Curing the growth malaise

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Sustained growth is widely accepted as being fundamental to business success and yet most companies do not seem to be managing it effectively. Andy Brent looks at the causes of this paradox and how it can be overcome.

It is generally accepted that sustained growth is the beating heart of an organization. But a robust rhythm of healthy sales results has been transplanted by the murmurs of stagnation among major consumer brands. 

Boards and marketing departments are standing over the patient reading the vital signs as normal. And yet the difference between a growing company and a stagnating one is comparable to a healthy athlete skipping gloriously over the finish line and a one-time champion staggering to the end.

Data shows that growing companies have lower costs, better margins, superior employee morale, an appreciating share price and a demonstrably longer chief executive tenure. As McKinsey put it a few years ago: "Growth is magic!" 

90 percent of companies fail to hit the growth targets in their annual reports

So why aren’t we better at it? And, more importantly, why aren’t we talking about the lack of it more seriously? Business growth is increasingly weak: a Bain survey a few years ago concluded that "nine out of 10 management teams fail to grow their companies profitably," while a large analytical study by author and business thinker James Allen showed that "90 percent of companies fail to hit the growth targets in their annual reports."

That is symptomatic of a bigger problem. I call the contrast between the importance of growth and the failure of most companies to manage it effectively "the growth paradox." 

In my book The Growth Director’s Secret, I suggest two theories that explain the disconnect. 

How Boots seized on hearts, not minds

Brand-choice decisions are driven more by emotional factors than by rational ones. And yet most businesses focus on rational marketing messages: "Our mortgage rates are 0.5 percent lower," "Our broadband is 10 percent faster…"

But businesses that own emotional thinking at key brand-choice moments are the ones that grow most successfully. 

One example is Boots’ "Here come the girls" campaign, created by Mother, in the late 2000s, which turned around a declining business and fueled years of profitable growth.

The insight behind the campaign was that there are a small number of key moments when it really matters to women that they look great. The brand that identifies and owns the emotions behind these moments should expect to become the autopilot choice of consumers. The key is emotional connection, not rational argument.

Boots identified the office Christmas party as an emotionally important event—a near-universal experience of working women charged with excitement, anxiety and an atypical touch of glamour in a work setting.

The first ad used humor to show women in a variety of office situations, surreptitiously preparing for the party, and ended with a triumphant mass entrance of working women in full-on party mode. The Here Come the Girls track captured the sense of powerful women letting their hair down together.

It struck an emotional chord, transforming the view of Boots from an old-fashioned business into a retailer that understood what women want in the festive season.

Significantly, there was only a limited "sell" in the spot—it simply said: we understand how this moment feels and its importance to you. The approach resonated with women, who voted with their feet and delivered bumper sales to the ailing retailer.

Identifying those key brand-choice moments, and appropriating their accompanying emotions, is the key to growth. Too many companies still rely on the logic of marketing when, in fact, logic has little to do with it.

No accountability

"Less than 5 percent of major consumer companies around the world have a growth director position on their senior teams"

First, most companies don’t take growth seriously enough. Of course, hitting the numbers is important in every business, but growth is treated as a byproduct of what happens when everything else is going well. 

The laser-like focus and accountability for business functions such as personnel or budgeting are absent from the serious business priority of achieving growth. 

Less than 5 percent of major consumer companies around the world have a growth director position on their senior teams. In contrast, 100 percent have a chief financial officer, about 90 percent a chief marketing officer and about 80 percent an HR director and an IT director. 

Autopilot shopping accounts for more than 75 percent of purchases in all categories

How confident would you be in delivering your bottom-line numbers if your company did not have a chief financial officer? Or in developing the right infrastructure, training and development programmes without an IT or HR director? 

And yet, in the crucial area of growth, senior management accountability is unusually lacking. Without clear accountability, it is unlikely that a business will have a clear growth strategy, executive alignment around growth priorities, sufficient resources allocated to drive growth, metrics to measure propensity to grow or the customer insights needed to position a business for growth.

The business world is just starting to wake up to this. Coca-Cola’s recent high-profile replacement of its chief marketing officer with a chief growth officer signals that at least one major company understands how executive focus could transform product promotion into growth.

Autopilot decisions

Our brains subconsciously screen out attempts by other brands to lure us away

But there’s a second problem. Most businesses fail to grow sustainably and profitably because they do not understand core truths about how consumers navigate hundreds of tiny decisions each day, exposing companies to the "big growth mistake."

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.

Autopilot decisions are made subconsciously and driven mostly by emotional factors

Most purchases, in most categories, are simply not available to other brands. Many companies fail to understand this and waste time, resource 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 favorite brands. Autopilot shopping accounts for more than 75 percent of purchases in all categories and, once chosen, autopilot brands are changed only occasionally. 

Crucially, our brains subconsciously screen out attempts by other brands to lure us away. Because people do not waste much time considering the relative merits of one product over another in the same category, most efforts to switch our purchasing through expensive promotions, high-impact ads or complex media plans are wasted. 

Autopilot decisions are made subconsciously and driven mostly by emotional factors. Conventional research tools that the business world relies on interact with our conscious brains and work rationally rather than emotionally. So they are of little use in understanding how to secure the autopilot preference conferred by our emotionally driven subconscious brains.

The key to growth is to understand how to become the dominant autopilot choice in your category. 

For chief executives keen to elude the growth paradox, a positive first step is to assign accountability for the growth agenda or, better yet, appoint a growth director with the power and resource to effect transformational change. For chief marketing officers, now is the time to step up, seize

Hit the growth sweet spot

Marketing efforts are often wasted because they either reach consumers with low propensity to buy or higher-potential consumers at times when they are not listening. In other words, businesses are marketing at closed minds. The Growth Director’s Secret advocates a new approach to ensure you are always marketing to open minds.

Using these tips, you can connect directly with consumers at the crucial moments when they are open to receiving "pitches" from other brands and maximize your return on investment.

1) Consumers don’t have socioeconomically predictable needs and preferences—they change according to situation and mood. Segment your market by the emotional drivers of purchase using the new generation of segmentation/mapping tools emerging from the world of neuroscience.

2) Identify those consumers/mindsets/purchasing occasions where your brand has a disproportionate chance of becoming the default autopilot choice—this is your growth sweet spot. Focus relentlessly on this and don’t worry if this means reprioritizing other groups—the dogged pursuit of the highest-potential customer groups turned Boots’ fortunes around in the 2000s.

3) Focus on connecting emotionally with your "sweet spot" customers in order to secure permission to sell to them. Present your brand in the context of an insight, which is emotionally important. Because we shop on autopilot, we’re hardwired to reject advances from brands we don’t usually buy—we’ll only listen if we feel empathy. Dove’s "Campaign for real beauty" did this very well.

4) Identify the moments of maximum emotional impact when your target customers will make autopilot decisions and present your brand as the optimum choice at these crucial times. You must focus on these moments—only then will you be marketing to open minds. Lynx’s "Lynx effect" campaign did this brilliantly and enjoyed years of exponential growth.

5) Build an autopilot proposition to beat competitors at the chosen moments of maximum emotional impact. Premier Inn’s ownership of the "waking up wonderful" moment via superior mattresses, a choice of pillow softness and its "Good Night Guarantee" is an example of a brand growing by doing this very well.