Perato Principle states that for many events 80% of effects come from 20% of causes. This simple law has been proven to hold true in so many walks of life. In a recent study of a Franchise Network performance it proved virtually 100% correct when we looked at income versus customers. 80% of Turnover came from only 20% of the customer base. We also know as a truism that it is 5 times more expensive to gain a new customer than it is keep an existing one.
Why, therefore, are we so poor at communicating with our customers and building more business with them? When I coached business owners I would ask do you market to your current customers. The answer was invariably that they did not as the customer "Gives us everything they have got!" I would then ask if they had ever visited a customer's premises to find the local competitor providing a service for the customer. "Oh yes happens all the time they would say". Its this Urika moment that gets them awakened to start spending more time telling the customers what they did. Often we think because we have done great marketing that everyone knows what we do for a living. Just because we know what we do for a living and we have told someone else does not mean that they have understood what we have said or retained that information. I spent 6 months in a Business Networking Group getting up at some ungodly hour to stand up for my 1 minute and trot out what I did. I had one to one meetings and was convinced that I had made headway with developing my brand. You can imagine my surprise when I got out of hospital having recovered from a serious illness that a) My competitor (not a member of the group) had been given a 45 minute lecture slot for the group and b) One of the members approached the competitor saying that they have been looking for someone to do that particular service for ages! My flabber was gasted! Then it was my fault for not getting across what I thought I had. Another example of my failings in this arena was in my logistics business. I had a friend who approached me and asked for my company to provide haulage for his company every week. Every week our sign written vehicles would be in his factory and every week we would send an invoice in with our logo headed paper and description of our services. It was a shocker for me when, after 5 years of this contract, in a local pub my friend asked if I knew anyone who had storage facilities locally. Our main business was warehousing with nearly 200,000 square feet very close to him. There was quite a bit of joking between the two of us about why he should have known but in the end the truth is I did not make it obvious to him and therefore I probably did not make it obvious to the rest of my top 20% either. The moral of the story is spend as much time on talking with your current customers cross and up selling as you do trying to get new customers! It will be quicker and cheaper to get business from them than it will to land a new customer.
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What factors should you consider when choosing a business coach? Experience running a business! I put this as number one. Running any business comes with its challenges. A good business coach is a person who has run one before. They know and can empathise with the business owner, about what keeps them awake at night Like any coach a business coach can be impartial and unemotional with the business. They will help with steering the business forward and hold the Directors to account. It does not greatly matter what type of business they have run before, all businesses have the same factors and issues, some just have more noughts after the first digits than the others. As a massive generalisation, but one based on coaching many business owners and athletes, the failure of the business is not usually down to external factors but is down to the lack of action of the business owners. Sure lots of competition is a factor, but lots of competition in a geographical area means there is lots of business in that area also so get out there and get it. The dirty word Brexit, might have delayed a few larger projects but has not affected trade in lots of businesses I deal with. In the Sign Industry the largest UK sign company (70 + branches) are 8 % up on turnover compared to last year! Again get out there and get it. Experience in the Industry? No it is not a prerequisite. In fact it can be a hindrance! ? Why? Well you can become a consultant and not a coach. The main benefit of a coach is their ability to draw the owner away from the day to day and start focusing on the bigger picture. If you have detailed knowledge of the industry you could become embroiled in questions on detail and lose the focus to get the business moving forward. My biggest successes have come from industry's where I have not worked in before. I am able to ask questions that need asking but are often overlooked because of industry knowledge. A good business coach leads you to develop YOUR business plan. They should not install their plan for your business. They should harness your passion for the business you have grown and ensure that you take the right steps for your business at the right time. A good coach is one that shines a torch on areas of you and your business that you feel too uncomfortable to face up to. As Pro Actions, Essex based business coaches puts it, "We are your best friend but harshest critic." There is no point hiring someone who is going to give you false praise as they do not want to upset you. Never be afraid of hiring the person that upsets you, they are not trying to be rude, they are trying to help. Can the information we have be trusted to make decisions with? In my last Blog I postulated about how knowing your numbers is vital for success, I am not going to argue with myself here ( I have two expert children and a wife for that!), but what I will ask is what we are measuring the correct things in order to be making informed decisions? For example, I once did some work for a very large retail company. Being a multi-national and a household name they measured absolutely everything. Not quite sure what happened with all the data, but I am sure it was used to make informed decisions! One