Posts on Jul 2020

The One Year, Thirty Minute Challenge :: Week 30 :: Marketing :: Messaging

If there’s one business discipline that gives me indigestion, it’s marketing. When I sit down to write about strategy or operations, the words flow freely, but when I have to write about marketing or, even worse, prepare marketing materials for my own business, I feel like my IQ drops 30 points.

I know the discipline is vital, so I’ve enlisted the help of people I trust. You’ll find my Kindle full of books from Donald Miller, Seth Godin, Bernadette Jiwa, Jay Baer and Jonah Berger. People who can help me decide what to say and how to say it. You’ll find my recommended reading list at the bottom of this post.

This week’s One Year, Thirty Minute Challenge is devoted to the most rudimentary of marketing disciplines – messaging – What do I say when I talk to customers? I’m afraid we devote too much attention to branding (logo design, colors) instead of the real words we say to the people we desperately want to talk to.

So, my goal for you in this week’s thirty-minute exercise is to use the criteria below to evaluate your communication with current and potential customers. Check your website, email campaigns, social media posts and written materials. These are the some of the most crucial truths I’ve gleaned from the smart people listed above.

Be brief – People are busy. They scan instead of reading. You’ve probably got 5-10 seconds on your website, 1-2 seconds for an email subject line and 3-5 seconds on a social media post to convince someone to go deeper. On your website, succinctly state the problem you solve, how you solve it and how the customer’s life will be better after consuming your solution. On email and social media, quickly say what the email or post is about and why they should continue reading.

Be clear – Don’t be cute, be crystal clear. A clever play on words might be tempting, but a solid message is always better. Don’t make the reader work hard to figure out what you’re trying to say.

Be valuable – Give value in every interaction. Let current and potential customers know what kind of information and work they can experience when they interact with you or your organization. Give them a taste of the value that will be returned for their investment of time and money.

Solve a problem – Current and potential customers don’t really care about you; they care about themselves. How will you resolve an existing issue or make their lives easier, better, or happier?

Be Mick, not Rocky – If you’re listing the top feel-good movies of all time and Rocky doesn’t make the list, you’re doing it wrong. The film about a struggling boxer, Rocky Balboa, who finally gets a shot at the title is Hollywood gold. But the pivotal character in the movie isn’t Rocky, it’s Mick, Rocky’s coach, mentor, friend, butt-kicker and confidant. In your marketing, be Mick the trainer, so your clients can be Rocky the hero.

Be empathetic – Let current and potential customers know that you “get it”. You understand their struggles, their frustrations, their obstacles, and their aspirations.

Be trusted – After you’ve shown that you understand their problems, demonstrate that you know how to solve them. Your proof might be in the form of years of experience, testimonials or case studies.

Be patient – Don’t be the weird person who discusses how many children he or she wants on the first date. Take your time, build trust, ask more questions, and learn everything you can about current and potential customers. Earn the right to heard.

Be transactional – In contrast to the previous question, don’t get stuck in the “friend zone”. Let potential customers know that the goal of your interactions is a paid engagement. Give potential customers a chance to begin the engagement with early and frequent calls to action. Be ready when they’re ready.

Be aspirational – Paint a picture of what their life will look like after using your product or service. Will they have more free time, more money, more security, more piece of mind, happier employees, better data enabling them to make better decisions?

If you’ll critique your communication using just the truths above, you’ll remove some clutter and make your message easier to read and easier to act on.

If this whets your appetite to go deeper on your marketing, you’ll benefit from these books.

Donald Miller, Building a StoryBrand

Donald Miller, Marketing Made Simple

Seth Godin, This is Marketing

Bernadette Jiwa, Marketing: A Love Story

Jonah Berger, Contagious

Jay Baer, Youtility

 

The One Year, Thirty Minute Challenge :: Week 29 :: Governance :: Decision Making

Over the course of a day we make hundreds of decisions. Many, in the great scheme of things, are inconsequential – blue shirt or yellow shirt, mustard or mayo, checkout aisle 6 or 11. However, when we’re at work, some of our decisions might have a bit more impact – this new region or that new region or both, this new employee or that new employee, abandon this product or invest a bunch of money into marketing it for another quarter or two. These types of decisions affect the lives of people, the trajectory of our company and the amount of money we make or lose in upcoming quarters.

