Small business strategy question: How do you measure company-wide success?

When I’ve worked for large for-profit businesses, there were a ton of metrics that measured just about every activity I did. Those metrics revealed my successes and failures each month. As much as I hated the level of analysis, I have to admit (in retrospect) that there was value to it. Compare that to some of the non-profits and government organizations I’ve worked for. Zero metrics… and predictably low productivity.

In starting my own business, I knew that metrics were a way to keep me on track and to constantly “take my temperature” to see how my business was doing.

So, what metrics do I need to measure company-wide success? I’ve included this question in my list of 100 small business strategy questions. You might have the same question, too. Here are some considerations to keep in mind based on my own experiences owning businesses…

  • I love the idea of measuring profit but in the early days of most businesses, that’s not very realistic. Early on I measured revenue because profit wasn’t on my radar initially. But any sort of money-coming-in measurement isn’t always easy to measure because it doesn’t give a true picture of the business. You might be thrilled to have $100 coming in a day… but that income doesn’t sound as good when you realize that you have $200 going out.
  • I would suggest that you measure something that is easy to measure. In my business, there might be several months between when I pitch an article idea and I finish it and get paid. So when do I measure that in my business? The effort was spread over several months so it doesn’t seem correct to measure revenue each month.
  • I also prefer to measure action instead of results. With action, I know there is a direct link to what I do. With results, there are a bunch of other factors that I’m waiting for. So, for a long time, I measured the number of proposals I wrote as one of the key measurements. (I knew my closing average and I knew how much I earned on average per closed proposal so it was pretty easy to estimate… plus, I can knock out a proposal in an hour so it wasn’t spread over multiple months). My business has changed (I don’t rely so much on proposals but that proposal measurement period was probably my most productive and efficient.
  • I would also recommend that you measure something inspiring. I write a lot and I toyed with the idea of measuring the number of words written each month. The problem is, I can get inspired about writing 10,000 words in a day but the idea of writing 200,000 words in a month (10,000 x 20 work days) is overwhelming and therefore not inspiring.
  • I also like to measure things that are related to your primary means of revenue generation. When I measured per word it was okay for a while when I was paid per word… but I no longer get paid per word. And even when I was paid per word, it was easy to ignore critical (but non-measured) activities like marketing and administration because they didn’t bump my word-count.

So what’s my advice? Sadly, I don’t have a specific number to tell you to measure. And frankly, right now I’m searching for a good number to measure in my business (since I no longer measure the number of proposals written). But if you use my above observations as a sort of checklist, I think you’ll find one number (or probably a couple of numbers) to help you.

For additional reading on the topic of business metrics, here are some blog posts where I’ve talked about this concept in other ways…

  • One number to rule them all: This was an attempt to collect a few metrics together that measured several aspects of my business. It was fun and effective but only lasted a year because I ended up working with just one client in the following year so I didn’t need to measure all of the same things.
  • I’ve also been a big advocate of setting up metrics for different stages of your sales funnel (which would measure marketing AND sales activities). I talk a lot about this in the blog post 40 ways to optimize your sales funnel.
  • Your sales funnel equation talks about an interesting article I read on a very-hard-to-measure calculation… I think there’s some really valuable metric opportunities here for business owners who can figure out how to measure the items mentioned in this blog post.

 

What border guards can teach you about answering your customers’ price questions

I like to travel and have traveled all over Canada, through the US, and through parts of Europe. As a result, I’ve encountered numerous border guards (and customs agents)… some were nice (and many were not so nice).

Here’s the deal with border guards: They don’t really care about the answers to your questions. What they want to do is pepper you with a bunch of questions — both expected questions and unexpected ones — to see what your reaction is.

That’s why you get the usual questions like “How long will you be in the country for?” and “What’s the purpose of your visit?” and then you get unusual ones like “What do you do for a living?” (and when I said I was a writer, they asked a follow up question: “Name some of your clients”) or the weirdest question that a friend of mine was asked: “Do you have a boyfriend or girlfriend in the country?”

Like human lie detectors, border guards judge you only partially on your answer but more importantly on HOW you answer. They’re watching to see how long it took you to come up with an answer and how weird your answer is… and if a follow-up question is asked, how detailed was your answer. (Presumably, someone who is lying to get into a country is only going to have a basic story… but when a border guard asks a detail-oriented follow-up question, that’s when the lie is likely to be revealed).

