Are You a Hedgehog or a Fox? 

In Good to Great, Jim Collins tells the story of the hedgehog and the fox. He points out that many of us fall into the trap of believing that we need to be cunning, crafty and knowledgeable about every aspect of our business. I run into this type of thinking all the time, especially when it comes to the advertising side of business. However, it applies equally well in other aspects of the business. The hedgehog, on the other hand, learns to do one thing exceptionally well. Even when the hedgehog is under attack by the crafty fox, the hedgehog simply invokes its safety shield and waits out the fox. Businesses that attempt to be all things to all customers are like the fox. The hedgehog business finds its niche and learns to do that one thing exceptionally well.

We have already discussed this in previous newsletters, in dealing with your passion for the job you do. However, it also applies when it comes to determining your ‘right and perfect’ customer. One of the most critical issues for a business to determine is the lifetime value of its customers. If you spend your time and effort attempting to identify and reach this highly profitable segment of your business you can invest high return time by learning how they came to you and why they stay. This week, I want to focus on how they come to you.

I spent a considerable amount of time with a client and her staff in San Antonio, Texas. She had an aesthetics practice that was struggling. She had been focusing all of her attention to attracting customers that were interested in her two highest-priced … and most profitable procedures. She was frustrated at her lack of success and wanted to see if I could help her. After some long discussions with her and her staff, we discovered that most of her customers for the high-priced procedures were customers that came to her for more routine procedures, such as Restylane and Botox treatments. We also discovered that these clients provided a greater lifetime value to her practice than the clients that simply came looking for the higher-priced services.

She was spending a considerable amount of money advertising for what she wanted, never realizing there was a better way to get what she needed I recommended she switch her external marketing dollars to attracting more clients for the gateway services, and to direct her internal marketing to promote the up-sell to the premium services. The key lesson in this example was that you need to understand the full economic benefit of our various customer constituencies. This principle applies in any business.

Look for the reasons people naturally discover your place of business. Then evaluate which of those reasons brings you the best long-term results for your business. Then focus your energy and your resources in attracting that ‘right and perfect’ customer that will produce you an ongoing revenue stream for your business.

It's All About ONE THING ...

 Every time I tell this story, I am reminded of the scene in City Slickers when Curly (Jack Palance) was telling Mitch (Billy Crystal) about the meaning of life. Curly held is index finger in the air and said ‘this is it what it’s all about.’ Mitch responded with ‘your finger?’ Curly responded back … ‘No, it’s all about one thing.’ When Mitch pressed him on what that one thing was, Curly informed him ‘You have to figure that one out on your own.’ Then he died. 

You are in the best position to apply this story and this information to your own business. It is often helpful to have someone from the outside help to prod you with some discovery and the application. However, you have the answers. Like the hedgehog, you need to learn to do one thing exceptionally well. Once you have mastered one, you can look at others.

The bottom line is “Become a hedgehog ... not a fox …”

Gary J. LaRoy,
President/Founder
Natural Path Marketing