area that was measured and the results displayed in a leader board of the best employee, was in the home delivery department. Like with most modern companies the home deliveries were tracked by a handheld device. Each week the driver with the least errors reported was declared the Driver of the Week. Quite logical you might agree. But no, not at all. What the management rewarded here was the driver that had got all jobs allocated to them signed in the exact time slot and with no complaints received. The driver that won each week was the same person who was actually the driver the “Team Leaders” could not trust to get all jobs done, rather than face up to this and train or fire they put him on “runs” that had a far less deliveries than all of the other drivers. He had 5 jobs per shift versus everyone else’s of 15 to 20. Yes the KPI should have been correct but in the absence of full performance statistics no corrective management action was taken, instead the worst driver was rewarded as being the best! A Cynic is a person that knows the cost of everything and the value of nothing ….. Oscar Wilde Measuring the wrong thing can lead us to making incorrect decisions. When I ran a marketing company that specialised in B2B appointment setting for our clients a question I was invariably asked was “How much does your service cost per appointment?”. “Why do you want to know?” I would counter. “Well to find out how you compare to the competition” would be the response. “Oh I can guarantee my company will be far more costly per appointment than all of my competition, but I will also guarantee that we will make you far more money than all the others also.” I would continue “The real KPI you should be measuring is what is the return on investment, not what is the cost per appointment. After all your Bank Manager won’t allow you to pay into your current account appointments made but he will let you pay in monies made.” We qualified our client’s prospects so well that we only sent them to appointments where they had a 75% chance of closing the deal. We might only set 5 appointments per month but these would result in great business. We only got our new clients by recommendation, which is testament that this approach certainly worked. Is the measure we use a measure of success of the business or just a measure of success of the measure itself? With all the advancements in technology and social media, our marketing spend can be far more accurately tracked these days than in the past. Even so do we use the information to make changes in our Marketing efficiency or do they become a success in themselves. This came home to me when I was presenting a workshop on using social media to drive business. A businessman in the audience listened intently to the content and at the end said a simple short sentence. “Show me the money” His argument was measuring how many likes you get, mentions, retweets etc was all well and good but if it did not result in more turnover then it was no more than “of interest”. He was right, these measurements should have an outcome and not be seen as a result in themselves. The work is not done when we have re-branded our business, produced a new brochure, got to number one on the google rankings; it is over when we have money in the bank. With the way High Streets are failing these days and the internet is taking over the need for companies to be result driven marketing organisations is greater than ever before. If you have a department for Marketing and a separate one for Sales it is imperative that they work together and do not see that marketing create the lead and sales closes it. They must work together feeding information both ways to make the offering to the client is irresistible. Wikipedia defines Marketing promotion as In marketing, promotion refers to any type of marketing communication used to inform or persuade target audiences of the relative merits of a product, service, brand or issue. The aim of promotion is to increase awareness, create interest, generate sales or create brand loyalty. It is one of the basic elements of the market mix, which includes the four Ps, i.e., product, price, place, and promotion.[1] Promotion is also one of the elements in the promotional mix or promotional plan. These are personal selling, advertising, sales promotion, direct marketing publicity and may also include event marketing, exhibitions and trade shows.[2] A promotional plan specifies how much attention to pay to each of the elements in the promotional mix, and what proportion of the budget should be allocated to each element. Sales is merely one form of promotion of marketing and not a separate discipline. Thus if the other forms of promotion are resulting in the wrong types of enquiry then we must alter our marketing to get better enquiries. If enquiries are not being converted because our sales process is wrong we must alter the process to increase our conversion rates. We cannot view this as a relay race with marketing departments handing over to a sales department and then abdicating any further involvement , I will leave this blog with a quote from another’s blog . Geckoboard
§ A key performance indicator is: A measurement of activity (often referred to as a metric) that reveals how a business or team is performing against its goals. KPIs are the most critical metrics that measure the success of specific activities used to meet business goals - measured against a specific target or benchmark, adding context to each activity being measured. § What a KPI is NOT: If a measurement of activity or metric does not directly influence your achievement of business goals, then it is not a KPI, it is simply a metric. Not all measurements are equally important, therefore, not all metrics are KPIs. Keep a handle on your numbers