Your customers are like border guards when it comes to price. A customer who asks you about the price of a product doesn’t JUST care about the price of the product… they are (often unconsciously) judging HOW you answer.

They’re watching to see when you talk about price (in your marketing? in your sales efforts? just moments before the sale?) and they want to see what you say about price. They’re watching for price indicators in your marketing — on your website, in social media, and even in your conversation.

When I first started as an entrepreneur, I was embarrassed to talk about money. My answer to the price question was hesitant. Therefore, customers saw a lack of confidence and they knew there was room to bargain. Later, when I became more confident about my price, the bargaining disappeared. Objections about price tended to disappear, not necessarily because of higher prices but because of increased confidence in the delivery of the answer about price.

Here are some other ways that your customers are judging you by HOW you answer the price question…

  • A fast way to generate angry customers is to prominently advertise one price and then tack on additional costs afterward. (Is it any wonder that car salespeople are not always the most respected salespeople? Their industry is built on pricing practices that SEEM like bait-and-switch… even when they really aren’t).
  • When customers research the price and they see prices that vary wildly (such as the demand-driven prices in the airline industry) they can become price sensitive and even resentful that there is such a difference between the high-demand price and the low-demand price.
  • If your pricing strategies aren’t clear, your customer might have a hard time connecting the value they receive to the price you’re asking… and they might trust you less if it takes you a while to calculate a price.
  • If you talk about price and then get defensive and talk about the product’s benefits or, worse yet, about how you are better than your cheaper competitor, the potential buyer files that away as something to look further into to see if the value is as evident as you are making it out to be.
  • If you NEVER talk about price, the customer notices that the relationship is ticking ever closer to the transaction and they might get edgy — afraid that you’ll spring it on them. Or, like the local Weed Man franchise did with me, they called to see if I wanted my lawn treated. I asked for more information and they sent out a team to fertilize my lawn… and then sent me a bill. (Note: Never ever buy from Weed Man. Ever.).
  • On the other hand, if you talk about price too early, you might appear focused on the transaction rather than on serving the customer. (I don’t mean hide the price until later. It’s okay to mention it early because customers want to know… but just don’t make it a big deal early on).
  • If I’m shopping on a website for a product or service, I want to see a price and it will help me decide whether or not I want to buy. When I see something like “call us about a price” I am forced to decide whether I want to speak to a live person and I have to wonder whether the price is a little more flexible… and I have to wonder exactly how many “moving parts” are in the equation that make up the price. Is the person going to hard-sell me? Are they going to customize a solution? If you sell a customized solution that requires a handful of questions before delivering an answer, be clear about what you need from the potential customer before you can give them an answer… and if possible, give them a range ahead of time.

I feel like I’m just scratching the surface here — there are so many ways that your potential buyer is judging you when they ask about price.

Your potential buyer is a type of border guard… they are guarding their hard-earned money and they don’t want you at it. So they’ll adopt the same strategies that border guards adopt and they’ll ask you an innocent price question and watch carefully how you answer.

What the mob can teach you about running a local business

I love mobster movies (and TV shows). The Godfather, Goodfellas, Boardwalk Empire… Mob movies give a glimpse into a world that many of us do not encounter.

I think one of the things that we like about mob movies is that the backstory is often the same, and it’s something that resonates with us: Someone who started out with nothing (impoverished, recently immigrated, etc.) rises to new heights to become a kingpin.

Of course, I definitely do not endorse how they got there — like scheduling assassinations while their child is being baptized…

But there is a lesson we can learn about mobsters… usually from the period in their life just before they really hit the bigtime.

Many mobster movies show the soon-to-be-godfather visiting various local establishments, shaking hands, kissing babies, getting to know the locals. They get their hair cut at the barber shop; they buy pasta at the local restaurant.

Before he traded favors on his daughter’s wedding day, we know that Don Corleone “walked a beat” and made friends with people who would later help him.
Before he built an empire, we know that Nucky Thompson walked up and down the Boardwalk and made friends with people.

These local kingpins built relationships and reputations with the people around them. They didn’t just pop in and ask to put a business card on the person’s bulletin board. They went in and bought from the shopkeeper, asked them how business was, offered to help in any way they could, and then delivered more than was expected.

