McDonald’s, the leading restaurant organization in the world, is opening 10,000 more stores in the next four years, increasing their count to 50,000 worldwide. They’re anticipating the fastest period of growth in the company’s history. With SO many competitors, and so many fast-food options, how is there even enough market share for them to accomplish this?
What makes this even more astonishing is that there are very few industries as difficult to succeed in as the restaurant business; 60% of all new restaurants fail within their first year of operation. With slim margins, high employee turnover, and intense competition, it’s one of the hardest businesses to operate, much less scale. Yet McDonald’s has continued to dominate and figure out how to expand in an incredibly crowded marketplace with an already impressive market share.
Black Rifle Coffee, a competitor to Starbucks, is another company that is rising above the others. They had a net revenue increase of 31% in Q4 of 2023, with anticipated revenue of between $430 million and $460 million this year. How can this be? Is it because everyone is walking around saying to themselves, “I wish I could find a place to buy coffee around here!”? Nope. We live in America, where you can get coffee anywhere, from fine-dining shops to any choke-and-puke pitstop on the Interstate.
At the 17th Annual IT Sales and Marketing Boot Camp, my big event in Nashville, I talked about how only 4% of the 33+ million businesses in the U.S. ever break the million-dollar mark, and a mere 0.4% of all businesses get to $10 million in sales. In the MSP space, the numbers look better but are still fairly abysmal: 79% of all MSPs never break the million-dollar mark despite the fact that the industry is in massive growth, being driven by regulatory compliance, ever-rising cyberattacks, and a huge IT labor shortage. Many of these under-$1-million businesses have been operating for years—some for decades—but still never seem to figure out how to scale and grow.
Many make the mistake of thinking that if they just improve the product, THEN they’ll be rewarded with enormous success. But does McDonald’s win because their food is so good, their atmosphere so luxurious and inviting, and their employees so customer-focused? Of course not. The food is tolerable at best. And you’d never think of McDonald’s as THE place you’d want to go on a special occasion. In my opinion, Black Rifle Coffee is no better than just about any other coffee I can buy at the local grocery store or get shipped to my home from 100 other coffee roasters who sell home-delivery coffee. How the heck did they carve out nearly half a billion in sales from an already overcrowded marketplace?
It’s NOT *Just* About The Product Or The Service
Here’s what you need to take from the above examples: It’s not what you do but how you run the business that makes the difference. Success in business does NOT require you to have an exciting, new, revolutionary breakthrough or a UNIQUE “thing” to sell. It often doesn’t even require you to have the BEST product or service. We can clearly see that it’s very possible to build one of the most valued companies in the world selling a complete commodity in an extremely competitive and saturated marketplace, where your product isn’t even a necessity to buy (McDonald’s) and/or where your customer can easily do it for themselves (can you say Keurig?). How? By packaging, pricing, and presenting it differently AND coupling it with a very well-run business. Let me unpack this a bit more…
Black Rifle is a coffee provider, but it’s not REALLY about the coffee. It’s about their social stance on serving coffee and culture to people who love America and honoring the men and women who protect our country. It’s about an ADVOCATED POSITION. Of course, this company would not have gotten to a $1.04 BILLION market cap with simply an advocated position. It undoubtedly required a sophisticated leadership team, solid strategy, and brilliant, consistent execution. That said, it was their unique approach and messaging (USP, or unique selling proposition) that got them established. It still provides a means for significant differentiation, despite the fact that they’ve birthed a number of copycats.
I see a lot of business owners making their lives a lot more difficult than necessary by myopically focusing on the product or service, thinking they need marketing campaigns that sell THAT exact offering they have, INSTEAD of starting with a clear vision of who their customers are, then building the product for that specific avatar. They make the mistake of going wide and attempting to appeal to a much larger audience, afraid of targeting a particular customer, watering down their messaging and uniqueness, thereby appealing to none.
