Random Quote - Priceless

Authors Diana LaSalle and Terry Britton observe in their book Priceless: “…when someone is asked why he uses whitening toothpaste, he might say to have whiter teeth. If probed further to find out why this is important, the consumer may say it makes him look better, a typical feature/benefit response. When asked again, he might finally reveal that looking better gives him greater confidence and self esteem. You can’t really put a price on feeling better about yourself can you? So these then are the priceless attributes of the product.”

Week 11 - Why Should I Buy From You?

Earlier we discussed the importance of being strategic, or proactive in your approach to building your business and remaining competitive. Your Unique Strategic Position (USP) is the key ingredient for achieving this. David Ogilvy, the famous advertising executive and founder of Ogilvy and Mather defines the “position” in USP as “what the product does, and who it is for.” I would take that one step forward and say “what the product does, who it is for and how it is different.”

Asking you to differentiate yourself as soon as possible is simplistic. A competitive advantage can be fleeting, we all know that. The guy across the street who offers “two for one” is soon copied by all of the local retailers. Therefore your goal should be to make your business the only choice through a totally outstanding offer, putting you out of the reach of your competitors.

Choose your niche carefully. No business can be all things to all people. Perhaps you should revisit “Week 1” to ensure your chosen USP is in alignment with where YOU want to go as a person.

If your USP has not been clearly defined, it is most likely not being communicated by your employees. That is one big problem but even worse is how we run our business in this mode: WE REACT, we lower our prices, we scream ME TOO and try to win the prospect over by promising things that we cannot deliver (ever had a contractor turn up late?).

Finally a good USP will set expectations about your product or service and position your business in the mind of your prospect.

What are some questions you can ask yourself when devising your USP?

1. What problem or problems do you solve for your customers?

2. What are the top 5 reasons your current customers buy from you?

Week 10 - The Power of Lifetime Value

Once you are measuring, testing and marketing as effectively as possible, you will start to see how you can attract more people into your business without spending additional money.

You also know who is coming into your business and why, so now we need to work out what each of them is worth to your bottom line. There are two reasons for this, the first is so we can tailor our marketing program to the amount of money each customer is worth and secondly so we can convey this figure to all employees. It doesn’t matter whether you sell do-it-yourself will kits and see your customers only once or if you sell seafood and see them every second day. The principle that it costs real money to attract each customer still applies. Given this cost, what is each prospect worth to your business over a year, or a lifetime?

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Lifetime value = average number of purchases x average value of sale x average number of years as a customer

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You really need to spend the time to work out this figure “on average”. Don’t get too tied up in it being exact, you need a number to guide you and you need it now. The lifetime value number will be used time and time again in the future to justify marketing programs or to help you sell your business system so put in the work and review it regularly.

Sometimes a simple testing and measurement program can reveal that you are actually paying more to attract new customers than they are even worth if you manage to sell them! It is often difficult to gauge as the phone is ringing and the workplace appears busy, but it is like the old story about the boiling frog.

If you have heard this a million times, bear with me because many have not and it is a great illustration of how we fail to address problems because everything seems “all right.” The story goes that if you throw a frog into a pan of boiling water, the frog will immediately jump out of the water rather than sit tight and be scolded to death. But what if the frog is put into a cold pan of water and the temperature is gently raised to boiling point? Well because everything “seems all right”, the frog stays where it is until of course it is too late, eventually the water is boiling and the frog is dead.

“All right” should be a warning sign to every business owner. You need the real data to make these important business decisions, not rely on feelings about how everything is going in the business.

Your staff need to know!

Another important reason to measure the value of each customer is so you can train your staff to see each customer as their annual or lifetime value, not a single transaction. For example, rather than the cash register clerk at a shoe store seeing the customer as a $129.95 once off sale, they would see them as $129.95 x two pairs per year x the number of years you can keep them as a customer! If your employees can buy in to the fact that this person is worth over $2000 to the business over the coming years, you can really instill a sense of importance into each and every transaction. This kind of thinking can and should be applied across the business and procedures put in place so that the sales clerk has no other option but to treat the customer as worth $2000 in sales.