If you run a local business — a restaurant or coffee shop, a barber shop or salon, an accounting firm or chiropractic office, or whatever — if you serve a local market then this lesson is for you. Get out of your office and become the godfather of your local area. Meet other shop owners and don’t just promote your business… promote THEIR business. Ask them about their business. Learn about who they serve. Find out what problems they have (and do what you can solve their problems… without killing people, of course). Make your face known in the community. Become the go-to guy (or girl) who solves problems (even if it’s slightly outside of the expertise you get paid for). Make connections. Build bridges between other people (we call these referrals in the business world but everyone else just considers them to be friendly introductions). Show up at local sporting events. Support local schools. Advertise in the local papers.

Saturate the neighborhood with YOU (not your business). That’s what Don Corleone and Nucky Thompson did to climb the ladder.

I promise you: The competition is NOT doing this. They are spending money on advertising beyond the borders of the community and they are forced to discount their prices to try and attract people.

The result will surprise you.

People will buy from you… not because you are necessarily the greatest at what you do or because you had the cleverest advertising but because they know you and trust you and believe that you have their best interests at heart.

5 questions to ask when evaluating new marketing opportunities

The web has transformed how businesses market their services. New marketing channels have arisen (blogging, social media) while traditional marketing channels have evolved (press releases). And within these broad channels, specific websites you can use to market your business are regularly unveiled. And every other day, new internet marketing gurus spring up like the many-headed Hydra.

There are SO MANY marketing opportunities out there and new ones are being introduced every day. So how do you know which ones to use and which ones to stop using? How do you avoid the “shiny object” syndrome? (Note: I’m using words like “marketing channel”, “marketing opportunity”, “marketing media”, etc. interchangeably because sometimes it’s a new website and sometimes it’s a new style or system or methodology).

Here’s the list of questions I use to evaluate new marketing opportunities as they arise…

  1. What kind of media/communication is used here? And, can I do it effectively? YouTube is video. Podcasts are (often) audio. There are many text-based marketing channels. Decide what is required and whether you have the equipment, skills, and desire to use this media. Note: Sometimes you have to test it out before you can answer this question.
  2. Does this marketing resonate with my target market? Different target markets interact with different channels/media/methodologies. Door-to-door selling might be okay if your market is at home during the day and responsive to a knock at their door.
  3. Doe this marketing fit into my sales funnel? Smart marketing doesn’t stand alone. There are sales funnel activities that precede it and sales funnel activities that follow. Each marketing activity in your sales funnel should lead naturally to the next one (i.e., each sales funnel activity has its own call-to-action to move forward to the next piece of marketing). Does this new marketing fit in with the old?
  4. What kind of content is acceptable to post on this site? For example: Is there a specific focus on this site? What does the user-base respond positively to? Are there restrictions outlined in the Terms of Use that I need to adhere to?
  5. What is the cost to set-up, use, and succeed with this marketing channel compared to the expected return on investment, and how is it better than a marketing opportunity/channel/method I’m already using? It’s so easy to succumb to a “grass is greener” approach to marketing and become tempted by the latest marketing methods. They might be better but they might not be. We need to consider the cost to use them (estimating time, money, and effort) and what we expect to get back. And, of course, we need to decide whether it’s worth replacing the systems we currently have in place.

There are many new opportunities for businesses to market themselves more effectively. But adopting every new website or methodology isn’t a great use of your time. Use these questions to evaluate all new marketing opportunities you encounter to decide if they are right for you.

What I’m working on this week (Nov. 26 – 30)

The days are ticking by. Before you know it, we’ll be ringing in 2013. There’s still so much I want to do!

The good news is: I’m feeling a lot better than I have been in for the past two weeks. Still a little cough but I’m at 99%. So now that I feel so much better, it’s time to turn it up a notch.

Here are a few of the things I’m working on this week:

  • I’ve got a bunch of projects that are just past the “freshly brainstormed” state and I’m about to start writing. But not all of them are priorities for the rest of the year. I need to touch base with my clients to see which ones of these are must-do projects and which ones only need to get the needle moved forward a little bit.
  • Then there are several projects that are in the “mostly written” stage and I need to push forward on these. I hate having them stall at this stage, but it’s easy to do because I’m busy and my clients are busy and there’s a flow of projects always coming from them to me.
  • I’ve also got a couple of books in the works — one for me, two for clients — and what I would really like to do is get into the habit of writing a couple pages per day in each one. That doesn’t always happen and I’d like it to happen.
  • Some exciting things are happening with a few of my other brands. With Winnipeg Technical Writer, I’m delivering a technical writing seminar. With GraphiteInvesting.com, I’m laying the groundwork for a really exciting 2013. A few other things in the works, too.

Okay, gotta go do the work.

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