Customer Selection And Development
Most businesses don’t even need that many customers in order to do well. An MSP with 60 to 70 good customers can easily get to a million net IF they are pricing properly and attracting the right client base at the correct margins. The linchpin is the quality, DEVELOPED customer, not just any customer who can fog a mirror and wave a dollar and who is permitted to buy whatever they want like a spoiled child because you fear correcting their bad behavior. Then you ignore them unless they call you for something. The best customers won’t tolerate this—and the best MSPs know this and build organizations that the best buyers want to do business with.
At the IT Sales and Marketing Boot Camp, I ran a panel with several highly successful CEOs of MSSP businesses. Universally, they talked about being strategic on customer acquisition, carefully selecting who they were targeting, and building the services THOSE carefully chosen customers needed and would buy. A good buyer for them is someone who already purchases what they sell but needs or wants a better provider. They are the ones who MUST buy compliance and cybersecurity solutions due to regulatory requirements, insurance mandates, or simply to keep their customer base and contracts (think CMMC). These MSSPs don’t just rent a list and start mailing and calling it; they look for strategic partners who already have the relationships with such customers and use that to gain entry.
They are also extremely good at developing customers by conducting deep assessments of their environments to produce an IT road map and budget, then conducting QBRs (quarterly business reviews) to continue to develop those relationships, uncover additional opportunities, and further entrench themselves into those accounts. Having those kinds of committed, constant customers should be every business’s goal. Why isn’t it?
Use Marketing And Positioning To Dominate
Another way to dominate against competitors is to simply outsell and out market them. Trust me when I tell you it’s not that hard. Most MSPs practice “vulture marketing,” where they sit quietly and wait for something to die in front of them before they feast—and then have to fight over the carcass with all the other vultures attempting to grab a piece of dead flesh. Definitely not sophisticated. They survive because there’s always someone looking for the cheapest price, and they’re able to subsist off scraps.
If you want a fantastic example of how to sell in a crowded, price-sensitive marketplace, read the book Simply Success by Jack Miller, founder of the office-supplies company Quill. Miller sold Quill to Staples in 1998 after getting it to $630 million. Office supplies is an extremely crowded and price-sensitive industry. I interviewed Jack years ago and learned his secret to success: good old-fashioned salesmanship.
Bottled water is probably the best example of the power of marketing. When bottled water was first introduced, people could (and still can) get clean water for free just about anywhere. Somehow, though, marketing departments convinced us that drinking tap water is for poor people without options.
When I was a kid, Gary Dahl became a millionaire selling pet rocks. De Beers has somehow convinced men that they must spend three months’ salary (!) on a diamond engagement ring—a practice that was not widespread until their advertising team stepped in with the “A diamond is forever” campaign in the 1940s. TOMS shoes is now a nearly $400 million company. Originally, they sold cheap and uncomfortable flats made of what felt and looked like cardboard and itchy burlap. While they have changed the fit and style of shoes significantly from their early days, it was the idea (USP) of linking TOMS to a charitable cause that made it take off.
There was a time in advertising when having a truly unique characteristic of your product was a huge advantage. These days, the quality and quantity of choices has exploded, and buyers are more likely to choose a service or product based on who’s selling it or on the message, not on the intrinsic value of the product itself.
You Are NOT A Victim
So don’t sit and bemoan for a second your own fate because you’re somehow “stuck” selling pretty much the same thing as everyone else. You are not a victim but a volunteer. If you CHOOSE to continue to package, price, and PRESENT your services like everyone else, then you can expect to have what everyone else has, which is mediocrity. When I started my business, I knew I did NOT want to sell my marketing services like other agencies—so I didn’t. Today, I have a bigger, more profitable marketing agency than the last two I previously worked for because I decided to do it differently.
So, the next time cheaper competitors and market saturation make you frustrated, go stand in line at McDonald’s. Maybe hang out a bit and observe what’s really going on so you can see that it’s not the product, or the service, that makes them successful.
