Every marketing plan should include an industry analysis. For what? Because it’s critically important to understand the industry you operate in and to identify and track your performance against your organization’s Key Business Success Factors (KSFs).
Understanding your industry and identifying your KSFs will help you build a successful marketing plan; one that is based on measurable progress and results. A key success factor is one part of a whole that affects your company’s ability to succeed in your market.
Most companies focus on between three and five of the most important success factors (for their business). From time to time, or year to year, these key success factors may change as the industry or market changes.
15 Examples of Key Business Success Factors (and this is not an exhaustive list) are:
- Number of new customers per year;
- Number of customers lost per year OR number of customers retained (it is important to understand and regularly measure the potential customer lifetime value for each customer);
- Hire and retain excellent employees (measured by employee turnover, vacancies, customer satisfaction);
- Successful new product introductions (measured by sales and costs);
- Successful promotional programs (measured by sales and costs);
- Good/sound financial indicators: e.g. working capital, acceptable ratios (especially debt ratios), profit margins, cash flow, receivables, etc. ;
- If in manufacturing, high utilization of operating capacity;
- Strong network of suppliers;
- Strong distribution network or channel;
- Successful product positioning;
- Low cost structure;
- Niche product/service – track the number of competitors entering and/or exiting the niche. Is the cost of entering the market high or low?
- Market leader, follower or challenger, what is your relative position in the market and why? Are you able to sustain this position if you are “attacked”?
- Product differentiation: Do you have any technology or service advantages that others can’t easily copy? How unique and differentiated is your product or service?
- Time to market: can your product or service be delivered quickly and easily; from first point of contact to shipping and then invoicing?
Once you have identified your specific KSFs, strategize around these factors and incorporate these strategies into your marketing and business plans to ensure your business is successful. Develop measurement programs to help you track your progress against your success factors. You should also assess your competitors and see if your competitors’ key success factors are similar or different from yours (depending on your strengths and weaknesses and your marketing and sales strategies, they may be very different). One way to compare and evaluate is to do a competitive strength analysis; discover the strengths and weaknesses of your competitors and build your competitive strategy accordingly. (A sample SWOT analysis can show you how to analyze the strengths, weaknesses, opportunities, and threats your business faces.)
For example, if retaining your existing customers is a key success factor, your business goal should be to increase sales with your existing customers. How are you doing that? First, conduct a customer satisfaction survey to gauge how happy your existing (or not) customers are. Next, determine what needs to be changed and what you need to focus on. Make sure you understand how your customers choose between competitors: is it price, service, quality, knowledge, reliability, relationships, or all of these factors? Which product or service attributes are most important to your customers? What is the unique difference between your product or service and your competitors’ product or service (from your customer’s perspective)?
Once you have identified your key success factors; builds measuring devices to track them; evaluated and compared the KSFs of your competitors – and those of the industry; integrated your strategies and objectives into your marketing and business plans (phew!); you must act! Build your business on these key success factors.