BAT_MAP: SURVIVAL
IT’S NO secret that the great recession decimated the
building industry. But Jeff Booth’s company, BuildDirect.com,
isn’t hurting. It sells building materials at a steep discount
through its website, thanks to arrangements to ship directly
from manufacturers. “It’s almost like an online Costco of
building materials,” says Booth, president and CEO of this fast
growing Canadian Company. Expecting his sales to increase by
more than 20 percent this year, Booth has increased his staff by
about 10 percent to 53 people.
What makes BuildDirect.com thrive in a struggling industry
is its growth strategy. And our recent research involving
more than 3,000 CEOs and executives from around the
world confirms that strategy is their #1 focus this decade, as
companies rethink their fundamental approach to changing
markets.
The challenge is balancing all the complexities of strategy
while keeping it coherent and simple.
Your strategy must tell a simple story, yet touch on what we
call the Seven Strata of Strategy. Booth and his partner are
masters at all seven strata – principles that every business
must master and integrate to achieve its potential in today’s
uncertain global economy. Here’s a checklist that you can use
at your own company.
strategy that drives your business model. This isn’t necessarily
a selling point you make to your customers, but it supports
delivering on your promises. Southwest Airlines’ “Wheels Up”
one-PHRASE strategy has kept every strategic and tactical
decision, like no-advanced reservation seating, directed at
keeping its planes in the air and generating profits so it can
keep airfares low. We strongly suggest you keep your one-
PHRASE strategy relatively secret, which is why I’m not sharing
BuildDirect.com’s.
Support
Your
One-PHRASE
Differentiating Actions.
Strategy
With
Underlying the one-PHRASE strategy is a set of specific
actions that represent HOW you execute your business
differently from the competition. BuildDirect.com, for instance,
requires a minimum order of a pallet of material. It carries
no name-brand products and instead create its own. And it
doesn’t give anybody terms, instead requiring full payment on
order (cash in advance). Competitors might share one or two of
these same actions, bu t it’s the unique combination of all three
for BuildDirect.com that truly defines its differentiation.
Establish Your “X Factor.”
To establish and hold onto your competitive edge, you need
to aim for at least a 10x underlying competitive advantage
over your rivals. At his previous lawn care company, Happy
Lawn, founder Barrett Ersek reduced the typical sales process
from three weeks to three minutes by using the latest digital
technology and tax map data to estimate lawn measurements
while customers were on the phone – instead of having sales
people visit prospects’ homes to take manual measurements,
write up quotes and then schedule appointments. It’s not
surprising that industry giant ServiceMaster bought the
company, which had $10 million in sales, from him. At Holganix,
Ersek’s new company that manufactures and distributes
organic fertilizer, he’s identified another X-Factor. But like the
one-PHRASE strategy, it’s best to keep it secret, really secret.
Choose The Words You Want To Own In Your
Marketplace.
If you don’t know how you want your customers to find you,
then don’t expect them to track you down. BuildDirect.com
optimizes its site to appear high in natural web searches for
terms such as “laminate flooring,” “porcelain flooring” and
“hardwood flooring,” which are key product areas. How? It
publishes unbiased content – which includes these keywords –
to help site visitors tackle their building projects.
Offer A Unique Brand Promise.
This is the experience you are promising your customers that
differentiates you from the competition. BuildDirect.com’s is
simple: “Best price, best quality and product expertise,” says
Booth. It’s normally a three-part promise, with one of the
promises – “best price” in BuildDirect.com’s case – that is most
top-of-mind. And it’s critical that you know how to measure
daily whether you’re keeping your promises. Booth’s team
has various KPIs (Kept Promise Indicators!) it monitors, like
competitors’ pricing, to make sure it is keeping its promises.
Measure Your Profit Per X and BHAG.
And last, there is a key metric that defines the essence of your
business model and is tied to your long range goal. Jim Collins
calls this metric your Profit/X and it benchmarks your Big Hairy
Audacious Goal (BHAG). In the retail building supply industry,
the key metric is same-store sales growth. Most BHAGs are
opening some number of stores within 10 years. At BuildDirect.
com, the business model is built around focusing on profit per
“building product category.” And it has a specific formula for
how to maximize this. To reach Fortune 500 status by 2023,
Booth figures the company needs to build out 20 specific
product categories, ranging from $500 million to $2 billion in
revenue. Given its mastery of these seven strata of strategy,
we wouldn’t be surprised to see BuildDirect.com listed in
Fortune even sooner.
Make It Hurt To Break Your Promise.
There should be some pain in your system if you let your
customers down. This keeps your team laser focused on
keeping your promises. BuildDirect.com has a 30-day money
back guarantee that includes paying return shipping (from
$300 to $500 for a typical order), says Booth. The company
offers the policy to customers who are unhappy for any reason.
Nonetheless, says Booth, «Nobody uses it.» Why? The company
works really hard to keep quality up and prices down.
VISIT SCALINGUP.COM
Create A One-PHRASE Strategy.
Underlying the brand promises you express is a one-PHRASE
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