I.T. Exec's – Now Is The Time
After talking to many business owners and I.T. Execs here in my area, I’m convinced most don’t understand or see the change that is taking place and think Social Media is a waste of time, a fad. Most are bottom-line thinkers and there must be a result for ever action taken, an immediate return on investment. They say I don’t have time for that sh*t! It puzzles me how those who think in these terms consider themselves Revolutionary thinkers, Visionaries in their respective fields. It would seem to me that this is the ultimate oxymoron. These individuals understand bricks & mortar better than most but they struggle with the soft side of what’s happening with Social Media and refuse to believe that it has any influence on the bottom-line.
How could it be that these brilliant minds are missing the shift, unwilling to accept that their roles will be obsolete as they know them. The argument is valid, someone must do the work, and, someone must be in charge, well, sort of. The Executive(s) that understand we the people are going to tell him what and how things will go will win, he must listen and listen hard before making a final decision. I’m not saying dismantle your hierarchy right this minute, I’m saying prepare to allow for a flattening of management and an empowerment of your staff unlike anything you’ve planned for in the past. Open yourselves up to bringing strategic I.T. and Social Media consultants (thinkers) in to help guide and wade through this new environment, this new era of Social Media and what it will mean to you and your business. How 50 Billion Dollar Marketing Dollars will go to firms that are smaller and can move faster than the bloated organizations we know today.
There will still be a need for large ERP systems and the like but they too are changing, as we move towards Virtual Reality and Nanotechnology, these environments are being built via the Cloud today rather than in big rooms with SANS and mainframe like servers. In the future we all will be wireless device’s, we will integrate with technology, in some ways we already have, manual processes will disappear in such a way we won’t see it coming. This isn’t fear mongering, this is asking you to look outside of your four walls and take notice of what’s really going on with technology, spend time looking ahead and consult with those who can help you see what you can’t see now.
I.T. Exec’s – The Time Is Now! You may even be too late in some circles, much needs to be done and you need to get started if you haven’t already. Don’t do things in a vacuum or you will stay inside your four walls and try to use old thinking to get you of your Executive Box. I know most of it seems logical but trying to put an ROI to conversation(s) is confusing at best when you try to get there using traditional equations. There are some sharp people who can help you and you must be willing to allow them to lead you through the maze, if you are looking for someone in your area let me know and I’ll get you connected.
I could go on and on but I think you’re getting the picture, get outside the box and ride the wave rather than be whipped out by it!
Return On Investment Selling
In July I wrote an article for you called, ” Your Break Even Point “. The premise was to help you calculate that number and for you to have a better understanding as to why you might be loosing money everyday and not know why. Your business depends on you knowing! I mean it’s not something real obvious because it’s kind of hidden, if you don’t have the right indicators in front of you everyday you won’t see it. Hopefully you were able to figure out what those indicators might be and you are monitoring them daily. I’ll assume you’ve done that because next I want to walk you through an advertising slash marketing concept with you.
Years ago when I was selling Radio Advertising we used a thing called Return On Investment Selling, it was an education and very interesting. The program was to show how you would be able to pay for a new ad campaign and make money too! Yep, pay for the advertising and make your desired ROI, sounds to good to be true right? Well….yes & no. Let me lay out a scenario and we’ll walk through this together, I think you will find it most interesting.
I’ll change the names and places to protect the innocent, just kidding. I’m going to take you through a simple Growth Objectives equation and an Investment Analysis so you can understand the number at the end when I’m finished. Oh, and the Forward Slash ( / ) means Divide By in my equations if I don’t use the ÷ Symbol, I thought I should clear that up right upfront 🙂
Let’s pick a market, let’s say you are in the furniture business and the Market Potential was say 5 Million Dollars. That means 5 Million Dollars in business is being done in the Market your business operates in. Lets keep it simple and say you have a present Gross Sales figure of $500,000. That means you have a 10% market share. But you want to realize a growth objective of $100,000 out of your market, what kind of additional penetration do you need to achieve your goal? You would need 2.2% more, here’s how I figured it out:
100,000 ÷ 5,000,000 – 500,000 = 100,000 ÷ 4,500,000 = .022 x 100 = 2.2 (actually 2.222222)
If you’re struggling with the equation, get your calculator out and punch it up. It works.
