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Guest: CEO Coaching International’s Phil Sullivan. Phil has over 30 years of experience establishing international operations and delivering dramatic revenue growth in the medical device and semiconductor industries. Most recently, Phil was the president, CEO, and a board member for Samsung’s healthcare subsidiary, NeuroLogica. In just four years as CEO, Phil grew end-user revenues 500% and increased overall gross margins by 20%.
Episode in a Tweet: Samsung NeuroLogica CEO used this three-step process to drive BIG growth in short order.
Quick Background: Many ambitious companies learn too late that there’s a BIG difference between the size of your total market and the size of your addressable market. But focusing on your addressable market without limiting your growth potential can be tricky, especially if you don’t have a clear vision forward and a mastery of the key numbers driving your business.
On today’s show Phil Sullivan discusses a three-step process he used at Samsung that will keep your company’s growth and the size of your addressable market in sync.
Transcript: Download the full transcript here.
Key Insights on Your Addressable Market from Phil Sullivan
1. Understand your opportunity.
“I think many companies play in markets that they don’t fully understand,” Phil says, “and they end up missing enormous opportunities. They deliver unsuccessful products or solutions to the market. I find with a very methodical approach you can understand that opportunity. When you do, you’ll also have data to hold yourself accountable. The approach that I followed is you really need to, with an open mind, identify the total market that you’re serving.”
It’s easy to get overwhelmed by “research paralysis” if you haven’t mastered the numbers that are the most essential to your business’ success. Drill into your KPIs. Analyze who your competition is, what they’re doing, and how you could do it better. Talk to your most important customers about potential new offerings and how you can improve your current products and services. Ask your entrepreneur coach to look at your market with a fresh set of eyes. And if your marketing department isn’t capable of crunching all this data and finding additional numbers you need, consider hiring an outside firm.
“At Samsung, I probably had 30 sales metrics,” Phil says. “But what I would do religiously is that in the markets that required demos 100%, I would review three things: the pipeline, the number of demos, and the demo success rate. I would say companies that have a well-defined market, have a good size, are probably doing this at some level. But what I worry about is they’re probably taking too many data points and they’re getting themselves all confused. Where to me, it’s all about the pipeline.”
2. Fit your product to the market.
Imagine that you’re trying to create an on-demand transportation company to compete with Uber and Lyft.
That might seem like a single-product market. But dig a little deeper, and you’ll realize that within the broad category of rideshare customers, there are distinct niches: occasional riders, everyday riders, high-end Uber black customers, Uber XL customers who need rides for larger groups of people. Is your new company going to fight for a piece of that entire market? Or is there a smaller addressable market that you are uniquely positioned to grow in?
In fact, what about people who never use ridesharing at all? Is there a totally untapped segment of the consumer base that you could attract and make your own?
In most businesses, the possibilities can seem endless. Which is exactly how mediocre companies get their heads stuck in the clouds.
Phil advises, “I think you need to decide, are you going to serve all those markets or are you going to specialize in a particular part of the market depending on the resources that you have? There are a lot of other opportunities, but to me, what are you good at? What are you trying to run your business around? Really focus on that.”
So, what are you best at? How can you leverage your customer service expertise, or your cutting-edge technology suite? What makes your company special, and what is going to make it stand out in your customers’ eyes as well?
3. Assess your access.
Now that you know your addressable market, you need to analyze your entry points.
At the high level, that means checking off any details that are going to impact whom you can sell to and when you can start selling. If you want to get into government contracting, you better have someone on your team with specific expertise on crafting winning bids. Your revolutionary production method isn’t going to matter much to an OEM who’s in year one of a five-year contract with your competitor. A big sale in California might drain more resources than it’s worth if your infrastructure isn’t built to reach out of the Midwest.
At the ground level, your point of entry is your sales team. Don’t be afraid to rehearse and refine a consistent pitch, especially if you’re preparing to introduce something new to the market. And make sure that your sales strategy is going to incentivize your team to work for what’s best for the company, not what’s best for themselves.
Rather than setting targets that are going to hang over your sales manager’s head every quarter, Phil recommends involving your sales team in the quota process. Working together through a systematic approach based on what the company discussed at your annual planning session takes emotion out of the equation. If they feel involved in setting targets, your team will also feel more empowered, more capable of hitting them, and more motivated to help you make BIG happen.
1. Follow your numbers to an addressable market specific enough for you to dominate but BIG enough to allow for growth.
2. Use your strengths to deliver a AAA product or service that only you can deliver.
3. Find an ideal entry point where you’ll be able to make your best pitch to your most desirable customers.
Transcript: Download the full transcript here.
About CEO Coaching International
CEO Coaching International works with the world’s top entrepreneurs, CEOs, and companies to dramatically grow their business, develop their people, and elevate their overall performance. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 350 CEOs and entrepreneurs in more than 25 countries. Every coach at CEO Coaching International is a former CEO or President that has made big happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $1 billion, and many are founders that have led their companies through successful eight and nine figure exits. CEOs and entrepreneurs working with CEO Coaching International for three years or more have experienced an average EBITDA CAGR of 66.4% during their time as a client, more than five times the national average. For more information, please visit: https://www.