In a previous blog we defined scale as two complementary components:
- Exponential Growth where revenue per customer (which we re-define as “community member”) increases as the size of the community grows, while
- Achieving Economies of Scale (proportionate reduction in costs per dollar of revenue gained by an increased level of sales)
From our point of view, when a company is scaling it exhibits these seven dimensions:
- Unit costs decline as it grows.
- Product or service value grows as sales increase.
- Service costs decrease.
- Category dominance and rapidly increasing sales from customer recognition of the company as the authority in the category.
- Operational costs decline as a percentage of revenue.
- Innovation is an integral part of the culture.
- Shared values and expectations as expressed through a structured measurement and feedback process.
If any of these dimensions of scale are missing the company has lost its scale momentum – or never really achieved true scale.
The Scale Werks curve illustrates the exponential growth (“Scale”) created through our processes of Transforming the Customer Base while Lifting Revenue per Customer.
The “X” axis – Lift Revenue per Customer – is built on capabilities that provide value to your customers:
- A customer-centric technology platform that facilitates fast, intuitive and engaging interfaces, collects relevant information and organizes it to support efficient, intelligent decision processes by both the customer and the company.
- A smart customer experience which makes it a pleasure for your customers to interact with you to collect information and execute transactions.
- The ability to leverage precise customer insights, generated from your data, that empowers you to quickly customize your interactions, products, product mix and service to meet the “wants” of your customers…and leave them with a “Wow!”.
The “Y” – Transform the Customer Base – axis is a powerful, deep-insight deep-relationship continuum.
- The base of the continuum is grounded in knowing your audience. With deep-insight analytics you gain a granular level understanding of your audience – enabling you to clearly define the jobs that your audience comes to you to have done.
- With a clear, data supported understanding of those jobs you can define your product and service offerings from a whole new perspective – not a niche or market competitor – but a category leader.
- To be a category leader you MUST become the Authority in the jobs that customers come to you to have done. Being the Authority means educating, not selling your customers. Good education is not just informational, it’s experiential – and this is where the techno-experiential environment of the X axis gives meaningful competitive advantage. The Authority-techno-experiential combination is the platform on which you can architect your Community.
- Communities emanate from Category Authorities who’s deep insight and process for helping their customers achieve the job to be done inspires the customers to come together to celebrate the accomplishment of the job. Think Harley Davidson, Sales Force or Patagonia.
The X and Y axis work together to generate scale.
As you increase or expand your customers’ capacities to do the job they want to have done, the more they tell other potential customers about the positive experience. This causes growth to accelerate because it follows the laws of the network effect.
As the size of the community grows, the more valuable it becomes. As the authority that leads the community, you can use the data collected to identify more opportunities to serve the wants of your community.
As you identify more opportunities to satisfy community member wants, you scale. As you scale you’re presented with the opportunity to evolve your business model. (We’ll cover that in subsequent blogs.)
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