Top companies grow products and services by 20% despite recession: Ernst & Young
(Toronto, 15 June 2011) If top-performing Canadian companies are anything like their global counterparts, they’re significantly growing their businesses by offering new products and services to existing customers, Ernst & Young says.
The report Competing for growth: how business is growing beyond boundaries finds that top performers (survey respondents in the top third for revenue and growth of earnings before interest, taxes, depreciation, and amortization) generate 46% of their sales from new products, compared to 24% of low performers.
“This discrepancy is not accidental,” explains Jeff Charriere, Managing Partner, Markets, at Ernst & Young in Canada. “Companies that want to lead in their markets are focused on incremental innovation. Right now, the customer is king. Understanding their needs better has resulted in an explosion of product development."
Despite the recession, one-third of top performers boosted their product range by more than 20% in the last three years alone. Only 6% of low-performing companies achieved the same.
“What’s remarkable is they achieved this during a very tough economic period, when competition was fierce and cost management was paramount,” Charriere adds.
In Canada, everybody from retailers to financial services to manufacturers is finding new ways to produce variety without compromising on cost. Businesses are adapting their offerings by zeroing in on what their customers need and want.
Duncan Shaw, Ernst & Young Entrepreneur Of The Year® 2010 for the Atlantic region, is a prime example of how businesses here are doing exactly that. His company — Cogsdale — has become one of the foremost trusted software developers for local governments and utilities. Shaw directly attributes Cogsdale’s winning business strategy and inspiration for new software solutions to two-way communication with his customers.
“This is about maintaining your existing customer base by tailoring your efforts to match their needs,” says Charriere. “The research shows innovating based on potential — rather than current — customers is actually hurting, not helping, the bottom line for many companies here and around the world.”
From retailers evolving their product lines to combat the draw of deals south of the border, to traditional manufacturers reinventing themselves for the 21st century, Charriere sees endless possibilities for Canadian companies looking to take their performance to the next level. “This shift towards better understanding customer needs is already driving an explosion of product development. Getting the right systems in place to analyze your customer base is a smart move that could shift your product development in new, profitable directions.”
About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 141,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.