Forget 1 Million, Focus on 1,000 for Success

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During my time at college, I had a friend who was obsessed with the idea of making $1 million. How hard could it be, he wondered, to take $1 from each of 1 million people? “Look at the guy who invented the pet rock. He became a millionaire selling. . . rocks!” my friend observed.

Creating the next big fad was his plan, but he quickly found it’s not easy to duplicate the success of the pet rock. Creating a product that could command the attention of 1 million people is a challenging dream to chase.

I recalled my friend’s ambitious plan to gain 1 million customers while recently reading author Kevin Kelly’s essay entitled “1,000 True Fans.” The main point of the essay is that most of us do not need 1 million customers; 1,000 will do nicely.

Defining a “True Fan“

Kelly’s “1,000 true fans” are people who would do almost anything to help their favorite businesses prosper. He gives the examples of a singer whose devotees will drive 200 miles to hear her perform and a writer whose fans buy hardback, paperback and audio versions of his latest book.

We would all like to have diehard fans like those, but they are difficult to attract. That’s especially true if your business provides a product or service that is not unique – like state-mandated auto emissions tests, for instance. Nobody is going to travel 200 miles to get their emissions test from you, except possibly your mother.

On the other hand, I have clients like dentists and property managers who are very highly regarded as regional experts. Their top clients, or fans if you will, are loyal to the point of sending them gifts and personalized Christmas cards. I have to imagine their fans would follow them through a change of office locations or the occasional fee increase.

Why 1,000?

Two premises of Kelly’s “1,000 True Fans” are that the entrepreneur can earn, on average, $100 profit from each true fan per year and that an entrepreneur can make a living by earning, on average, $100 per year from each of 1,000 customers. That’s $100,000 per year, but the $100,000 must be free and clear of all operating costs. In other words, it is net profit.

Why is 1,000 the magic number? That is the question I asked myself while reading “1,000 True Fans.” I know dry cleaning businesses whose owners make their livings from customer bases smaller than 1,000. I can imagine Kelly’s premises being valid for a writer or a singer without a band. But for most of my clients’ businesses, some adjustments would have to be made.

As Kelly explains: “The number 1,000 is not absolute. Its significance is in its rough order of magnitude — three orders less than a million.” So, 1,000 is not posited as the be all and end all. It’s an approximation far closer to the mark than 1 million customers.

For an entrepreneurial professional with employees, the business probably needs to clear $100,000 per professional (maybe more depending on the region). And, the 1,000 customers likely needs to be expanded to accommodate a practice of several professionals.

The key point is that attaining 1,000 customers is an achievable goal. You can grow your business to that size by adding just a few accounts each week. And, if 1,000 is achievable, so is 2,000. It just takes more time. . . and an unwavering commitment to keeping customers happy.

Here’s to your 1,000!

Mike, The Numbers Coach

Want To Improve Your Sales? Do This One Thing

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I recently ran across an article discussing how some companies are asking one simple question to get an understanding on whether a customer would recommend your product or service.  Referred to as the “net promoter score “, the question asked is the following.

On a scale of 0 to 10 how likely is it that you would recommend us to your friends or colleagues?

High responses in the 9 to 10 range are promoters.  Low responses from 0 to 6 are detractors and responses between 7 to 8 are somewhat satisfied.  This concept was embraced by GE Healthcare who at the time was doing traditional customer satisfaction surveys that only gave vague results.

GE went so far as to not only compile a score but also tie it to a bonus.  However, there are critics of this approach too.  While it is a simple measure some say its simplicity may point people in the wrong direction. My thought is we all need to start somewhere and having an actual metric gets you started thinking about how to make customers your best source of referrals.  Understanding why detractors answered the way that they did can only give you helpful information to become better at what you do.  The discussion with your customers on this question can be of great value that can accelerate your company’s growth.

Want to Increase Sales?

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There is a whole lot of information on the web and in print on what to do to get great sales results.  Part of the solution is to know what are the statistics behind some sales activities that could help influence how you approach your activities.