So what if we could get better at decision making? Let’s agree up front that every decision carries risk. We can’t “good decision” our way out of every fork in the road and remove risk. Most of us fall victim to, what those who study decision-making call, “resulting”. We believe if we get good results, we made a good decision. If we get bad results, we made a bad decision. Let me illustrate. The odds of winning on any given number at the roulette table are 1 in 37. If you walk up to the table, place your chips on 5 and the little ball goes into the 5 on the wheel, you might believe you made a good decision. In reality, you made a bad decision (the math was against you) but got a good result. Conversely, if you hire a salesperson with experience in your industry, stellar credentials, a history of strong sales and equip them with every resource they need to sell your product and they fail miserably, you more than likely made a good decision, but got a bad result. Just one of the foibles that we, as humans, struggle with as we evaluate our decisions.

So how do we up our decision-making game? In this week’s One Year, Thirty Minute Challenge, I encourage you to spend your thirty-minute exercise piecing together a decision-making framework that you’ll use when your organization is faced with a decision. I’ll give you some thought starters and you can grab what works for you and add your own.

  • What empirical data can we bring to bear on the decision? It’s easy to fall in love with people, products, places and processes. Can we put our hands on data that will give us objective information – sales numbers, number of defects, number of returns, sales by location, sales by hour, sales by salesperson, production per assembly line, bounce rate for the landing page.
  • How can I remove my ego from the decision? It’s tough to divorce yourself from a person or project that you’ve poured yourself into. In reality, you are not what you do. You still have worth and you’re still smart, even if the object of your affection is looking questionable. Recognize this for yourself and recognize that others in the organization will have similar feelings towards the people and things they’ve invested in. Step away – and help them step away. Two more things on ego. First, we love our own ideas and struggle to see how they might have a couple of holes. Second, we love information (both empirical and anecdotal) that supports our position and tend to discount information that opposes our position. Be on guard against both of these things.
  • Enlist the collective genius of the people most affected by the decision. If I could list the most frequent management screw-ups, this would be close to the top – people not familiar with the intimate details of the work, trying to improve the work. In reality, the people who do the work are most qualified to improve it. Get input from employees, customers, and vendors – whoever can help you assemble the largest body of knowledge on the subject about which you are making a decision. One important thing – an outside perspective does help because people are occasionally so blinded by the forest, they can’t see the trees. But I’d err on the side of getting lots of input from those in the know.
  • Get help from someone who’s made similar decisions. The Israelite King Solomon said, “There’s nothing new under the sun.” True when he wrote it 3000 years ago. Still true now. Find someone who’s faced a similar situation and pick their brain.
  • Propel your self forward and look back. As much as you can, transport yourself to the end of every fork in the road (all the possible decision options) and look backward. Things might seem much clearer – after all, hindsight is 20/20. What would have to go right to get here? What could go wrong on the way to here? Can I live with the consequences of the things that might go wrong? What are the probabilities for each of these things going right or wrong? Conduct a pre-mortem – in your head, jump to the end of the decision, assume it failed miserably then ask, “What did we screw up that caused this?”
  • Would you put money on this? I wish I could claim credit for this idea, but it comes from Annie Duke’s brilliant book, Thinking in Bets. She encourages her readers to ask themselves, “would I bet on this?” This moves the discussion from theoretical to financial. Before we bet on something, we contemplate the probability (run or pass, cover the spread or not cover the spread). Our emotions (we love our team and hate the other team) are eclipsed by the reality of what could happen to our wallet.
  • Find a contrarian. Seek out someone to poke holes in the decision you’re narrowing in on. They can be inside or outside the organization. Encourage them to pick it apart personnel-wise, strategically, operationally, and financially.
  • Festina lente. Caesar Augustus adopted this motto – Make haste, slowly. Make decisions quickly but deliberately. Don’t fall victim to paralysis by analysis, but don’t fire from the hip. Good decision-making is thoughtful and complete but with a bias for action.

 

Following these steps, or any others for that matter, won’t result in perfect decision-making. There’s no such thing. We’ll still be duped by the poor decisions that have good results (thinking they were good decisions), puzzled by the good decisions that have bad results and feel smug about the good decisions that yield good results. Our best hope is that we optimize our methodology.

The One Year, Thirty Minute Challenge :: Week 28 :: Governance :: Change

The Greek philosopher Heraclitus said, “Change is the only constant in life.” True when he lived 2500 years ago. Still true now. That being the case, we ought to be pretty good at it. But we’re not. Inevitably, when we introduce change into our organization, it’s a struggle.

