The accepted wisdom is that is better to be a small fish in a big pond. This advice is aimed at those companies who are a big fish in a small pond. Being the big fish is a very comfortable place to be.
Being the big fish makes you feel like number one, like you’re crowding out every other competitor. And if you’re not a big fish in the small pond, you’re probably aiming to become one.
I Would Think Twice About That.
The problem isn’t becoming the big fish. The problem is that a big fish in a small pond doesn’t have a lot of room to grow. If growth is what you’re after (and it should be), the best way a big fish can achieve it is by moving to a bigger pond, where there’s room to expand. (Many companies are reluctant to make this move for a number of reasons – none of them terribly good – but that’s a subject for another post.)
If You’re Not the Big Fish, Look for a Smaller Pond.
One of the biggest mistakes I encounter when working with building materials companies is their refusal to focus. They’re so proud of their product that they see it as something that can be used in just about any building, even when it’s not the most suitable option. If they make wall products, they figure that all buildings have walls, so every building is a prospect for their products.
They usually think they are focused because their product is mainly used commercially or residentially, or in new construction or repair/remodel. But those ponds are still too big for most companies to succeed in.
You may see commercial new construction as a big ocean. I see it as a hundred different ponds. There’s a schools pond, a hotel pond, a healthcare pond, etc.
Avoid Being a Pond Hopper
Some companies are a bit more focused than this, but they are still going after too many markets (ponds). This scattershot approach has several problems.
Here are Three of the Big Ones:
Ineffective Sales and Marketing
The more markets or types of buildings or customers you pursue, the less effective your sales and marketing will be.
That means your cost per sale will go up. Because your marketing has to reach more people, your conversion rate will go down. Your salespeople will be working just as hard but closing fewer sales.
You are acting more like a merchant in a bazar trying to reach a wide audience of people, each with different interests. To do that, you’ll come up with a vanilla ice cream message that leaves you looking like just one out of a number of options.
That makes you generic and being generic means you’re easily replaceable. When you’re just another face in the crowd and you don’t have a clear value proposition aimed at a specific type of customer, price becomes your only selling point. When that happens, you give your customer all of the power and leverage. You have ceded control of your future over to them.
Spread Too Thin
What happens when you hop from pond to pond like this? You don’t conquer any of them, that’s for sure. You’re more like a bunch of minnows, each struggling in their own little pond. All you can do is run from pond to pond, reacting to threats or opportunities, instead of building a strong presence in any of them.
That makes you frantic. You won’t have the time or the resources to nurture, support and feed these many ponds and become a big fish in any of them, let alone ever be ready to move to bigger ponds.
Finding the Right-Sized Pond and Knowing When to Move Up
Trying to grow in an ocean is futile, their a few whales. Hopping from pond to pond also won’t give you the opportunity to dominate any of them. So, what’s the right move?
You need to step back and find the right-sized pond and know when you’re ready to move on to the next one. That’s the only way to grow faster and become a more solid company.
Here are four steps you can take to make that happen.
Step One: Be Selective
Pick your top five to ten ponds. But don’t just look for the biggest ones. Your first criteria should be the type of building or geography where your products is the best solution, hands down.
Let’s say you sell foam board, frozen food warehouses might be a good place to start. They need the highest R-value per inch they can get without losing any of the durability they need. That’s a small enough pond where a foam board company has a good chance of becoming the big fish.
Another example is an inverted membrane roof that costs more but lasts longer than any other type of commercial roof. That won’t be appealing to every single market or type of construction. But it’s the type of product that would be great for a university.
Don’t forget that your pond could also be geographic, based on things like weather or local building codes or building practices.
You should be able to meet with the owners of these ponds (your prospects) and convince them to eliminate any other type of product and then work to make your company the fish everyone in the pond likes the best in your category.
If you’re a trout and the prospect agrees that their pond should only be full of trout, that’s your first victory but it’s not enough. Your next goal is to become the biggest, most desirable trout in that pond, whether its frozen food warehouses or universities.
Step Two: Find a Pond That’s Right for Your Size
The next piece of information you need is the size of each pond.
Your product may be a great solution for shopping centers. But because none are going to be built soon, that’s an awfully small pond to be focusing on.
In addition to looking at projected activity, you also need to look at the average size of a sale per project. If your product is a great fit for firehouses and there are a lot of new firehouses that will be built, you still need to consider how big the average sale to a firehouse will be. If it’s really small, then you need to consider whether selling more small orders works for you or whether you’re better off focusing your efforts elsewhere.
It’s not hard to find the projected construction activity for housing, airports, hospitals and just about any type of building. For many products, like roofing, the retrofit market is bigger than new construction. If you sell one of those products, you will probably have to do a bit more homework to estimate the number of university roofs that will be replaced each year, for instance.
You also need to look beyond national figures to find out where, geographically, most of the activity is going to take place.
A state that is doing well economically will have more activity than one that is struggling.
Step Three: Dominate and Become the Big Fish
Take this information and use it to focus on no more than three markets, the ones that represent the best opportunities for you to grow into the big fish. You can still make sales in other markets, but send the majority of your salespeople to and focus your marketing on these three markets.
When you focus your efforts like this, you will quickly know more about these prospects’ needs. Once you really understand them and their struggles, it won’t be hard to build relationships with the major players. Instead of going to a big trade show, join their associations and exhibit at their smaller shows.
When you create product marketing tools and programs, target them to your three chosen markets. Never send out a brochure with a headline that says “The Best Roofing Product.” I challenge you to name one of your competitors who isn’t going to make that kind of claim.
You need to stand out by using a headline that speaks directly to your prospects: “The Only Roof Designed Specifically for Universities.” Yes, you’ll probably need to design three different brochures, one for each market.
You also need a page or section on your website that is focused on each of these three markets. That’s a bit of extra work and maybe some upfront costs, but it’s going to have much better returns than a generic message most prospects will ignore.
If you focus on your three best markets, you’ll grow your sales a lot faster than if you go after too many opportunities. Stop being the minnow in a bunch of small ponds. Pick three ponds and focus on becoming the big fish in each of them.
Step Four: Find the Next Pond
After following all three steps, you’ve become the big fish in three key ponds. But don’t get comfortable and settle for this. You’re ready to expand: pick your next pond and do it again.
I used the commercial market in these examples, but this also applies to residential new construction and repair/remodel.