So now we know the Penetration needed to reach a $100,000 Growth Objective in your Furniture market. Next I’ll break down how many customers or prospects it will take per day to achieve your goal of One Hundred Thousand Dollars.
To make this equation work we will need to know a few things first before it will work. We need to know what the average customer worth is in your store, how much each customer spends in your store. We also need to know what your closing ratio is, a great way to see how well your sales staff produces I might add.
For the purposes of this exercise I’ll use an average customer worth of $1,000 and a closing ratio of 40%. That will keep the numbers easy to work with. The equation is somewhat simple, I’ll try to lay it out that way.
$100,000 / $1,000 = 100
Growth Objective / Avg. Customer Worth = Additional Customers Needed
100 / 40% = 250
Additional Cust. Needed / Closing Ratio = Additional Prospects Needed
250 / 312 = .08
Additional Prospects Needed / # of Selling Days (Days Open) = # of Prospects per day
Is the number of prospects needed realistic? Yes No
This is only part of the equation, this merely tells you how many prospects per day you would need above and beyond you current customer base over the course of one year or 312 business days.
OK, we now know what the daily number is, but it still doesn’t tell us what the additional Gross Profit is going to be. Well, if your Growth Objective is $100,000 we now need to multiply it by the Average Gross Margin. Let’s use a simple number and one that might be realistic, let’s use 25%. Using our numbers from above this is how the equations looks:
$100,000 x 25% = $25,000
Growth Objective x Avg. Gross Margin = Additional Gross Profit
So in order to achieve the additional gross profit of $25,000 you were going to need to make $100,000 more (above and beyond) in business over the next year. We figured out how many new prospects / customers it would take to hit that number (0.8 per day) and we felt it was realistic. Now, what kind of ROI did you want to achieve, I’ll assume you wanted 100%! You want to make $100,000 in additional business which would give you an additional gross profit of $25,000 and you want a return of 100%, right?
The question begs to be asked…..HOW?
Well, obviously you would have to do something different than you have been doing to achieve that fine 10% market share. You want to grab 2.2% more of that market right? That means you have to do something above and beyond what you are already doing in your advertising efforts. You WILL have to put more advertising dollars into achieving your goal of 12.2% Market Penetration, your $100,000 Growth Objective and put the additional $25,000 Gross profit in your pocket.
The ROI I’m talking about is what you have to spend in additional advertising dollars to make it happen. You are probably asking yourself how you figure out how much to invest in advertising dollars. the Investment Analysis is quite simple. Here’s the equation:
Desired ROI is 100%
$25,000 / 1 + 1 = $12,500
Gross Profit / Desired ROI as a Decimal (1 + 1) = Maximum Additional Advertising Investment
25,000 ÷ 2
So, you want to get 100% of your advertising investment back, you will spend $12,500 in new advertising dollars plus make $12,500.
You will Invest $12,500 in additional advertising to realize the Growth Objective of $100,000 in additional revenues that will produce and directly impact your bottom line by an additional $25,000. Cool & achievable based on the above numbers.
The above is an over simplified view, achieving a market share growth of 2.2% on top of the already acquired 10% market share is not easy, the numbers don’t tell the whole story. Now you still have to go through the process of doing the creative, copy, layout and cross promotional stuff but now you an idea in advance the hill or mountain you may have to climb.
I hope this helps you when you get the notion to grab more market share, do your homework and crunch the numbers. You will have a much better picture and it will allow you to enjoy the process of achieving it. Keep this in mind the next time your advertising sales rep wants to up sell you. If you want more real gross profit you will invest to get it, it’s a fact of life. Just make sure it fits your goals, think with the end in mind and work hard to reach it.
Until next Time.
Customer Service That – FAILED!
My Lawn Mower stopped working a few weeks ago, I was kind of happy because that meant I didn’t have to cut grass 🙂 The down side to not cutting the grass is that it got to a point where the yard looked like Hillbillies lived there! Weeds took over and gave the place a look I’ve not experienced before, so I had to solve the broken switch in my Lawn Mower STAT! Well, the switch was the most likely thing to be broken so I’m starting there.