We like what we know. It’s comfortable and we know what to expect. So when change comes, for a good percentage of us, we dig in our heels. There are a small number of change addicts out there who embrace it, but they are few and far between.

Joseph Schumpeter (1883 – 1950), an Austrian economist who immigrated to the US and eventually became a US citizen, made a compelling case for change in the workplace. In fact, the change he advocated for was so far reaching, it required periodic “destruction”. Schumpeter introduced the idea of creative destruction in 1942. He taught us that if we are making money, competitors will work to find alternative ways to meet those same customer needs so they can make that money instead of us. So, to succeed for the long-term, we must be ever vigilant to look for ways to improve on our work and do a better job of meeting customer needs, sometimes requiring that we blow up what we’ve done and rebuild it. For a business, it’s the ultimate change – shoot the horse you’ve been riding and get a new horse. Think about the evolution of home entertainment over the last 30 years – VCR to DVD to BluRay to streaming services. Each change in technology required companies to abandon formerly revenue generating products and build new, different ones. Before we move on to this week’s One Year, Thirty Minute Challenge, let’s make a quick list of companies who were confronted with a mandate for creative destruction, refused and subsequently died or are dying now – Kodak, Blockbuster, AOL, Blackberry, MySpace, Xerox, Polaroid and almost every newspaper in the US.

The goal of this week’s exercise is to create a plan you can utilize when you’re introducing change into your organization. That change might be as sweeping as replacing a product line that has generated the bulk of your revenue for the past 10 years, as far-reaching as replacing an enterprise-wide software system or as personal as changing the health insurance provider in your benefit package. Use the though-starters below (listed in no particular order) and supplement with your own to create a change management plan that will equip your team for the one constant – change.

  • Start with why – Change in an organization is never random. Explain the rationale for the change – previously unseen market conditions, changing customer tastes, under-performing vendors, software no longer supported, need new functionality, price, etc.
  • Explain that “here” is unacceptable – One of the most difficult things I’ve run across in introducing change into an organization (a regular occurrence in my work) is a longing for the status quo. The status quo sometimes is laden with emotion because it represents the world as designed by a beloved founder (many times a family member). When we introduce change, it seems like we’re dismantling the founder’s legacy. In reality, change often mirrors the work of the founder – who created the original product or service to meet the needs of the market. We are honoring their work by recalibrating for the needs of a new market. “Here” is never an acceptable alternative for a business. We must evolve.
  • Change is consistent with mastery – Everyone wants to be good at their job. As we become better at our craft, we change. We find new ways to do existing work. Introducing change gives us the opportunity to up our game and add new tools to our toolbox.
  • Change is consistent with lifelong learning – We encourage individual and team growth. Some change is evolutionary, some is revolutionary. When we introduce change into the organization, we add to our collective knowledge base which allows us to become more effective, efficient and serve customers more skillfully.
  • Invite people into the process – As much as possible, involve your team in every part of the change. For example, if you’re buying new enterprise software, don’t make it solely an IT decision. Invite users from every involved department into the evaluation, buying, implementation and training process. It will take longer, but employee buy-in will skyrocket.
  • Be vulnerable – The more complex the change, the more unknowns are out there. You, and other leaders in the organization, don’t know everything. It’s OK to say, “I don’t know” or “I need help”.
  • Be transparent – As change unfolds, be upfront about everything. When a vendor drops the ball, say so. If you decide to delay a portion of the project, don’t obfuscate and or make excuses. Trust will grease the wheels of change and trust comes from transparency and vulnerability.
  • Paint the picture of the future state – As a leader in the organization, it’s imperative that, as part of the “why”, you spell out the desired future state that will result from the change. How will the change make the organization healthier, how will the customer experience improve, how will the organization have better data for decision-making, how will employees be better trained or better equipped.
  • Be resolute – As I wrote this, I almost typed, “Be confident”. But in the context of changing the organization, being resolute is better than being confident. The commitment and subsequent actions to see the transformation through to the end is better than rah-rah speeches.
  • Seek and obtain sponsorship – Don’t lead alone during change. Recruit other leaders to join you in bringing change to the organization. Share the vision and project with those who can lead the charge with you. Focus on those who have the biggest stake in the transformation. They will bring along their teams and will influence those on adjacent teams.
  • Make a roadmap – Identify the beginning, milestones along the way and the end. Flesh out this schedule with activities, status meetings, status reports and the people accountable.
  • Communicate – If this list were in order, this would be close to the top. Communicate before, during and after every phase in the change process. Communicate information, progress (included milestones reached and missed) and the transformation already happening during the implementation of the change. I like the idea of appointing a scribe for the change process – separate from the change manager (project manager, CEO, consultant) and the other project sponsors.
  • Celebrate – When you reach the end and begin to experience transformation in the organization, throw a party. Celebrate those who did the work, the work itself and the impact you’ll have on the organization for years to come.

