? What product or service attributes are most important to your customers? What is the unique difference between your product or service and your competition’s product or service (from your customer’s perspective)?
Once you have identified your key success factors; built measurement devices to track them; assessed and compared your competitors’ KSFs – and the industry’s; built your strategies and objectives into your marketing and business plans(phew!); you need to act! Build your business on these key success factors.