The payoff for successful marketing is supposed to be increased sales. One frustrating aspect of innovation services firms can be their inability to take advantage of all their marketing success. Ironically, success in marketing can actually create problems, along with sales.
Unlike a product company, the capacity of a service company is strictly limited by size — you can’t just crank up your machine and make more of what you sell. This is a great thing when you’re bootstrapping, but not so great once you’re established.
Atomic’s upfront team will handle three times the sales opportunities in 2011 as we averaged during the period 2006-2009. The dramatic increase is partly the result of how successfully we tell our compelling story. We can also credit being in business for 10 years, having a good reputation, high demand for repeat business from our happy customers, and a general under-capacity in our industry.
So what’s the problem with having 300+ opportunities but the capacity to deliver only approximately 75 projects annually? Unfortunately, there are several. First, it takes a lot of time to handle 300+ opportunities with care and attention. Second, it’s darn discouraging to work hard on a sale, knowing you may not end up having the capacity to complete the work. Third, every project you win creates the immediate need to sort out several internal complexities (putting together the right team, optimizing the strengths and availability of individuals, delivering within the customer’s time constraints, balancing the competing demands of other existing projects, etc). All of these complexities are exacerbated by constantly running at or near capacity.
On balance, the positives of being good at marketing outweigh the negatives, of course. I just find it ironic that there are in fact any downsides at all to successful marketing. As with most hard problems, this is one worth solving, and we’re experimenting with some new ways to balance demand, capacity, and our sales process.
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- Atomic’s purpose: to be a company where work matters - November 5, 2018
- Elevating & distributing “glue work” flows out of our core principles - October 18, 2018
- Atomic Ownership, Part 2: How the Atomic Plan & our ESPP work - July 16, 2018
- Atomic Ownership, Part 1: Context, motivations, and accomplishments to date - May 17, 2018
Mike Karlesky
July 30, 2011And saying no to new opportunities too often can be a detriment to the valuable reputation established…
Carl Erickson
August 2, 2011There’s the rub, Mike. Balancing a desire to help, internal workloads, the dynamic nature of our work, brand risk, and a customer’s needs makes this a tricky problem to solve.
Dave
August 1, 2011Nice post, Carl – GREAT to hear you are having good problems!
Perhaps this gives you an opportunity to position yourselves in your best fit markets? We are money managers (also in the service business) and have found that approaching the top end of our growth objective has brought in more opportunities. When dealing with prospects it allows us to be more clear on the terms we prefer, let marginal business go by, and refer out to adjacent peers when appropriate.
We have found this to be an excellent condition for our business (too many opportunities) and I hope that you find the same in your line of business as well.
Carl Erickson
August 2, 2011That’s the hope, Dave. We’ve begun experimenting with the techniques you mention. Nice to hear that it’s worked well for your company.
Jeremy Yamaguchi
August 2, 2011I’ve had these problems in the past with my company, as we have found that sudden spikes in leads have resulted in decreased conversion rates as our operators struggle to keep up with demand.
I’d be very interested in hearing about what solutions you come up with to some of these seemingly universal problems.
Carl Erickson
August 2, 2011Conversion rate is something we track and look at occasionally. It’s interesting to see how this problem wrecks that metric. We actually introduced a new “closed” status in our CRM to indicate we couldn’t pursue for lack of capacity.
I plan on an update on our experiments at managing demand and capacity in a few months.
Analytics can't measure customers for innovation services firms | Great Not Big
September 2, 2011[…] website visits and potential customer visits by day.I estimate we’ll handle approximately 300 sales opportunities this year. Even assuming they all came through the website (they don’t, obviously), and […]