To discover your X Factor ask questions like: “What is the largest cost component in my industry?” or “What is the part of my industry that I hate the most?” Go to your industry trade association tradeshows – look at the breakout session topics over the last several years and look for patterns. These are “top of mind” problems for your industry, and all of your competitors are faced with the same challenges. Next begin looking for solutions that will give you an exponential competitive advantage (7-10x) for your industry. Once you figure it out, don’t tell anyone.
Here is an example of how an X-Factor revolutionized not only a company, but an industry many thought was fragmented and stale. Vistaprint set out in the mid-2000s to test their belief that marketing and printing offerings could be provided to small businesses in a profitable manner; to an established industry that believed that small business printing services were not scalable.
Vistaprint challenged this industry belief and developed printing technology that enabled it to aggregate and print customers’ small orders in a highly scalable way. As a result of this technological innovation, Vistaprint developed an X-Factor that turned the industry on its head and enabled the company to grow from $5 million to $25 million in revenue over a 5-year period, servicing nearly 10 million clients each year in over 120 countries.”
“Let’s look at another X-Factor story, this time from a small business: Happy Lawns, which was owned by Barrett Ersek. In 2001, Barrett was frustrated. His lawn care business had flat lined at $2M for 3 years in a row. He tried everything to drive sales, but nothing seemed to work. Something in the sales process was broken. It cost $300 and 3-4 weeks to acquire a customer that would spend $400 annually with Barrett’s company; and since the company’s gross profit was around 50%, it took 6 quarters (18 months) to cover the acquisition costs.
While Barrett was struggling, he learned about the X-Factor and got to thinking about how to gain a significant advantage over the competition. Barrett decided that instead of focusing on the problem, he would focus on the asking the right question. He asked: How can I make the sales cycle cheaper and faster by 7-10x? He started asking everyone he knew and he finally found it.
Since Barrett sold his company and now does public speaking about his story, we can share his X-Factor. In 2003, at a ‘Birthing of Giants’ program Barrett was asking everyone he could find about his X-Factor question and bumped into a guy who mentioned aerial photography maps, which later became the basis of Google Earth. No one knew about them at the time. The aerial photos made it possible to measure lawn size and see significant landscaping issues (like swimming pools) any place in the country without having to send a representative to the property. The concept revolutionized Barrett’s sales process. He could now give a prospect an estimate right over the phone in 3 minutes when it used to take 3-4 weeks. When he heard about aerial maps, the answer to his X-Factor question, Barrett immediately, updated his business plan with his new process, he sold 1,000 lawns in 3 weeks. He got a patent on his process and his sales grew from $2M to $10M in just a few years.”
One last example One example of an X-Factor that many of us know is the Aussie-themed chain restaurant Outback Steakhouse, which was founded by veteran chain restaurateurs Chris Sullivan and Robert Basham. They had been through several difficult chain restaurant expansions and they realized that something was broken in the chain restaurant industry. Quality of food and quality people were hard to scale the larger the chain became. They started looking for a solution to the quality issues by trying to find some common element. After a significant amount of study and debate, they found their answer: They realized that the problem with the chain restaurants that they needed to fix was restaurant manager turnover.
At the time (late 1980s), the average tenure for a store manager was 6 months. Better store managers improved the quality of the people that worked in the restaurant and that, in turn, helped keep the quality of the food and the customer experience high. In most chain restaurants, competent restaurant managers got promoted to area manager positions in order to make more money or they left to start their own restaurants. Big chains were spending millions to recruit/train new managers – so they realized if they could retain their store managers for more than the typical 6 months that they would have a competitive edge.
In 1988, Outback initiated a breakthrough compensation plan based on their prior experience in the industry. They asked key managers to sign a 5-year contract and to invest $25K in the restaurant they would manage in exchange for 10% of the store’s cash flow and a higher-than-industry average base salary. The deal could turn a $45K-per-year employee into a millionaire. Ultimately, the experiment worked tremendously. 95% of managers stayed with Outback for 5+ years, giving the company an 10 times advantage over its rivals and 80% of employees renewed their 5-year contacts. Outback is so confident of its restaurant managers’ tenure that they put managers’ names in gold leaf in each restaurant’s entry way.”
After discovering your X Factor immediately begin to work on finding the next one. Your competitors will eventually figure things out (once they know you are doing it, they’ll know it’s possible and they’ll keep working until they find the answer). People work differently when they know something can be done. Therefore, start working on your next X-Factor as soon as you can after you launch your last X-Factor. X-Factors take some time to find. Solutions to complex problems that have stumped your industry for years won’t appear with just one brainstorming session.
What trends will affect your business? Which will influence your business positively and which could possibly hinder your growth? Can you state your business strategy in one simple sentence? If you answered no, I suggest you book time this week with your team to work on your business strategy. Get your free worksheet on the X Factor to help you become 7 – 10 times better than your competition. If you are stuck, I would be happy to help. You can book in a free 30 minute call with Shelley Rogers.
0 Comment