  • Most emails get opened at the end of a day.  According to a study done by MailChimp they found the hours between 2pm and 5pm to have the most opens.
  • Tuesday is tending to be the day of the week with the best open rate.
  • A subject line is one of the keys to whether a person opens an email.  A study shows about 35% of people will make their decision to open an email based on a quick read of the email’s subject line.
  • Key words in your subject line are important for the open rate.  Words such as “learn”, “new”, “alert” tend to grab their attention.
  • According to a recent study about 57% of recipients will mark an email as spam, and this is even when the person knows the sender too.  If the subject line and material don’t resonate, they will throw it to spam because they don’t have the time to linger over matters that don’t help them move forward.
  • For outbound cold calling only about 2% result in an appointment.  This resonates with me because of my experience with clients using this technique.  It can be very effective but requires a large volume of calls to drive results.
  • On average a study showed that sales people will spend about 25 hours each month leaving voice mails.  Does leaving a voice mail work?  It may in some cases, but from my experience it does not result in calls to action to return the call.
  • Most voice mails will not be returned.  A study done by RingLead indicates that 80% of call go to voice mail and 90% of the first-time voice mails will go unanswered.  Some say to make it effective, only leave a voice mail that is between 5 to 15 seconds long.
  • The best time to call is generally between 6:30am – 8am and 4:30pm and 6:30pm.  People are usually checking messages and catching up at these times of day.
  • A recent study found that 77% of B-to-B buyers never talk to a sales person without independent research done before making contact.  It’s important to maintain the right social media presence and website content that will provide the information needed to the buyer.
  • Another study on B-to-B business found that 84% of buyers in this market started their buying decision with a referral.  One of the most powerful sales techniques is “word of mouth” referrals from a trusted friend or advisor.  How can your company position itself with influencers in your space as the “go to” source for your product or service?
  • Social media usage for business has found sales people are 79% more likely to hit their goals.  The key is using it for business communication with a strong message for recipient.

Give these statistics some thought on how you can utilize it with the sales techniques most appropriate for your company.

Here’s to increasing our sales!

Mike

Company Growth: Know Your Speed Limit

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Have you heard the saying “you’re either growing or dying?” 

For me, growth is in the eye of the beholder.  What I mean by that is growth means different things to different people and larger is not necessarily better.  The seduction of “bigger is better” exists because you can scale, get better pricing from vendors, and have a wider impact on your market.

However, as Basecamp founder Jason Fried explains in his article “The Zen Approach to Growth,” size may be important but it should be a by-product of meeting the mission of your company.  Getting bigger means more personnel to manage, larger customer base to manage, and so on.  Employees become a number vs. a name and family.

A business owner should think about why they want to grow and how it will impact the culture.  Being intentional about your growth is important.  Careful, methodical growth where the rate of growth is at least within the company’s affordable growth rate, which I often referred to as your “speed limit.”  Every company has a speed limit, and going excessively fast has its consequences.  Know your limit and why growth is important to you.

Here’s to knowing your speed limit and staying within it.

Mike

Marketing, Advertising, Branding… What’s the Difference?

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For business owners, it can be confusing to understand the differences between marketing, advertising, and branding.  The differences can seem subtle and for those not trained in these areas, it can be difficult to figure how best to implement especially with the myriad of channels to put our companies out there, such as Instagram, YouTube, podcasting, LinkedIn, Facebook, and more.

I recently read an article in Inc. magazine that helped spell it out for me.  Here is how they defined these terms:

  1. Marketing
    Marketing is how you see yourself as you try to present to others in reaching your target audience.  It’s how you “dress” your company for the image that you want it to portray.  The article mentioned thinking of your marketing strategy like your personal appearance.  It’s the difference between a business professional, a rock ‘n roller or a nerdy techie.  It should convey the vision and values of your business in a way that the public can identify.
  2. Advertising
    Advertising best shows your actions.  While marketing portrays the image you want, advertising is the actions you are taking to carry it out.
  3. Branding
    Branding is how you want others to see your company.  The marketing strategy needs to mesh well with how you want your brand to be “seen” by the public.  A strong brand helps you drive your marketing and advertising strategies.

All three are important pillars in your company’s ability to educate and attract your target audience to buy your products and services.  Making sure they all work together cohesively will ensure better success with driving sales.  Knowing the difference among these three can be the difference between success or failure for your company’s bottom line. 

