Yesterday, Mark and I visited a company to introduce ebdex Document Exchange. The company is a subsidiary of a FTSE250 plc with revenues of over £12m and 100 staff with number of city based offices operating predominantly in the UK. They operate in a growing sector with number of large incumbents. Whilst they have a large parent (over £700 m revenues), they operate as an independent, whilst their incumbents are small subsidiaries of very large corporations (almost institutions). The company has achieved significant growth over the last couple of years.
One of the things their CEO said stayed in my mind and I thought I will share it with you. He put down getting closer to customer as a key differentiator.
Our account manager, each look after about 25 clients, and they are small clients of each generating around £1m. Whereas the account managers of industry incumbents look after about 75 clients.
Without going into too much detail, getting closer to customer is crucial to any business. You need to identify customer pain before you can offer relief. And this company is doing it. And they have the potential to be one of the leading companies in their industry, as long as they can maintain this level of service. The incumbents have much more resources at their disposal, so why are they not allocating lesser clients for each account manager? Could this be a cultural issue? They are in a growth industry, therefore there is plenty of businesses to be had. The incumbents will only start noticing if their clients start to go elsewhere or their market share, revenues or profitability start dropping.
So, is incumbents’ strategy wrong? I do not think so. But if they pay bit more attention, perhaps their growth rates may start to look even rossier and thier dominance in the future may be secured.