Is A Business Strategy Important to Building a Business?

Recently I have been working with a couple of business owners who are stuck on the whole strategy thing. These owners want me and my company to take over their internet marketing, you know SEO, pay per click and all of that kind of stuff. The problems is they can't clarify their strategy for us. My rules are pretty simple, no strategy, no marketing. The simple reason is I want to keep clients for a long time.

What I have learned in 20 years of owning and building businesses is that anyone can grab an opportunity, throw money at it and fail. I don't want these clients because I am lazy. Not lazy because their business is too hard to market, but lazy because I don't like chasing down new clients if I lose one.

Before we had the strategy requirement in place, clients would last anywhere from six months to about a year and a half. The few that have been with us over five years all have two things in common. First they have a strategy. While the strategy has changed a little over time, we have been involved with the changes so we could change the marketing to meet the needs of the client and their market.

The clients that we took on who were opportunists and didn't have a strategy would not see the progress they expected and jump on the next opportunity. Every six months we had to completely revamp their marketing. In the world of the internet, consistency is a critical component of success. The first month of any campaign is the most expensive, and we usually lose money getting a client set up. In fact most of the time, you don't see real progress for two or three months.

When a client jumped from opportunity to opportunity it was like getting an entirely new client. None of them would pay the higher fees of the first month, so each time they "re-invented" their business we lost money. The clients with a strategy are all still in business, still clients and still profitable.

As we grew our business, we saw that a small base percentage of clients were floating the entire business.  It was a pretty clear testimonial to the accuracy of the Pareto Principle.  You might know the Pareto Principle as the 80/20 rule.  Sure enough more than 80% of our margins were coming from less than 20% of our clients.

As we started looking at these clients, we realized they all had one thing in common, a solid strategy or as some would say a business “mission”.  

Don’t roll your eyes just yet.  I don’t mean mission like some goofball plaque on the wall or feel good save the world stuff, I mean mission like a military mission or a sports mission.

In order to have a mission or strategy in business that the entire team can focus on, it must come from the top.  That was the second element we discovered all of our “good” clients had in common.  They each had a leader.  Someone who was clearly in charge and set the tone for the business and it’s strategy.

In sports, teams have a strategy to achieve certain objectives.  Working backwards, the final objective each year is the championship.  Before that the playoffs, and before they reach the playoffs, the objective is the game of the day.  Even within each game there are play objectives.  A batter might have an objective to get on base so he may bunt instead of swinging for the fences.

In the military, the real difference between success and frustration is the strategy.  “Stormin Norm” Schwarzkopf had it pretty easy compared to his successors.  He mission was “Free Kuwait”.  That was it.  With that mission, the lower generals could create a strategy.  That strategy would set objectives.  The soldiers could clearly see and understand the objectives, and then were turned loose to achieve the objectives.  

In management practice this is no different than a sports team heading to the field.

At the other end are vague missions like “bring peace to the region.”  No one knows how to do that, and what you end up with are frustrated troops, higher casualty rates and higher turnover because the troops don’t feel fulfilled when attempting to accomplish this vague mission.  Humans are always looking for purpose.  Leaders need to have a vision that creates a mission that builds a fulfilling strategy for all of the players.

Business isn’t any different, and I learned how to start coaching the owners that I liked so that they could build a mission and a strategy that they could get their entire business to focus on.  If they are not willing to do it, then they can go find another marketing company.  I am just too lazy to rounding up lost clients because they have no idea where they are going.

When you look at any opportunity in life or business ask one question; Is this part of my vision of a perfect life or am I settling for an opportunity?

If you want to learn more about strategy in business and life here is a great book to read.