Cheers to attracting the right customers at the right time through your marketing, advertising, and branding activities!

Mike

Selling via email? Absolutely – but use these tips for success

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Communicating with sales targets via email was probably not an option for your parents’ generation of workers. Yet email is a crucial tool for today’s salesperson. But these days, as we know too well, it’s impossible to read all incoming emails. So only “smart” emails will make it through your prospects’ filter.

Here are a few tips on how to craft and send emails that actually get read:

Best time to send:  According to Mailchimp, most emails are opened at the end of the workday, between 2:00 and 5:00 p.m. So, send emails in the afternoon to be first in line. A study by Experian shows that the most emails are read on Tuesdays. Why? Maybe because the Monday rush has passed. Maybe people are moving toward a four-day work week, whether their companies approve or not. Whatever is happening, send your most important sales emails on Tuesdays if possible.

Choose subject lines carefully:  Studies also show that the subject line makes or breaks an email: 35 percent of people decide whether to open an email based on the subject line. So a “cold call” email has got to have a short, interest-catching subject line.  Email open rates drop by 60% when the subject line is more than three words, so keep it short and concise.

    • There are also certain words in a subject line that increase the likelihood of it being opened. It may seem unoriginal, but words such as “alert,” “new,” and “free delivery” in the subject line (not only those words, of course) seem to pique recipients’ interest. Of course, the subject line should match the email content. Interestingly, words like “report” and “learn” in the subject line are likely to get your email escorted to the trash bin – perhaps because they allude to committing time that people just don’t have!

Content that inspires action:  Now we come to the content inside the email. The message should be friendly, concise, and action-triggering. It should have helpful information: why your product or service is better, what you want the recipient to know, what you want them to do next. People are busy; if it isn’t relevant to the receiver at the time, it’s clutter, no matter how fabulous you are. Give them a reason to reply!

So, send sales emails – but send smart sales emails. And think before you send each one. The last thing you want to do is flood someone’s inbox until your name equals “Junk Mail” in their mind.

What are the Benefits of a Diversified Revenue Stream?

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by Michael Iverson, Principal of Trillium Financial

When you think about the way America’s small businesses get started, it should come as no surprise that a relative few have revenue streams that could be considered diversified. A great many startups are the result of the entrepreneurial recognition of a market need.  In many instances, the market need is that of a single, sizeable customer.

For instance, I once made the acquaintance of a woman who helped manage the investments of a state pension fund.  One of the challenges of her position was keeping abreast of corporate governance matters for a universe of nearly 2,000 stocks owned by the pension fund.  Her team had a fiduciary duty to vote the shares in the best interests of the pensioners.  Yet, keeping tabs on executive compensation plans, auditor changes and corporate acquisition proposals for 2,000 different stocks was nearly impossible, given the small staff of the pension fund.  Why wasn’t there a service that could provide advisories on the stocks owned by her fund and other pension funds?

To make a long story short, she left the pension fund to become an entrepreneur and start the business that would address the very need she had identified.  She started a fiduciary advisory service to track corporate governance issues of stocks held by pension funds.  Her former employer became her first customer.

Starting Out

In the early years of a startup, it’s not uncommon for a business to be strongly dependent on its first customer. For some startups, it is 100 percent of first-year revenues and more than 50 percent of second-year revenues.

No matter how solid that first customer may be, it is prudent to become less dependent on the customer by diversifying the revenue stream.  Keep the original customer happy by providing outstanding service, but develop new customers as quickly as you can.

Diversification of revenues provides financial stability for your company, reduces business risk and makes your business infinitely more marketable when it comes time to sell.   Diversification can be number of customers, geography of customers, and product offering.  One of the metaphors that I have heard over the years is a three-legged stool offers more stability then a two-legged stool.

Shoot for 15%

As a goal, try to diversify your business to the point that no single customer is responsible for more than 15 percent of revenues.  Until you achieve that goal, the possible loss of your largest customer (due to reasons as varied as a change of ownership or a sudden downturn in the customer’s industry) carries significant financial risk to your business.

I have met any number of business owners who have lost a customer responsible for 30 percent or more of their revenues.  The results can be devastating.  Imagine having taken on debt to expand the business, only to lose a customer of that size.  Some businesses can’t survive that kind of a hit; others survive, but with great difficulty and sacrifice in the way of layoffs and contract renegotiations.

