Tag Archives: metrics

Solve Rather Than Analyze

Is your business underperforming? If so, chances are high that your CFO or you as owner have determined that it is necessary to “manage the business by the numbers.” Reporting systems are put in place and monitored rigorously. I know this to be the pattern because I have observed turnarounds for over 20 years. It is predictable.  For some, the focus is on sales, for others, on leads, expenses, receivables, payables, etc…

What can be lost in the “shuffle” is necessary focus on what actions are necessary to change the patterns. So much effort is dedicated to capturing information, reporting information, and communicating information that not enough is given to improving performance. Simply noting what needs to change without the corresponding strategies and tactics, as well as daily behaviors, is not enough!

When the organization takes time to problem solve, innovation can occur. Instead of doing the same thing and expecting different results (insanity), new solutions need to be developed, new processes tired, new personnel invited to help develop solutions.

Paul Williams invites change managers to ask the question “How Might We…?” How might we drive sales? How might we drive traffic? Determine at least four “how might we” answers. Then, for each of those answers ask again “How might we…” Identifying at least four responses for each.

In his blog for the Idea Sandbox, Williams recommends the tool below to guide the exploratory process:

Let’s use the “How might we drive sales?” as an example.

ROUND 1:

How might we… drive more sales?

Here are four ideas…

  1. By building more awareness.
  2. By charging more to those already coming in. (Raise Prices)
  3. By getting existing customers to visit/buy more frequently. (Increase Frequency)
  4. Get people who come in to buy more than what they normally do. (Add-on Sales)

ROUND 2:

How might we… drive more sales?

Let’s take those first four answers and ask “how might we?” about each.

1) How might we… build awareness?

  • Do advertising.
  • Do PR.
  • Do community events.
  • Word of mouth: get current customers to tell others.

2) How might we… raise prices?

  • Increase prices across the board.
  • Increase price of most popular products.
  • Add perceived higher-tier items – that command a higher price point.
  • Remove lower-priced / smaller sized options from menu.

3) How might we… increase frequency?

  • Add items for a different time of the day / daypart (e.g. add breakfast).
  • Offer special in-store events to encourage non-traditional visits (e.g. art events, live music).
  • Run frequency-building consumer promotion(s).
  • Create / suggest additional uses for your product (e.g. baking soda for cleaning, cranberry sauce – not just for Thanksgiving).

4) How might we… get add-on sales?

  • Put impulse items near the cash register.
  • Offer add-on extended warranty / product insurance.
  • Show customers products that pair with and enhance what they normally buy.
  • Offer specials encouraging families and group sales.

Williams advocates that we continue to ask the “how” question to arrive at possible solutions. By repetition, more ideas surface. Though he stopped after two rounds of brainstorming (problem solving in this case), you need not feel limited except by the creativity of your team and amount of time you are willing to commit to the process. 

Even stopping at the point above, you notice that 16 potential solutions to enhance sales were generated. While not all of them will create the desired improvement, many will and the effort is way more valuable than perseverating on the problem, as organizations and their leadership teams are wont to do.

Move to action rather than “paralysis by analysis” and you will be better off!

 

Real Estate Agents Must Understand Content Management

Today was a good day. In addition to meeting with some smart minds about artisan entrepreneurship, I had the opportunity to plan a pitch event for would-be entrepreneurs and meet with an existing business owner who desires to invigorate his enterprise. His business is real estate–specifically residential sales. What he’s hoping to accomplish is to build a powerhouse brand that competes statistically with the leading agents in our community while targeting an under-served niche market. He asked me about my philosophy on how to accomplish his goal(s).

We began with a conversation about the role of social media in marketing services organizations. Fairly quickly, I felt the need to draw a diagram to make a key series of points. The figure below is what I drew for him–allow me to explain it to you so that you can be on the same page as we ended up:

 

Everyone knows that Social Media is on the rise and important to reach niche audiences in engaging conversations. What I was able to point out to this entrepreneur is that social media is a subset of Content Management Marketing. Knowing what messages you want to get across is a precursor to sharing the right information through online channels. To begin making posts, tweets, updates, etc without in-depth knowledge of target prospects and their needs is like wearing a blindfold in an archery contest.

Whether it is your strategy as an agent to build your business through referrals from prior clients, key centers of influence, or new campaigns, it is unwise to get spread too thin and not have deep relationships. Given the huge number of users on many social networks, the agent must devise a strategy that isolates niches and pursues them with targeted strategies.

The diagram shows that thought leadership is obtained by creating great content that is shared through social media. In response, the various media provide a built-in feedback loop that should drive future thought leadership strategies. For instance, some agents provide insights in multiple categories for their target audience(s). Whether it is local community, national real estate trends, the agent’s own interests, or local real estate content, the point is to demonstrate that you know what you are talking about.

