In 2014, Nest Labs, a company that produces smart learning thermostat systems, was bought by Google. Nest Labs’ competitor was Vivint, which produces similar systems. When Google was bought by Nest, it became apparent to Vivint that it would not only be competing with Nest, but also with Google.
This posed a problem for Vivint. Like many businesses, Vivint depends on its Google search rankings for revenue. Unfortunately, soon after Google’s acquisition of Nest, Vivint found itself delisted from organic search listings of all but 3 of the 3,300 search terms.
Google is known to penalise websites that do not follow search engine guidelines by dropping its position in the organic search listings. Google wasn’t forthcoming with why Vivint was delisted in almost all of its organic search listings, and SEO experts believed that this was a harsh penalty for a competitor.
Through Vivint’s own investigation and with little to no assistance from Google, the company learned that the delisting was a result of an improper linking of its website. However, it took the company four months to rectify the situation. A small technical mistake in linking led to being wiped out in Google’s organic search listing for the entire duration.
Vivint’s recourse in those four months was to pay Google to be listed in the paid search listings. Fortunately, Vivint maintained good relations with other search engines. The company also had a strong door-to-door sales force.
Their delisting, nevertheless, affected their sales. It also took some time before they could recover their original search ranking on Google.
What can we learn from Vivint’s experience?
I’ve seen many businesses heavily rely on a single revenue stream, or a single supplier, or a single person or technology to achieve their current success. If we are to learn from Vivint’s experience, it is that relying heavily on one thing—essentially putting all our eggs in one basket—can put us in a precarious position when things change in our business landscape.
Look at your current business model: from order taking to product acquisition to order fulfillment. Is your business dependent one major supplier, or a single major client, or maybe even a single person—a critical member of your team to deliver your desired revenue? Consider what would happen if this supplier, client or staff member leaves your business? Would your business survive?
The solution is to provide contingencies in case this happens. Find a feasible alternative so that your business will survive even if things change.
Vivint survived because the company had an alternative sales channel that brought in the cash flow while they were sorting out their Google rankings. Alternative revenue streams and having plans in place for contingencies will serve any business that experiences unexpected challenges.
We can Learn from others and not make the mistake
We do not need to make a mistake to learn a lesson. We can also learn from the experience of others. In fact, learning vicariously is a lot less painful way of learning importance business lessons.
If you are interested to know more about what a business has to go through when facing exponential growth, you can download the first chapter of the book, ”$20K to $20 Million in 2 Years” absolutely free here. The chapter talks about the differences between a good and a great business and puts out questions that make you consider how you can turn your business from good to great.
