|
Are You Growing at the Speed of Failure?
Double and triple digit
growth is not uncommon in the direct and interactive marketing industry.
When you read case studies about companies that have astronomical growth
rates, it is so easy to envision comparable success for your company.
Growth is necessary to remain competitive and attract talented personnel.
Too much growth can cause your company to implode. The challenge is to
achieve growth at a rate that doesnt destroy the infrastructure.
The mindset of the dot com
explosion was grow or die. The post mortem of many companies that failed
should read Death by Extreme Growth. Successful growth is a result of
careful planning and balanced management. Focusing solely on the top line
usually ends in failure.
There has to be a strong foundation for your
company to sustain high growth. It requires top-notch personnel,
processes, and systems. While they can be added or modified in the
interim, you have to recognize the need before it moves into crisis
management. Signs your growth rate is exceeding your infrastructure:
-
The work backlog is creeping upwards even though key
employees are working extremely long hours without vacations and holidays.
Time that was once spent following industry trends has been redirected to
crisis management. This reduces their effectiveness as managers and
leaders.
-
Profits are diminishing more than expected. There is a
tradeoff between growth and profitability. It should be planned, carefully
monitored, and revised when needed. If you plan a year where profits are
sacrificed to stimulate growth, plan the next year for profitability.
-
Service quality is decreasing in a steady trend. Early
indicators are increases in order turnaround, abandoned calls, and
backorders. There will be variances in your benchmarks because the growth
will immediately impact your service. If you correct the issues, the
service will improve. Manage your growth so you have the time and
resources to correct service issues.
-
Productivity ratios are steadily decreasing. Initially,
volume and productivity should increase simultaneously. The additional
volume will fill in the gaps. There will be a brief decrease as new
personnel are added, and then the continued growth should increase
productivity. If the ratios are declining without a correction, then you
are overstaffed and under managed.
-
Response rates are declining significantly. When you expand
your marketing into broader categories and borderline names, there is a
natural reduction in response. This should be projected and expected.
Large declines, especially in strong segments, indicate that customers and
prospects may have had a negative experience with your brand. It could be
too many mailings, poor service, or bad timing.
Balance is key in
everything we do. There has to be a balance between growth and
profitability for a company to be successful. High growth is exciting,
fun, and addictive. Plan it carefully so you avoid the growth trap.
Home
|
|
