It seems rather obvious doesn’t it, at some point you have to deliver, you have to deliver something. You don’t start a business or any kind of venture without eventually delivering a product or service. Without delivering you don’t really have a business do you. Why would you go through the process of creating something if you didn’t want someone to see it or know about it. Sure you could create something for you and you alone, but you’re still delivering, you’re delivering to yourself.
If you’ve created something awesome, and you have a plan to differentiate your creation, you must deliver it to someone. How will you ever sleep at night if you don’t?
The only way to change the world, to make a difference, to influence others, is to deliver. Delivering can be as simple as showing up, but you will deliver something when you do.
This equation can be applied to anything, the only way to get good at it, is to do it. Read it, learn it, live it.
Create. Differentiate. Deliver.
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.
I joined Twitter May 21st, 2008, not that long ago but it really doesn’t matter because I only had 6 followers on December 17th, 2008. That’s right; I went from 6 followers to 1,000 in 10 days! You’re probably saying one of two things, so what or how did he do it? Keep in mind, I’m just getting started and I don’t have the following some of these Twit guru’s have because they’ve been around a long time. This is not the only way to build followers with Twitter, it’s just what I did.
Before I get into it, we should more than anything talk about the why? Why did I sign up in the first place and then why did people start following me, I wasn’t selling anything and I wasn’t dropping pearls of wisdom on anyone, so why? You will read that I was looking to build traffic to my Blog, that’s the main reason I started and because someone got my attention.
Now, I had been reading, testing and playing with all kinds of tools to find a following, my interests so to speak. I’m not saying everyone that I follow and or that follows me has the same interest as me but there is a reason they follow. I follow anyone who is willing to follow me, I hope I am anyway. Why? Because I believe everyone has something to offer, even if it’s a BOT! I’ll deal with the BOT’s later. Along the way there will be a tipping point, a point where my followers will figure out if they are still as interested in what I’m doing or eventually find likeminded people and move on, I’m ok with that. So why, why did I join Twitter? I heard about Twitter while reading a Blog and the owner of the Blog called Twitter his secret weapon. That got my attention and the question came to me again, WHY? As I mentioned I was looking for an easy way to create traffic to my Blog, did I say easy? In the grand scheme of things it is amazingly simple but I had to give it considerable thought and effort.
I searched around and found a number of people had already written about getting more Twitter followers, I found they didn’t go deep enough in my humble opinion. You may feel the same way about this writing on the topic too. I’m not making claims of grandeur; I’m just sharing what I did.
I downloaded one guy’s PDF document on what he did and thought, he is just trying to get followers and not giving much thought into who is following him and what the common denominator might be between him and his followers. Now if you subscribe to Guy Kawasaki’s theory of Twitter followers – Forget the influential’s, I agree to a point, it’s just a numbers game to him. Guy is partly right and so is this young fella in his PDF document, take a read of Guy’s article called How to Use Twitter as a Twool. If you sit long enough and you follow enough people you will get followers for sure, but what do they want and what are they hoping to find in you?
My thinking on the topic is that it may be too time consuming for you; maybe you don’t care or don’t want to streamline who your followers might be or even qualify them. I do, but there is nothing like sheer numbers to guarantee your success if your selling something. I went about my business in building a following in a more methodical way and I asked myself a few questions before I click on the follow button.
1.) Does this person have something in common with me based on their BIO?
2.) Does this person look like someone I would want to follow? (look at their picture & tweets)
3.) How many are they following?
4.) How many are following them?
5.) Who is following them? (See #1 & #2)
6.) When did they last tweet? (Check how active they are)
7.) What is the common denominator that ties you & their followers together?
8.) Is their cause related to yours and how?
9.) Are you interested in that cause?
10.) Is this a potential market?
All those questions are running in my head as I go about finding likeminded followers, did you get that, likeminded is what I was looking for in a follower. It’s the same thing as finding followers interested in your Niche or Market. I didn’t have a set number of people to follow each day nor did I go looking for the ones with largest followers, I just did a lot of reading.
Now, as you are getting people who want to follow you, keep in mind they may not know why they want to, many will never look at you again because they just want to reach 500 or 1,000 or more followers. I have also come to the conclusion; people have a deep need to belong to something so be kind. But if you are in business or are just trying to get started building a following then you must consider the above list of questions in my humble opinion. Just following people blindly without any consideration of who they might be doesn’t accomplish anything of meaning. You’re just collecting followers. I’m not saying forget the influential’s but keep an eye on them, they know something that’s why they’re considered influential 🙂
Once I have given some thought to those questions while deciding if I should click follow I will do the following, if I feel this is a viable market:
– I will go through the next level under the 1st level followers and find out who is following them and quickly glance at their postings or their Tweets and look for the high numbers and so on.
– Then spend time researching those top followers. And then do some test marketing.
Yes the process sounds tedious and slow, yes it is time consuming and yes it can seem like it takes forever. Anything worthwhile is never convenient or easy.
What I have discovered is that if you follow many, many will follow you. So the time issue really takes care of itself and eventually you get a reputation as being someone of value and there will be followers. Now the question is, are you reputable, is what you are doing or interested in something others want from you and want to follow? Getting published helps, an interesting Blog too, the list goes on.
There are thousands of articles on finding your passion and how to maybe even find it, but, in the end it comes from you and you will want to pursue it and hopefully monetize it. Without traffic you will not be able to sell anything or build community. You need Traffic and Twitter is just one way to get started and anyone can do it!
There it is that’s what I did to reach 1,000 followers in 10 days. No tricks no games, just hard work. I had the time because it was over the Christmas break and I’m in between gigs. Sorry if you were hoping this was going to be a step 1, 2, 3 type of lesson but that wasn’t my focus at first, I wasn’t looking to write about it. I didn’t decide how many per day I would go through or anything that orderly, I just looked for people that looked like we had the same interests. Around the 600-700 mark I noticed people were coming along for the ride and they had no common ground with me from what I could see, they just rode the wave with me. I stopped actually following people once I hit 1,000 but the next day I went over 1,100, the eleventh day.
My next steps will be determined by the followers really, what they want and what will they consume. I only hope I can be a positive influence and make a difference to those looking for my knowledge and help.
Have fun and enjoy this Social environment called Twitter. I do use TweetDeck as my primary tool and I use the website now and then but that’s it for tools.
I look forward your comments and tweets.