 

If you’ll use this week’s exercise to put together a change management toolbox using these ideas (plus any additional that you come up with), you’ll be ready to lead your organization through the inevitable, necessary changes that will make your organization ready for the future.

 

The One Year, Thirty Minute Challenge :: Week 27 :: Finance :: Lifetime Customer Value

I remember it vividly. I was a freshly minted consultant. It was one of my first engagements. The client’s business was growing quickly, but at the end of every month, he barely had any money left.

So, I did an individual profit and lost statement for every single customer. I did some quick math and calculated the percent of each revenue dollar (at his current volume) that went to cover fixed costs, then applied the remainder of that dollar to the variable costs associated with each individual customer. Not a perfect methodology, but it worked well for quickly flushing out the problem. Eureka – the lightbulb moment. For every revenue dollar from the client’s biggest customer, he was breaking even (the reasons why are interesting, but that’s another story for another day). The more this giant customer spent, the more my client “broke even”. We applied the same methodology to every other customer and even found a couple that he went backward on for every dollar the customer spent.

I’m a strong proponent for a P/L for every customer. I realize it only makes sense in certain industries, but if it works in yours, you should do it.

That’s not the topic for this week’s One Year, Thirty Minute Challenge, but that type of math is at the heart of this week’s exercise.

In many industries, a company is upside down financially when they first begin a relationship with a customer. The costs associated with marketing, advertising, selling, onboarding and servicing the customer the first time exceed the revenue from the customer’s initial purchase. Hopefully, just a few purchases in, the company is right side up and making money. In the course of calculating the acquisition and onboarding costs, the company should be projecting and making customer experience decisions based on the potential lifetime value of the customer. Loyal, happy customers, depending on the industry, could represent a lifetime revenue stream of 1000s, 10000s or even 100000s of dollars. Happy customers tell their friends. That can translate into even more lucrative customers.

This week’s One Year, Thirty Minute Challenge is to identify the factors that constitute the lifetime customer value calculation for your products and services.

Let’s jump into this week’s exercise.

  • What are the costs associated with acquiring a new customer? Depending on your industry, it could include annual marketing and advertising expenses (divided by the number of new customers each year), direct selling costs (lead generation, sales technology, sales salaries, sales commission), onboarding costs (customer training, installations services).
  • What does the customer pay for the product?
  • How many times will the customer buy the product? What is the range from the most sporadic customer to the most loyal customer?
  • What does it cost to produce each copy of the product? Depending on your product or service, it will include cost of goods sold, plus additional costs for packaging and delivery.
  • What does it cost to service already acquired customers? There might be customer service calls, technical support calls or costs for billing and collecting.

 

The math should look something like this –

Number of times purchased * purchase price

– number of times purchased * cost of goods sold (and additional costs)

– initial acquisition costs

– ongoing support costs

= total lifetime value

You’ll probably want to do some math that’s similar to what I did in my initial illustration to reduce the top line purchase price number to reflect the impact of fixed costs.

So, what do you do with this information once you have it? Here are some ideas –

  • What are the primary drivers of purchase frequency? How can we move less frequent purchasers to more frequent purchasers allowing us to spread the acquisition cost over more units and consequently increase lifetime customer value?
  • Can we draw any correlation between purchase frequency and acquisition costs or support costs? Does a more expensive acquisition equal a more frequent purchaser? If so, maybe the extra acquisition cost is desirable? Maybe there’s an inverse relationship between frequency and support cost – the more they use the product or service, the less they need support.
  • If a customer is ready to defect, what can we do to save them? Is there any correlation between defecting customers and their use of support? Based on their potential lifetime customer value, what can we afford to spend to keep them?
  • How can we leverage the personal networks of high total lifetime value customers to find more like them? They should be our best brand ambassadors.
  • Since high total lifetime value customers have demonstrated a willingness to spend money with our company, are there other products or services that might be of interest to them?

 

Once you’ve completed your exercise, begin educating your team on the importance of lifetime customer value. The first time that new customer walks through the door could be the beginning of a long and profitable relationship. Treat the opportunity that way.