Evaluate opportunities
A strict diet can keep a pig from becoming a hog. Fisher continually evaluates what makes his company healthy so he knows how to keep it growing beyond 2009 net revenue of $233.4 million.
“You have to figure out why you’re different,” he says. “Why have you succeeded? Why are you succeeding where others haven’t? What differentiates your company from others? Start with those core questions.”
Fisher found answers when he took his management team off site. But their perceptions just reflected what customer feedback already revealed. Customers are the best source for defining your differentiation.
“How you are differentiated is clearly based a lot on what your customers are telling you,” Fisher says. “That’s just through: Are you growing your business? Are your customers happy? Are you getting more customers than you’re losing? What are they telling you as part of research? How do you stack up against your competitors? How do you stack up against where you were a couple years ago? Understanding what your customers think about your business is critical.”
Fisher’s team deals with several thousand customer interactions daily. The team stores and analyzes feedback to find patterns in customers’ perceptions and problems. The team also conducts annual industrywide surveys to see how the company stacks up against competitors.
That information reveals your core through the lens of why customers prefer you over the competition.
“It’s a lot of data-mining and statistical analysis, using tools to help sift through the data, finding those patterns,” Fisher says. “A decade or two ago, you would have had to sift through those very manually. Today, there’s great software that really helps identify patterns in customer interactions.”
That’s good, because that data is only half the equation. You also need to track larger industry trends to make sure you’re positioned for growth within your core.
“If you say, ‘This is our core area of focus,’ you need to understand the opportunity there,” Fisher says. “It does you no good to have an area of focus that has zero additional growth. It’s understanding what the market looks like today. How fast is it growing? Understanding how large the opportunity is is extremely important to telling you whether or not you should keep building in that area.”
The prospective customer base can help determine growth opportunities.
“We also look at it from the customer perspective, the demand,” Fisher says. “How many retail customers are out there? How many of them are using these products? Where do we think we can penetrate into by looking at the type of customers that are out there, their demographics, how they compare to the demographics of customers using the products today?”
Fisher looks at options and futures volumes in the market — and at customers who trade them — and then forecasts trajectories. Of about 40 million people trading online, only 10 percent currently use options and futures products, leaving untapped potential in online investing. With obvious room to grow, it makes more sense for optionsXpress to continue expanding its core focus than to get distracted by new offerings. When you control significant market share, then it may be time to branch out.
Staying committed to the process of evaluating — and re-evaluating — the differentiators that define your core can keep your company healthy.
“You’re trying to take a lot of numbers and a lot of statistics and a lot of data and then trying to make predictions based on where the industry has been and where you think it’s going,” Fisher says. “You’re not always going to be 100 percent right, but that’s why you have to keep re-evaluating it. You don’t make a decision saying, ‘This is our focus,’ and then lock it in a safe for the next 10 years.”