Tight focus on customer needs is driving a profitable explosion in
TORONTO, June 15, 2011 /CNW/ - If top-performing Canadian companies are
anything like their global counterparts, they're significantly growing
their businesses by offering new products and services to existing
customers, Ernst & Young says.
The report Competing for growth finds that top performers (survey respondents in the top third for
revenue and growth of earnings before interest, taxes, depreciation,
and amortization) generate 46% of their sales from new products,
compared to 24% of low performers.
"This discrepancy is not accidental," explains Jeff Charriere, Managing
Partner, Markets, at Ernst & Young in Canada. "Companies that want to
lead in their markets are focused on incremental innovation. Right now,
the customer is king. Understanding their needs better has resulted in
an explosion of product development."
Despite the recession, one-third of top performers boosted their product
range by more than 20% in the last three years alone. Only 6% of
low-performing companies achieved the same.
"What's remarkable is they achieved this during a very tough economic
period, when competition was fierce and cost management was paramount,"
In Canada, everybody from retailers to financial services to
manufacturers is finding new ways to produce variety without
compromising on cost. Businesses are adapting their offerings by
zeroing in on what their customers need and want.
Duncan Shaw, Ernst & Young Entrepreneur Of The Year® 2010 for the Atlantic region, is a prime example of how businesses here
are doing exactly that. His company — Cogsdale — has become one of the
foremost trusted software developers for local governments and
utilities. Shaw directly attributes Cogsdale's winning business
strategy and inspiration for new software solutions to two-way
communication with his customers.
"This is about maintaining your existing customer base by tailoring your
efforts to match their needs," says Charriere. "The research shows
innovating based on potential — rather than current — customers is
actually hurting, not helping, the bottom line for many companies here
and around the world."
From retailers evolving their product lines to combat the draw of deals
south of the border, to traditional manufacturers reinventing
themselves for the 21st century, Charriere sees endless possibilities
for Canadian companies looking to take their performance to the next
level. "This shift towards better understanding customer needs is
already driving an explosion of product development. Getting the right
systems in place to analyze your customer base is a smart move that
could shift your product development in new, profitable directions."
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