Lead generation is the holy grail for many agencies that advise real estate firms. They think that, if they can generate enough new prospects for the agents to pursue. they have earned their keep. However, as the agent with whom I was meeting explained, leads that are not qualified and filtered can waste a lot of time. Smart lead generation comes from site visitor capture initiatives that are driven by a content management system that relies on social media to create online experiences for web fans.

 

Having worked in marketing roles for multiple services firms, I have met many peers who are entirely comfortable being creative, attending wine and cheese events, and spending the money of the business owner(s). What many of them lack are measurement systems (metrics) that validate the marketing ROI.  Furthermore, when metrics are available (web analytics come with every website), the marketers often don’t use the information to change the messaging and means of communication. Smart agents know better and use metrics to verify that what they are doing is working.

Competitive advantage is what is so hard to achieve, yet worth the pursuit. It is that unique place where the audience you target perceives that you can solve their needs “better” than any other provider. “Better” means that the home buyer/seller connects with the agent on a personal and professional basis and feels that the fee they pay to be represented is a value that exceeds what else is available to them.

What is your Content Management Strategy? Do you have one?

Endurance Runners Are Like Entrepreneurs

In writing for Inc magazine, Patricia Fletcher draws a comparison between entrepreneurs and marathon runners. In addition to being a little crazy, she says both have a plan to follow that prepares them for success. The performance for which you are judged is predictable from the “practice” that leads up to it. Here are Fletcher’s observations about the right mindset both need–

Get comfortable being uncomfortable for long periods of time.  Believe it or not, this will become a badge of honor.  Most of your work as an entrepreneur requires you to try new approaches, to push yourself beyond your limits. This means that you will fail a lot. You will struggle for funding–a lot. You will lose customers and opportunities–a lot. It’s all part of the training process. Your response to rejection is as good a determinant of your entrepreneurial ability as your response to success.

Adopt a resilient mindset. You are going to have some tough days; days when you question your own sanity and want throw in the towel.  Much like a marathon, the entrepreneurial experience is long, twisting, and filled with ups and downs. Every successful entrepreneur and marathoner I have talked with believes mindset is either your biggest asset or your biggest barrier. The pros handle it by maintaining an objective mindset that looks at setbacks as opportunities for improvement.

Embrace others like you. Working in a vacuum is not going to help you finish the race. Runners find running partners or join running clubs. They get faster because they push each other. They become stronger because they share tips for nutrition and avoiding injury. You can do the same thing. 

Connect with other entrepreneurs. Get together to practice your pitches, test your demos, and talk about go-to-market strategies. Working together will give you practice and insights while creating the relationships that will push you forward.

Don’t over-train. In my first few years as a runner and professional, I over-trained, thinking it would make me stronger and better, and prove that I belonged. Instead, I burned out. You will not succeed if you have 10 No. 1 priorities. Identify your top three goals. Don’t do anything that won’t make a big impact on your progress toward those three.

At conferences, I have heard several speakers tell up-and-coming women entrepreneurs and executives that they should say yes to any high-profile opportunities. I disagree. Go after new opportunities only if they’ll help you achieve one of your three big goals.

Measure. A good plan incorporates key performance indicators to track your progress. It also helps lessen risk by proactively addressing problems. What measurements will tell you that you are making progress?  How often should you track your progress?  What are your biggest obstacles?  Which do you need to address and which can be ignored? 

As someone who has been a distance runner for over 30 years, I can relate to each of these. When I was competing, I had a mental edginess honed from the daily effort I put into psyche and development of my skills. As an entrepreneur, I have  been more successful when I have brought my “A” game to what I do. How about you?

 

How To Grow Business All the Time

 

Whether your trade is producing software, computing tax liabilities, or manufacturing tangible goods, the success of your organization is going to be tied to strong sales (business development/ “bizdev”) performance over the long haul. Yet, few organizations are able to create a bizdev model that is sustainable and that constantly fuels the capital needs of the enterprise. Bizdev, however, is something that far too many senior executives (or, business owners in the SMB world) think must be acquired through osmosis or tenure. While I don’t actually believe that they think that, their actions would indicate otherwise.

Virtually everyone in North America has had a frustrating experience with bad sales execution. Either one has been on the end of trying to convince someone to buy, or the other end where we hate to be the recipient of “sales.” There’s much wrong with the selling models that are so pervasive that negative experiences abound on both sides of the equation.

Mahan Khalsa, who led the Sales Performance Group at FranklinCovey for a number of years, is one of my favorite authors on the subject of business development. His background included developing instruction for one of the old Big Eight CPA firms, then turning his attention to training almost 100,000 salespeople and consultants from all over the place in many different verticals.

Khalsa says, “Most professional sellers have good intent. They know manipulation and deceit hurt rather than build long-term sales success. They know that building trust is essential to both creating and capturing value. So they eliminate a lot of what would otherwise be dysfunctional—no surprise there. Yet most also consistently engage in actions that are not value adding–for them or for their customers. Even when great intent is present, there is a lot of room for improvement in eliminating dysfunctional behaviors.”