As many of my clients know, it’s not easy to achieve the 15 percent target. It’s not uncommon for talented service providers to be approached by a large customer who wants more of their time, not less. I advise clients to be disciplined and politely dismiss opportunities that would make them more reliant on a large customer.

Even though the initial financial rewards may be tempting, there is an important trade-off in terms of autonomy.  A business owner who hitches his wagon to a single customer often feels more like an employee than a business owner.

Is your business in need of a more diverse base of revenues?  We have ideas about acquiring new revenue streams. Give Trillium a call at (404) 353-2148 or send us an email.

Marketing Strategies for a New Economy

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by Bernadette Peters, Natural Marketing Services, LLC

What an interesting time to be running a business?  Everyone is trying to speculate about what is going to happen in real estate, with gas prices (and the shortage), the election and in the economy overall.  Small businesses are responding in a variety of ways . . . some are ceasing all extraneous spending . . . others downsizing . . . and many are “hitting the streets” in an effort to boost their sales.

We can’t throw in the towel – small business is still the fiber of our economy . . . but now is an even more important time to make some smart marketing decisions.  Below are a few key principles to help your business continue to thrive in the midst of tricky times . . .

Retain, cross-sell, up-sell

We all know that the most time-consuming and costly part of marketing is capturing a prospect’s attention, and then building trust so they will buy from you.  Marketing analysts say that the cost to acquire a new customer is 5-10 times greater than to retain an existing customer.  So why not spend your time and resources keeping your existing business, cross-selling to your current customers and encouraging former customers to buy again?  You already have a good bit of contact information, a buying history and hopefully some other knowledge about them.  Use this to re-connect, stay in touch and demonstrate the value you bring through your products and services.

Promote products/services people need in this economy.

Think about the products or services you offer that save your customers money, increase efficiency, simplify life and can contribute to their key values.  Focus on promoting those products and services rather than your entire inventory.

Give them a “taste” of what you have to offer.  Consumers have become a lot less risk-tolerant.  They want to get a sense that their purchases will count.  We are seeing fewer impulse buys and more calculated, well-thought out purchases.  You may want to consider breaking down your offering into a more appealing price point – a massage therapist may want to offer a 30 minute massage rather than the typical one hour . . . an IT services provider may want to put together a package of computer services with specific diagnostic and service deliverables the will speed up the performance of the computer for a flat rate.

In prospecting, build trust, go deep

As you pursue new prospects, your approach is what matters most.  Since we see and hear over 3400 marketing and advertising messages each day, it is difficult for a business to capture a prospect’s attention to get them to make a purchase . . . especially in this economy where people are more careful when parting with their money.

When promoting your products or services make the investment in time or money to generate an attractive, professional design and compelling message.  The call to action should require very little risk on the part of your prospect.  Get them to take the next step by offering valuable information or free or low-cost “samples” of what you do.  In this economy, consumers won’t make a decision by simply seeing an ad or mailer . . . you’ve got to go for the easier close, and build a relationship with a prospect through multiple steps.

Focus on the personal touch

Historically, challenging economic times have precipitated a return to core values and close relationships.  Personal connections with clients and prospects will prove to be an effective strategy when marketing your business.  Networking, phone calls, face-to-face meetings and hand-written cards bring the personal connection in our media saturated world.  The idea of doing that might seem daunting, but when integrated with your traditional communication and promotional programs, you can be both effective and efficient.

We are seeing a return to the traditional “drip campaign” where calling programs are integrated with mailings and email to individuals.  Natural Marketing Services has partnered with a direct marketing company called, Telesales, Inc. to provide these types of drip campaigns for our clients, as well as lead generation programs, customer retention, surveys and studies.  They have also seen a return to personal touch with their clients as the economy has changed.

Most importantly, you can’t spend too much time watching the news and listening to all the analysts’ opinions about the economy!  Your business makes a contribution to the economy too, and now is the time to focus ON your business, your customers and your prospects.

If you are interested in scheduling a low-cost marketing strategy session to jump-start your business, call Bernadette Peters from Natural Marketing Services at 678.643.3899.