Article provided by FedGroup
The success stories we hear most often are of companies that took advantage of a need in the marketplace and that just continue to go from strength to strength. However, there are many companies that are massively successful today that faced the very real threat of going under not too long ago.
Just because a company is not performing as it used to, does not mean that it is heading for liquidation, but in most instances where a famous turnaround was achieved, it took true grit and plenty of innovative thinking to get out of the rut. This article looks at the companies that made it back from impending doom, and the people who made it happen.
Turn your enemy into your ally
In the early 80s, a small ice cream company, Ben & Jerry’s, was founded and started to create a loyal following that was not making many waves but continued to grow its following. Their giant competitor, Häagen-Dazs, recognised the threat and tried to limit Ben & Jerry’s distribution by threatening to stop distributing their product to outlets that also stocked Ben & Jerry’s.
Ben Cohen and Jerry Greenfield sought legal advice, but were told that a lawsuit would cost them US$50 000, a lot more than the US$7 000 net income they had made the previous year. Instead of lying down, they decided to use their competitor’s well-known name to attract attention to their plight.
They launched the “What’s the Doughboy Afraid Of?” campaign, referring to the logo of the Häagen-Dazs parent company, Pillsbury. As part of the campaign, they distributed kits to allow customers to write letters of protest to the management of their rival.
This move proved to be a stroke of genius and not only did more people take note of the brand, but in 1985 Pillsbury agreed to stop coercing outlets to drop Ben & Jerry’s. The company was saved and quickly increased in size. In 2000, it was sold to Unilever for US$326 million.
Change with the times
In America, the Metropolitan Opera is such a household name that it is hard to believe that the largest performing arts organisation in the world was faced with closure a few years ago.
Before the turn of the century, Met tickets were as scarce as hen’s teeth and sold-out performances were the norm. However, ticket sales nosedived due to a number of factors that included rising costs, fewer sponsors from philanthropists, increased competition, minimal marketing and changing consumer behaviour. In the past, the Met could count on many subscription ticket sales, but consumers had become a lot more spontaneous in their decision making and stopped planning months in advance. This change had a big impact on their cash flow.
Then, the long-time general manager announced his retirement, and the future of the Met rested on the new incumbent, Peter Gelb. He immediately set about turning the house’s fortunes around through a three-pronged approach; improving the product, improving marketing and looking for new revenue sources.
The product was improved by signing on more top-class artists to perform. In the past, a diva would perform for a few nights, and then the role was reprised by a lesser-known artist for the duration of the run. This was changed to retain the pulling power of the stars for longer. The Met also made a point of marketing its lesser-known stars to achieve higher status with theatregoers.
With an improved product, marketing became easier and the theatre kept with the times by turning opening nights into a glitzy affair. The red carpet was rolled out and the arrival of stars was being broadcast live with the paparazzi in full tow.
Additional revenue is now being created by telecasting performances live and in high definition to movie theatres around the world, where more people pay to see the show. These screenings also feature live interviews with the stars during intermissions, coupled with specially-produced documentaries that shed light on dress rehearsals and the story behind the production.
All these changes have been made in the last few years, but already they have borne fruit, sell-outs are once again on the increase and subscriptions are also up for the first time in years.
Tweak the concept
Sometimes, the only change between huge success and massive failure is a small tweak to differentiate a product.
Gary Heavin found this out when he started a women-only gym called Women’s World of Fitness with his brother. The concept was immediately popular and within six years they had opened up 14 branches. However, their rapid expansion came at a price and soon they could not afford their overhead expenses as new outlets were not generating enough new memberships. He literally lost everything, his house, plane and even his wife.
However, his luck turned in four short years. With his new wife, he looked at where he went wrong and developed a new women’s fitness centre called Curves. Some equipment was done away with to focus exclusively on circuit training, bringing down the cost of starting up an outlet. The first location opened in 1992 and three years later, the concept was franchised. Today, there are over 10 000 gyms across the world.
A good product is the cornerstone of any successful business, but as these success stories show, it is often not enough to ensure business success. Success comes from putting your great product in the hands of as many people as possible and taking measures to ensure that consumers come back for more.