Both Khalsa and Neil Rackham find the tendency to jump to solutions before having completed the questioning process to be the bane of many folks involved in bizdev. I have observed noted rainmakers stumble in prospect meetings over this very subject. It’s as though the brain clicks into autopilot and, rather than seeking to understand, hubris takes over and the rainmaker is intent on being understood. Often, the solution that is recommended is premature–it doesn’t bear the wisdom of listening and consultative due diligence.

“Looking a little more holistically we could say the missing link is the ability to successfully blend excellent inquiry with excellent advocacy – to do a superb job of matching our story to the client’s story. Good inquiry is essential and most often the more undeveloped portion of the balance – and it is still only part of the equation. I’ve seen people get good at inquiry and still not be able to convert on advocacy.” (Khalsa)

When Khalsa left FranklinCovey, part of his intent was to transform the way business developers approach their work. He felt there was room for continuous improvement over an entire career. To that end, he began to wed together the twin concepts of business development and change management, with a sprinkling of performance measurement. In order to see strong long-term results, he argues, there must be an environment supportive of continuous improvement and a repeatable process that can be practiced and refined. 

Edward Deming once said, “It is not enough to do your best. You need to know what to do and then do your best.” So the quality of the practice and application is as important as the quantity of practice – and the quantity is essential. Khalsa subscribes to this concept as it relates to bizdev, stating “What I find liberating and motivating about the research is that everything, repeat everything, we need to do in order to get really good at sales is learnable – if we are willing to practice. It doesn’t have to do with our DNA, our native IQ, our personality type or social style, our years of experience. If we are willing to engage in a high number of repetitions of quality practice we can become as great as we want to be. That’s powerful.”

A key factor in effective bizdev is the ability to build a trusted relationship with the other party. Khalsa firmly believes that trust can be built intentionally and that it is tied strongly to value and information flow. In fact, he would argue that anyone who has two can obtain the third. Fundamentally, a rainmaker will have to become consistently better at doing what is promised and establishing a culture where the other party feels safe to share meaningful information.

 

Need Outside Investors? Choose Wisely

Is private equity in your future? Many closely held businesses reach a point where their capital structure is not supportive of their cash and other financing needs.  When internal resources and bank money is no longer enough, the business owner and/or CFO has to find outside sources. Seeking outside investment is not, however, an easy process. The search needs to resemble a courting relationship that used to be so common in interpersonal relationships. You are, after all, seeking to build a long-term partnership.

Inc. online has a column entitled Herding Gazelles. In a post today, Karl Stark & Bill Stewart point out what to look for in private equity investors:

1. Find the right investor.

Angel investors, venture capital funds and large corporations all have different investment profiles. Each has a specific motivation and a process they typically use to create value.  Partnering with the wrong investor often means that your business will be asked to meet investor goals that may not align with your goals for the business. Find an investor whose objectives are in sync with the business you are building. 

2. Agree to a common view on how to maximize value.

At the outset of your partnership, spend time to align on the facts around the business and its markets, then discuss your strategy and how it will maximize value for the business.   Make sure both parties are clear on the roles they will play and the expectations for how the investors will participate and add value to the business. A successful relationship is all about setting and communicating the right expectations and engaging in open communication when events necessitate a change in those expectations.

3. Align on the right incentives and desired outcomes for both parties.

Clearly lay out the personal, professional, and financial goals for both you and your investor. Identify areas where you can work together to help each other reach his or her individual goals. The investor will likely have a specific timeline in mind for an exit and may have expectations about an exit price. This will have a large impact on their view of various strategic decisions. As a CEO and management team, you may also have specific expectations about how to grow the business. Put these all on the table, especially if they may be in conflict, so you can manage expectations upfront and amicably.

4. Leverage your investor’s experience, not just their money.

Brainstorm with your investor about ways in which he or she might help push the business forward. In some instances this may be obvious, such as a partnership with a corporate entity, but you may be surprised at other things the investor can offer beyond financial support. Investors typically have seen successes and failures and can share their advice.  They may have a wealth of contacts, even potential customer relationships, that could provide value to the business. Don’t overlook these intangibles.

A private equity investor will be a key member of your management team, so you need to build a strong, lasting relationship with them-just as you would with any of your key team members. Using your investor to the fullest will be critical to fueling the growth of your business.

Following these guidelines is just good common sense. We would add to the suggestions that it is important to identify “fit” before anything is on the line. Discussing how decisions will be made, what outside professional services firms will be used, and how the composition of boards of directors and advisors ahead of time is a good way to learn about the investor’s priorities and values. While agreeing on how to maximize value is important, it is even more important to identify what metrics represent value.  Great advice on leveraging an investor’s experience–ask what they plan to bring to the partnership beyond money. You may be very pleasantly surprised!