Before I share with you my Customer Service That – FAILED story, let me share with you an experience I was impressed with when I broke my shoulder in the 1st week of July. As some of you know I was doing warp speed on the soccer field, a guy got a breakaway and my 20 year old brain (I’m 51) said,” you can catch him”, so off I went! Oh ya, I caught him, kicked the ball away and then clipped his back foot and down I went, what should have been a tuck & roll became a SPLAT! So there ya have it, I knew it was broken by the sting, I’ve had broken bones before so I knew how it felt. I took a slap shot between the eyes as a young hockey player once too, the guy shooting the puck was Gord Cochrane. Yep, the NHL goon back when he was just playing Junior in the 70’s but that’s another story for another time.
SAVE-ON FOODS STORY – Customer Service That PASSED!
After a couple weeks of cabin fever I took the risk of driving, had to wear a sling so it was interesting. This particular day I went to the grocery store, SAVE-ON FOODS just down the hill from me, about 6 kilometers. I went in early thinking I wouldn’t have to deal with a busy store, I forgot a quarter to get a cart so I went to the Customer Service desk and asked for one. Lorna at the desk asked me what happened to my arm, nothing I said, I broke my shoulder. She then asked me if I needed someone to help me get the cart, being a man I said NO! So I wondered outside to get the cart, low & behold there was Lorna coming out the door asking if I was OK. Yep, thanks for coming to check I said. Once I got in the store I started down a couple isle’s and at the end of one isle was Lorna, can I push the cart and help you shop? Now I’m not used to this kind of treatment from a local grocery store so I’m taken back a bit. I said no thanks and continued on with my shopping.
I got home and went on with my self-pity because I couldn’t lift things and do what I wanted so I called my wife to chat with her a bit. My lovely wife happens to work for a company where SAVE-ON FOODS is a customer, I shared my story of Lorna, my wife then told one of the big Kahuna’s at SAVE-ON about Lorna. I merely said that this is the way customer support should be and I would speak highly of Lorna always because she went the extra mile when most wouldn’t. Lorna works at store #904 in Abbotsford, B.C., Canada at the Sumas Exit, if you ever have to get groceries that’s the store that gets customer service right. I hope that the BIG Kahuna rewards Lorna far beyond what they normally do for their staff because Lorna deserves it in my humble opinion. I Thank You Lorna for blessing me with your kindness and willingness to serve.
BLACK & DECKER STORY – Customer Service That – FAILED!
Now, let me share my Black & Decker experience with you. I told you about the switch I needed for my Lawn Mower earlier, I went to Black & Decker’s website thinking I could order the part from them in ten minutes and I would be back cutting grass in a few days. WRONG! I was able to search and find the model of my Lawn Mower and was even able to add the part (switch) to the shopping cart so it wasn’t all bad until I tried to checkout. I clicked on the Checkout Button and I was sent right back to the beginning to search for the part again. I admit I did that three or four times thinking I missed something. Then I thought oh crap I must have really screwed up now and have to wait 24 hours before I can try again. Some carts in the past would force you to do that so I waited till the next day. Short story is it failed once again and did the same thing. As you can probably tell I was getting frustrated, I went to the FAQ’s and help part of the site which solved absolutely nothing, in fact it sends you to another company’s site for support. I also tried to use the Service Center Locator search tool on the site, it asks for the country and ZIP code, I click on the drop down list and select Canada and then put the Postal Code in. Guess what, it wouldn’t accept the Postal Code, it only accepted ZIP code’s, it did let me select the correct country though. At this point I had enough and decided to phone Black & Decker’s toll free number to try and buy this part. That did work 🙂
I got a cheerful lady on the phone with a nice southern drawl in her voice, I shared my challenge and she said I couldn’t order the part and they wouldn’t be able to ship it either. Say what? Why I asked? You are in Canada. OK, is there a place in Canada where I can get Black & Decker parts for my Lawn Mower? Where in Canada do you live was the next question, Abbotsford, B.C. about 40 miles East of Vancouver. Yes, we have a service center in Vancouver. I asked if there was one out in my area and she said no only Vancouver. I got the phone number of the location in Vancouver and proceeded to ask about the part, I got a guy named Dan on the phone, I then asked if they had a location in my community, why yes he said. I got the number for the location in my community and I was told they had the part! EUREKA!