Let me start with a brief background of me! Who am I, what brought me to this position and what do I do. Firstly being a Brit of a certain age I hate talking about myself. I am great at writing description for other people and businesses but get me to talk about myself and I clam up like a bad Oyster. That being said here goes. I was brought up in a hotel and restaurant and having completed a degree in business went into the family Warehousing and Distribution business which I ultimately took over in 1998 as Managing Director. During my 25 years in this business I was taught about the importance of numbers. My father was a Chartered Accountant after all! I always knew our figures with a gut feel even before the accounts were produced, we produced ours on the 4th working day of the month following, this would seem impossible to a lot of my clients. It became apparent to me that the accounts were only the outcome of activity and it was the measuring of our activities that would drive results. Are we doing the right things? Are we doing enough of them? It was this need that drove me to implement KPI’s in each of the businesses profit centres and ensure that the staff knew what was expected of them and that they would be measured on what they were doing. Since that time, I have been a business consultant and coach, both running my own business and in employed roles. In many organisations I have dealt with, both large and small, there can be a lack of understanding of the purpose of accounts in a business. Some organisations see accounts as a "compliance" issue. Accounts need to be produced because Companies House says you have to file them by a certain date. This is undoubtedly true, however accounts are YOURS and are there to help you understand how your business is doing and a way to plan a path for the future. I have visited companies that show me published accounts, usually produced just in time for the filing date, in other words, a very historical document. When I ask if the accounts have been examined by the owner and explained by the accountant, I get bemused looks. A brief look at these accounts invariably lead me to ask questions about the obvious variances showing up. When the owner of the business cannot explain the variances, the Firm of Accountants are asked and then panic in the Accountants firm sets in. A junior has produced the accounts, been signed off by a partner and filed at Companies House but there are errors!! Two quick examples:- Company A accounts showed an increase in insurances by 300%. Examination showed that this was a mistake in a journal entry. Company B had £6000 showing as negative revenue??? The accounts not only produced the accounts but did the bookkeeping also. The accountants had posted cash received to a Sales revenue account! Needless to say the accountant no longer works for my client. It took over a year for the new bookkeepers to correct all the mistakes of the previous firm. Before you sign off the accounts your accountant puts in front of you take time to look at them, if you do not understand why they do not appear as you would think ask for an explanation. Do not get rushed into signing as the deadline is imminent, make sure you and your accountant schedule time to discuss these properly. Set yourself some quick and easy Key Performance Indicators in your business so that you can see if the actions you are taking are leading to the results you are aiming for. Target Setting An old hackneyed phrase is “Businesses don’t plan to fail, they fail to plan” This is undoubtedly true. Moreover if they do plan, often they do not keep that plan alive. It was a failing of my own in the early days. I would sit down over the Christmas break and produce a fantastic business plan with spreadsheets forecasting profits and cash flow, a marvelous piece of work. That’s exactly what it was a piece of work that languished in my drawer until the following year when I would redo it all over again. What’s more it was only me that knew about it. My key managers were not involved in its production, more importantly they were not involved with its execution. If a plan is to be achieved it must be communicated. The diagram below is a three-year vision for a fictitious company. This is a Growth Accelerator Orbit diagram. I found this tool invaluable when coaching my clients. We get all the key managers together with a blank diagram produced on an A0 sheet of substrate. We would then brainstorm the vision of the business over the next three years. Invariably doing this in such a visual way enabled the management to see interrelations between factors of the business they would need to change that led to a modification of their plans. I worked with air-conditioning company, their plan was to expand their new installation business, however when we looked at the required investment and cash-flow to do this it was apparent that a change in focus to increase the maintenance side of the business was going to be the more beneficial. They had a record turnover and profits 6 months later! I encourage my clients to display the Orbit vision in their business. I do get resistance to this sometimes when the owner believes that the staff will ask for money if they know how well a company is doing. I even had this with a client that paid a bonus based on the turnover of the company but would not tell his staff what the turnover was!! It wasn’t rocket science to work out what it was! I am a UK Athletics Coach, the above attitude is like me agreeing a target for one of my sprinters to beat 10 seconds for the 100 meters but then refusing to tell him how quick he has done. After we have developed the 3 year vision for the business we then produce a First Year Action Plan assigning tasks to key members of the team. From that I build 90 Plans with the staff and measure their activity to ensure they are doing what they need to do to reach company targets. I have developed a Management information Tracker that shows and monitors the relationship between the forecast Profit and Loss for the company against the actual and the activities individual undertake in order to reach the forecast targets. By focusing our vision and actions like this my clients have all outstripped their targeted growth plans. Keeping a plan alive and at the forefront of what you do drives performance. In my most recent role there were 80+ businesses. The Growth for the whole company was 8% for the year, my clients were achieving double this growth rate! If you could benefit from someone to keep you on track with this methodology get in contact today. |
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