Gap analysis is used to find out the gap between a companies potential and its position in the market.
There will always be a difference between what a company wants to achieve and what it manages to pull off. This is the gap. Objectives should constantly be re-assessed to address this gap. Gap analysis can address product development, strategic goals, revenue projections, a whole host of topics.
Step 1) Find the gaps
The first and most critical step is to find the gaps, this seems obvious but sometimes the obvious answer doesn’t go deep enough. Is market segmentation the issue? In what way? Is it a level of interest? Understanding? Positioning? Is the market simply changing? Does the product fail regarding features? Which? Really? No, really? Reliability? Or is it support and implementation? There can be many gaps, and for the most part, they will not be closed simply or even completely – the objective should be to address them – give them attention. When looking for the gaps stay with your strategic objectives and move from there. “Revenue projections fell short,” then dig deeper. “Customers did not upgrade as projected,” then dig into the key factors affecting that outcome.
Step 2) Narrowing in on key factors
One you have identified the gaps tease apart the key factors influencing the gap. If the gap is revenue projections follow the projection all the way back up the chain of a decision. What was the projection, where was it supposed to come from (market segment? customer choice? feature development?) until you’ve narrowed down the key factor. A gap in customer projections would lead you through a market analysis until you found the key variable in your influence, offering or sales process. Any factor that is stopping the company to achieve it’s objectives needs to be taken into consideration and directly addressed strategically.
Step 3) Closing gaps strategically
Once key factors are identified strategies to address them need to be developed that can then be measured and tested. It is amazing how often this does not happen. Companies often come to the conclusion that revenue projections fell short and even decide the culprit is a failure of sales effort. The solution, they conclude is “sell more” or “raise quotas.” Why’d they fail to begin with? More digging needs to happen – is it a lack of sales support? A misalignment of messaging and process? Is this market segment clearly identified? Sales may well be the problem in the end, but the success of the sales department has itself a great many factors that influence the outcome. There are three different strategies from which to derive your action steps.
Customer focused strategy
Gaps at the customer end – their expectations were different, their level of capacity may be over estimated, the length of the sales cycle may be longer than expected. These customer-related variables would then influence a measurable outcomes-based strategy.
Operations focused strategy
Gaps may be in operationally focused. It costs too much to deliver; it’s too complicated to implement, onboarding is unclear and not-systematic. Addressing operations gaps that create friction for staff and customers can help you to develop a strategy to address them.
Product focused strategy
Key factors in product features or design may surface; creating an opportunity to develop a product-related strategy. Feature gaps are real but it’s also very easy to blame a product and send the responsibility back to your development team. Don’t fall into the trap of blaming everything on the product – developers don’t sell, developers don’t woo clients, developers don’t maintain relationships – keep your focus where your strategy is.
The risks of gap analysis are to jump to conclusions too quickly. Determining the sales department is falling down on it’s job is an easy conclusion to make but one must ask oneself what is going on there – is that a human resource problem? Is that a training problem? Is that a support problem? Is it a feature problem? An onboarding issue? When you dive into gap analysis, understand that the answers are no likely to be clear and concise. The answers can be complicated and challenging. Getting to the true gap will give you a fighting chance to close the gap and get closer to your objectives.