In the last article, we asked which small-business group your company belongs to—the elite 5 percent, the successful 15 percent or the struggling 80 percent. (If you didn’t read it, please visit Do You Have What it Takes to Become a Member of the Elite 5%.) The elite 5 percent are the engines of job growth, making up 90 percent of the new jobs created. But the real question is: How did the elite 5 percent become the elite 5 percent in the first place?
One outcome from our research on fast job creation was the determination of four characteristics that separate the elite 5 percent from the herd. The following represents the data with an understanding that each organization pursued these four characteristics in ways unique to them.
1. Leadership’s Focus on Resources
Sales focuses on business development, achieving 100 percent of client spend on comparable products and services, with sales techniques that highlight education.
Marketing spend equates to 10 to 15 percent of revenue per year to build brand presence and reduce cold calling. The minimum threshold is 5 percent.
Greater specialization is a bigger priority than new product development. A narrow focus on micro-segmentation (creating small differences from customer to customer) of existing products and services takes precedence over pursuing new markets.
2. Leadership’s Focus on Strategies
All elements of the customer’s experience are very distinctive and unique from the competition. There is standalone branding of the company, of executives as thought leaders, and of products and services.
The focus on target accounts is narrowed. Define your offer with clients by the value provided.
Specialized services are developed and built first for customers, then generalized into other markets.
Marketing partnerships are used to gain leverage from the reach of your customers and suppliers.
3. Leadership’s Focus on Clients
Specific and detailed descriptions of core clients are established, and market research is conducted into why your best accounts are your best accounts.
Client research can trigger a 31 percent increase in growth rate and a 20 percent increase in profits. In other words, understand before you build, never build on specification, and always codevelop with customers and suppliers.
4. Marketing and Sales
Face-to-face contacts are leveraged. Think partnering instead of formal distributorships, referrals instead of networking, the use of outside experts instead of cold calling and sales training of non-sales staff instead of spending on print ads.
This list of characteristics originates from meta-research on fast-growth companies. The initial research was conducted between 2002 and 2004 on startups that grew from zero into market dominators, including $1 billion firms that went public. The research revealed 34 best practices containing 296 attributes that differentiated companies experiencing fast from average growth—separating the 5 percent from everyone else.