Now the system on the Black & Decker site flips you back & forth with DeWalt’s site to actually get support and parts here in Canada. It may even do the same thing in the USD but I wasn’t able to test that today. I would suggest to Black & Decker that their website is a prime example of a site that fails in customer service. There should have been an error, a pop-up or a message that said something about what was happening. I should have been able to find a location using the Service Center Locator by letting me use a Postal Code and then a message telling me to contact Yadda Yadda in Canada instead of NOTHING!
I can’t imagine customers putting up with that kind of support and continue doing business with them, Black & Decker, you better pay attention and fix your failing system and failing grade because you won’t like what may happen to your business. I’m just one person who tried to buy a part for a Lawn Mower, I spent far too much time on the company website trying figure out how and why it wasn’t working and then 3 phone calls later to actually find a location that had the part. You are making your customers Work Far To Hard Black & Decker! STOP IT!!!!!
Social Media & Blogs Are Broken
The Internet is the new game changer in every possible way for business and individuals, it’s also a problem, because like the town you live in it brings out those looking to take advantage. Imagine a world with no law enforcement and I show you a day where everyone will try to take advantage, not to benefit others but to benefit themselves. It really isn’t much different than today, many don’t value human life the way we used too and we don’t help each other in the way that we should. We are self serving most of the time, we do things because there is something in it for us. Call me a cynic, but, human nature has proven time & time again we are predictable. We prove day in and day out there is good and evil, dumb & smart and there always has to be a winner and a loser.
The flattening of companies and now the world puts an old power in our hands, you & me! Most of us aren’t equipped to handle this new old power, we will continue to take advantage of others with even more ease. Can we be trusted with this power? Probably not, all you have to do is look at the history of mankind, how we consume everything in our path including people. We are doing the same thing with the Internet, with Social Media and Blogs, consuming and taking advantage.
The picture isn’t all black but it’s dark, I struggle as I’m sure you do with how the rules are being broken, how they are being changed. This new old power we have at our disposal is a double edged sword, it will work for us and against us.
One of the most disappointing and tiresome problems on the Internet today with Blogs and Social Media, is with the very thing we cherish the most, the content. There is a re-occurring problem that takes the joy out being a Blogger is, Social Media & Blogs are broken.
Social Media is forcing transparency, honesty and do the right thing mentality, this is good right? This by itself is extremely powerful and we will all feel the benefit, but there is a dark side too, some will manipulate and try to take advantage of this very power. Let’s take Blogs for a spin here, there are some incredibly talented people out there writing amazing content and truly have something of value to share with all of us. They write for hours a day, sculpting and carving a message that is meant just for you. You have been hunting for this content, but sometimes, you find it in the most unusual places. Then there are Blogs that don’t write one letter of original content, they claim to be a the best resource on the Internet and all they do is pilfer news sources that auto post to a these Blogs. In essence, gaming the business of Blogging.
The gaming of Social Media has the same issues, Twitter is a great network for connecting with like-minded individuals. You also will find the same links and content posted by millions over and over again, each one thinking they reported it first creating a wall of noise beyond anything you seen or heard before. Every Social Media Network has the same problem and I have to hear of a good solution to solving it. I realize I can’t do much about these problems by myself but I can speak against them and encourage you to do the right thing for you and your business. I to post links to information with the intent that it actually matters to you, not to be the first one to break the story and then watch 250 million others do the same, it defeats the purpose of having a Blog or using Social Media Networks the way they were intended.
I have found that the most common thing being delivered on the Internet is how to make money and get rich by using (buying) someones system, claiming to have done it, only to find out they don’t have a clue how to run a business. They are just doing what someone sold them to do, there are no short cuts my friends so be prepared to pay some kind of price no matter what you do. Don’t get me wrong, we all want to earn a living, but if it’s too good to be true, it probably is.
