The $4.3 Billion Lesson Every Successful Business Owner Should Learn
Some of the most expensive business mistakes aren't made by amateurs or inexperienced executives. They're made by exceptionally intelligent, highly accomplished people with impressive records of success.
And sometimes, the very experience that makes you successful becomes the greatest obstacle between you and considerably greater wealth.
Consider what happened when one of America's most celebrated retail executives took charge of a major department store chain.
How One Smart Executive Cost JCPenney Billions
In 2011, Ron Johnson became CEO of JCPenney. His credentials were extraordinary. He helped develop Apple's enormously successful retail stores and previously held a senior executive position at Target.
He was exactly the kind of executive a company wants at the helm. He was experienced, confident, and knew how to produce results.
Johnson arrived at JCPenney with an ambitious plan to transform the company. He eliminated many of the coupons and promotions customers loved, introduced a new pricing strategy, and attempted to attract a more affluent customer.
On paper, his ideas had merit. Why confuse customers with endless discounts when you can offer straightforward prices? Why not modernize the stores and attract customers who spend more money?
There was just one problem. The customers didn't want what he was determined to give them.
Longtime shoppers abandoned the stores, and the new customers he hoped to attract didn't arrive in sufficient numbers. By the end of 2012, JCPenney's annual sales fell approximately 25%, a decline of $4.3 billion. The company reported a net loss of nearly $1 billion.
By April 2013, Johnson was out of a job.
Think about that. An executive with an extraordinary record of success at Apple makes decisions that contribute to billions of dollars in lost sales at JCPenney.
Was he unintelligent? Hardly. Did he lack experience? Certainly not. But his previous success didn't guarantee that his assumptions about a different company and its customers were correct.
And that's the lesson I want you to consider.
The strategies that make you successful can also cost you a fortune when you assume they're the right strategies for every situation.
Are You Solving the Wrong Problem?
Now, let's bring this closer to home.
Suppose your company generates $10 million annually, but sales growth falls short of your expectations. You conclude that you need more qualified prospects, so you increase your advertising budget, hire another salesperson, or launch a new marketing campaign.
Sounds reasonable, doesn't it? But what if your company already attracts enough qualified prospects to generate considerably more revenue?
Perhaps your sales message fails to communicate why your product deserves its premium price. Perhaps your salespeople lack a persuasive argument that separates you from competitors. Or perhaps poor follow-up costs you valuable opportunities.
More advertising won't solve those problems. It will simply cost you more money to lose more sales.
In my book, Persuade. Profit. Repeat., I call this The Curse of Misplaced Cause. It's what happens when you identify the wrong cause of a problem and spend a fortune on a solution that cannot deliver the results you want.
Johnson believed a different approach to prices and the customer experience could transform JCPenney. But the company's results demonstrated that a strategy that appears logical to management fails spectacularly when it doesn't account for what customers actually value.
You face the same fundamental risk whenever you invest in a solution before you understand the real problem.
The Fortune Your Financial Statements Don't Show You
Here's where this becomes particularly interesting for successful business owners.
Suppose your company generates $10 million annually and produces healthy profits. What if a more persuasive sales message, a different approach to prospect selection, or a stronger sales process could increase revenue by 20%?
That's another $2 million annually, potentially with a substantial contribution to profits. And you may not need another product, another salesperson, or a larger advertising budget to capture that opportunity.
I call this The Fortune Not Made on Business Not Done.
Your financial statements tell you what you've earned. They don't reveal the sales you could have closed, the profitable markets you never pursued, or the customers who would have purchased more if you'd given them a compelling reason.
And because those transactions never happen, you may have no idea how much money you're leaving on the table.
Success tells you how well you've done. It doesn't tell you how much better you could do.
What If You're Overlooking Your Greatest Opportunity?
I'm not suggesting that you abandon successful strategies or completely overhaul a profitable business. That would be foolish. But I am suggesting that you question whether your current approach produces everything it reasonably could.
Are you pursuing the most profitable prospects? Does your sales message give customers a compelling reason to choose you? Are you certain the problems you devote time and money to are the problems that actually limit your profits?
After four decades in this business, I can tell you that some of the greatest financial opportunities don't require revolutionary ideas or massive investments. They require the right perspective, an accurate diagnosis, and a strategy that addresses what actually stands between you and the results you want.
Ron Johnson's experience at JCPenney demonstrates how expensive the wrong assumptions can become. But there's another side to that lesson: recognizing an overlooked opportunity can be extraordinarily profitable.
How much money could you be leaving on the table simply because you've never questioned what already works?
That's a question worth serious consideration, especially when you already have a successful business and millions of dollars at stake.
Let's Talk About Your Business
You've already built a successful business. But how much more could it produce with the right strategy, a stronger sales argument, or a fresh perspective?
At Conquest Marketing & Sales, we help successful business owners who sell high-value products and services identify overlooked opportunities and develop strategies to turn them into profitable sales.
You know your business. I bring 40 years of experience in marketing, sales, strategy, and persuasion. Let's find out what opportunities you may have overlooked and what they could be worth to you.
Let's Talk About Your Business →
Russell J. Martino is a marketing and sales strategist, direct-response copywriter, and author of Persuade. Profit. Repeat.