This is What Keeps Me Up at Night

I was having a great conversation with a very cool business woman the other day and she used a term I had never heard before, “moderate failure”.

We were talking about a business that is failing so gradually it doesn’t even know it’s happening. This “moderate failure” is often a result of poor or inconsistent marketing practices where the business seems to be performing acceptably but the reality is that the company’s growth rate is insufficient to provide long-term profitability and battle natural customer attrition.

The more I thought about it, the more freaked out I became. The concept is similar to the hidden costs of doing nothing. I’ve met many CEOs who were thrilled with their company’s 4% growth rate – while bragging that they don’t “do marketing”. The fact is that measly growth rate should be more like 8-12% (based on benchmarking studies of similar companies in the same industry) if the company was sustaining a proper marketing and sales program. Ouch!

Moderate failure is difficult to spot if you don’t measure and track performance. I am stunned by the number of companies that don’t track basic metrics such as number and quality of leads, source of leads, conversion, cost per lead, close rates, etc. Yet these same companies are quick to tell me marketing doesn’t work for their business. How would you know if you don’t track it?

Moderate failure can sneak up on you. Years ago, as a fledgling CEO, I was stung by this creeping menace. We were able to sustain operations for several years before we finally realized that our business development activities were not enough to sustain the business. As our revenue hit a plateau and our debt increased, it took me a while to figure out that we were not simply at the low point of a curve – we were gradually failing. I wish I could tell you that my superior leadership skills saved the company. The fact is – I got lucky. We won a large, cash cow account that allowed us to focus on revamping our operations and systems to better track our performance while reducing our debt significantly. This windfall also allowed me to bring in a very experienced consultant that helped me see the path to growth through the trees.

The key is to have a sound process in place to manage your marketing programs and track metrics that directly impact revenue and profitability. Plus, a good nights sleep always help see the picture more clearly.


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