A tip for you. There is a gap between knowing how to do the work of a business and knowing how to run a business. You may not be equipped to be both business owner (Entrepreneur) and the worker (technician), most aren’t.
My point is this, If you are serious about Blogging or being part of media, stop trying to be like mainstream media, report from your part of the world not everyone else’s world. Write about what’s happening to you and your interests. We already get bombarded by the same content over and over through normal news services. Gaming something rarely is a long lasting venture of success, you rarely get or sustain credibility by doing it. If you must use someone else’s work, ask them to help you, ask them to be a guest Blogger or get permission to use their material, have integrity and be known for it. Your original content, your voice, will eventually be heard because no one can write or deliver it the way you can. Whatever it is you are passionate about, do that, be that with all you can muster up to be it and let the quality and sound of your voice be the difference. Don’t set up systems that fail to present your personality and desire to help others. Only you can do that by participating first hand with your blood, sweat and tears. Let us know who you are and see the passion of your heart by being transparent, honest and real. We are waiting for you.
Is Headquarters Listening?
Do you work for an organization that has multiple locations and or field staff, and do whatever HQ (the mother ship) tells you to do because that’s the way it is. You have to use their system, which tools to use, and they never ever ask you what you really need to get the job done right. If they do, nothing happens normally and the frustration continues. Are you continually fighting to be heard and have given up because HQ doesn’t seem to be listening?
There has always been a disconnect in most organizations with this kind of structure, mostly because they are out of sight and out of mind. It’s a long distance relationship, these relationships break down quickly and create a lack of trust for the reason’s I mentioned earlier. The key to solving this breakdown takes effort from all parties involved, but in the end, someone from Headquarters must take the time to truly care and put forward solutions for everyone not just HQ. Lip service is a short-term time buyer, but you will lose trust with remote locations and field staff if you don’t deliver, once again you will be part of the problem not the solution. CIO’s & I.T. Leaders must go to the distance, go to the remote offices and take inventory of the desired needs and the requested functionality. Sit down and truly listen so you can get a more accurate picture, this action alone can build trust just because you made the effort to invest in those that feel they’re not being heard.
This is an opportunity, not an opportunity to buy time, get votes or support, but to deliver or you are done. You are fighting politics, which means you must get the popular vote or life gets interesting.To do get the popular vote you must be a person of your word, that’s it! I didn’t say it was going to be easy, it’s the nature of people you are up against. Authoritative attitudes no longer have a place, organizations now are WOM (Word Of Mouth) driven and as you know, it can kill you just as fast as it helps you. As we get more and more connected Headquarters can no longer turn a blind I or just give lip service. Today’s Social Media Networks feed into instant gratification, we have made communication instant, meaning you don’t have the luxury of time anymore. Kill or be killed.
Businesses have a LifeStream and this stream is the tool of choice for the masses to share, to collaborate and make decisions. Beware the LifeStream, be aware that “we the people” are turning the tables, the power is no longer in the hierarchy of organizations…it’s at the ground level. The flattening is happening at a rapid pace all over the world, the Internet is the game changer and the people are not only watching, they are listening, and then they are acting. With this new found power, organizations must become more transparent, deliver on promises, and more importantly, treat staff the same as a valued customer.
So how do you get there, how do you make the shift? Each organization will figure it out in the traditional way before they get it right in a social way, they will deal with the squeaky wheel first before they sit down with the people and truly listen. I would recommend that CEO’s & Presidents instruct their CIO’s to go to the basement and find out what’s NOT working and what IS working, then present the findings to the Executives & Board if necessary. Don’t think in terms of a project or an ERP implementation, think of it as a way of getting your house in order, is the family happy and do they have what they need to ensure your success. The best way to do that is to go to them and ask, otherwise you will hear about it on Twitter, FaceBook and the like, the beginning of the end if your not careful.
The old lesson of STOP, LOOK & LISTEN comes to mind when dealing with your constituents throughout the organization, then add the word DELIVER when you have done the first three.