Value from VoC for Scaling your Business
Whether or not you succeed in growing a product or scaling a business, one component you must always address as objectively as possible is Voice of the Customer. I use VoC as a headline. Think of it as three-part harmony with voice of consumer, voice of market and voice of technology/capabilities. When you find the harmony at the intersection of all three voices you have the foundation for sustainable growth and opportunities to scale.
Become deaf to any of the voices of the consumer, the market and technology/capabilities at your peril! Deafness occurs when business leaders start listening to their few successful experiences more than to the new voices they must hear to grow and scale. They become captive to what they want to hear. This signals the rise of assumptions as the predominant frame of reference which in most cases does not align with an ever-changing reality.
Assumptions impose a personal frame of reference on reality. In this way business leaders see through a glass darkly, that is, an obscure or imperfect vision of reality and will succumb to the siren voices of bias and assumption when making important decisions. Getting up close and personal with VoCs three-part harmony and experiencing this reality first hand is essential to growing a product and scaling a business at any stage.
What do we mean by scaling a business? An obvious example is a digital platform and code where scale can be achieved without overheads growing at the same pace. Some organizations, especially high-touch service organizations, like law firms or accounting firms, do not scale in this way. They grow by adding personnel so that there are more people serving more clients and generating more billable hours. Some companies scale by adding channel partners that enable a business to expand its selling capacity in return for a share of margin. If this scaling strategy works, revenue still significantly exceeds costs because sharing a percentage of margin results in more profit than taking on the costs of more sales employees. Similarly, another way to scale your business is through astute, strategic marketing that stimulates more sales cost-effectively.
Businesses can grow products and scale vertically or horizontally. By vertical scaling I mean by growing sales within the same business model by going further up the market vertical. An example of vertical scaling is a business called Primitives by Kathy (PBK) started and still headquartered in Lancaster, Pennsylvania.
Almost 20 years ago, Kathy Phillips found her employment was not offering enough creative challenge so she started making her own crafts in her garage and selling them at craft shows. From craft shows she earned about $10,000 that year. She also learned a lot from interactions with customers and other exhibitors. Now Kathy has a wholesale business that is worth more than $15 million and still growing – selling her designs to buyers from major national retailers to one-shop local retailers. The opportunity to vertically scale in craft and decorative items dramatically increased what a one-person workshop could make. PBK now has manufacturing contract workshops in the USA, India and China. Kathy designs and directs all the products. She has 150 employees in a 150,000 square foot facility in Lancaster County to handle distribution and customer service.
Kathy says that the secret to her success is the originality of her designs. The products themselves depend on Kathy listening to, understanding and leveraging her design skills with knowledge of VoC – which she, not a surrogate, was originally exposed to through her craft show experience. Kathy does not do craft shows now, but she is always present for buyers who come in person to her showroom and who also provide feedback as they shop on the PBK website. In these ways she continues to gather and leverage the three-part VoC harmony.
Clark Enterprises, also started in Lancaster County, and headquartered there today, is an example of successful horizontal scaling. By horizontal scaling I mean growing by starting and acquiring other businesses that complement the original service and provide a one-stop family of services to help existing clients grow and scale, and, also help acquire new clients.
Clark Enterprises began in 1908 with the Clark brothers both in their 40’s providing electrical services to local commercial businesses in Amish Country. They then expanded into HVAC. Many of the original business clients were in the food service business. The brothers instinctively acted to help when they discerned other needs and business opportunities that they saw and heard about first-hand from their clients. This ‘back of the house’ mentality came from a commitment to seek out new ways to make life easier for customers and customers’ customers.
The Clarks uncovered a need for access to a range of food service equipment and in the 1970’s and 1980’s Clark Associates founded three companies: Calumet Enterprises that acts as a holding company for a variety of commercial and industrial real estate properties and also offers real estate management services, Clark Fire and Protection and Noble Chemical . They also looked for other companies to acquire to add to the family of services. They bought Hawk Industries that specializes in the design, manufacture and installation of custom cabinetry and food-service and commercial counters, booths, tables, bars and backbars. They then purchased Commercial Stainless and now own other businesses that offer 34 brands of products to an expanding commercial client base that includes restaurants, retirement communities, nursing homes and hospitals, schools, universities and corporate offices and cafeterias.
In 1993 they opened their first brick and mortar, cash-and-carry Restaurant Store to sell foodservice supplies and equipment. It was immediately successful and scaled across Pennsylvania, Maryland, and Delaware over the next decade. Then, paying attention to the intersection of proven voice of the customer, voice of technology/capabilities and voice of markets beyond the mid-Atlantic, Clark Associates added a new business model to their enterprises. In 2004, based on the World Wide Web and using the Amazon business model of ordering on line and supplying from large and strategically located distribution centers, The WebstaurantStore.com came into being. From start-up to 2015 it has scaled making Clark the fastest growing foodservice and equipment supplier in the USA with annual revenue of 450mm, more than 1,000 employees and 1.5mm square feet of distribution space in 8 US states. Clearly a triumph for scaling and for a laser focus on serving the growing food service and equipment needs for an expanding range of clients.