How many times over the years have you been treated in a “once off” manner?

Week 9 - Testing Critical to Success

Testing is simply learning what works best when you attempt to market your business. You test early, gather feedback and draw conclusions long BEFORE embarking on expensive city or country wide marketing programs.

Day to day, you need to track the quality of leads (those calling or emailing your business) but more than that, you need to start with the materials that motivated the prospect to make contact in the first place. These include testing different headlines, colors, texts, offers, pricing and just about anything else until you are confident you have the best combination of factors to attract the most qualified customers.

Testing can not only pinpoint the most effective way to get your message across, it also offers huge leverage - remember, an advertisement might pull 3 or 3000 responses but still costs the same to run.

Testing doesn’t end with the style or appearance of a marketing piece. You can also test the most effective medium, the page number if it is a newspaper, the size of the advertisement, the most effective page within a Blog to run your banner, the call to action or the timeslot when a radio ad runs.

These days Internet clicks are easy to track and many small business owners are using the data to alter their marketing programs, some on the fly. Although more traditional advertising mediums are not as flexible, why not apply the Internet logic when analyzing the effectiveness of your offline marketing? It’s your money, don’t waste it. Test, measure and test again and you can sleep each night knowing your marketing dollars are deployed in the most effective manner.

Week 8 - Measurement Key to Success

Last week we saw how making small, incremental gains in a range of areas can have a massive impact on your bottom line. But take a step back; the only way to surely know whether you have improved is to start measuring everything you do.

What you don’t measure, you cannot possibly manage!

Most businesses simply do not measure. How can you get additional leverage if you do not know where you are starting from? You might have heard a business owner say “television does not work for me, but sponsorship does”. Next time you hear that, dig a little deeper, why did they say that television didn’t work for them? What did they test? What was the call to action for the people watching the commercial? How was that call measured? How do they know that sponsorship worked better? More customers? How many more and what was the cost of getting each of those customers?

Think of the last call you made to get help at home. How many of the companies that you called asked where you heard about them? None, 1%? This is the most basic form of measurement but very few businesses are using it.

Look back over your last 12 months of marketing programs. Ask yourself some hard questions:

1. What did each initiative produce in terms of leads?
2. What was the quality of those leads?
3. How many resulted in an actual sale?
4. What was the cost of the initiative and therefore what did each of the leads and sales cost you?

Unless you can answer each of those individual questions, you have room to improve your measurement systems.

Week 7 - Incremental Gains

Growing your revenue and profitability can actually be easy if you focus on exponential rather than linear gains. What this means is that you focus on multiple avenues of growth which combine to produce a much greater result than single, isolated campaign you might run from time to time. For example, a business owner I know just declared that he is going to double the number of customers coming to his business over the next year. Naturally I feel that he faces a big challenge; the business is already running at or near capacity with the staff and resources he has, so creating and then coping with twice the work will be a daunting task indeed.

Rather than focussing on simply doubling the number of customers, why not look for a small gain in a few key areas? As every business is different in some way, you can probably think of many things that could be improved. For the purposes of this exercise, I will focus on five areas which apply to nearly every business.

1. Number of Leads – The number of phone calls or visits generated each year by your marketing

2. Conversion Rate – the rate at which you convert prospects into actual customers

3. Average Value of Sale – the average amount that customers spend with you each year

4. Number of Visits per Customer – the average number of times per year your customer purchases your service or product.

5. Your Margins – the gross profit you make on the service or product you provide

At this point, don’t worry how you would achieve these gains. You should focus on the impact of increasing each of these areas 15% during your next year of business. If last year you repaired 200 cars, can you see yourself repairing 230 this year? If you filed 600 tax returns for your clients last year can you increase that to 690 this year and increase your fee by 15%? Take a look at the following table and the effect that these gains can have on your bottom line: