Tag Archives: minding your business

A lot of businesses are started on one “big” idea. A product or service the founder “knows” people will buy. They’re convinced this is “exactly” what the market has been waiting for. In a perfect world, all these businesses would succeed.

Unfortunately, we don’t live in a perfect world and a lot of these businesses struggle and eventually fail. Even the big boys get it wrong. When was the last time you saw a Ford Edsel driving down the road?

That’s why it’s important to have a strong customer base of people who want what you’re selling or a supply chain to distribute your products or services. It’s much easier to find a new product to sell to these customers than it is to find customers for a product. Let me prove it to you.

You can look no further than Philips Healthcare. They’re a multi-billion- dollar company that makes MRI

machines like the one above. Philips is DEEP in the healthcare business. They offer everything from those MRI machines to consulting services for hospitals.

Philips, however, understand the power of their supply chain. They are proof, that having a customer is always more important than having something to sell to them.

Let me tell you what I’m talking about.

That my friend is a sucker. You might also know it as a binky. If you look on the upper left-hand corner of the packaging you’ll recognize a familiar name. Can you see it?

That’s right, the name up there is Philips. The maker of multi-million- dollar MRI machines is also in the sucker or binky business. Amazing, right?

Philips helps make the case that your product or service doesn’t matter if you don’t have ready to buy customers or distribution channels. But is Philips REALLY in the binky business?

Probably not. My guess is this is some sort of joint venture or parasite-host relationship with a smaller binky company. Philips provides the distribution channel and their customers. The binky company provides… the binkies.

If this is a traditional 50-50 joint venture Philips wouldn’t need to keep the full 50% of their cut. Why?

Because any revenue generated from the binkies is like found money to them. It’s not their core business, it compliments it. If binky sales are down one quarter it won’t send investors for the exits. So why not capitalize on their existing customer that know, like and trust them and sell them something else?

The best business strategy is one that is not product focused and instead focuses on building a large mass of customers that like to buy from you. It’s always easier to find a new product that it is to find a new market in cases like this.

If you still don’t believe me just look at what Apple does. The products they make don’t have the best specs by any stretch of the imagination. They’re crafted beautifully though. Apple is at the point where they can launch almost any product and it will sell. Why? Because they have customers that know, like and trust them.

Further proof of Apple using the “find something to sell them” strategy is their purchase of Beats by Dre.

Apple needed to find something to sell their people and instead of joint venturing with Beats the chose to just buy the company.

Not the best way to do it in my opinion, but it’s Apples style to not share.

Convinced?

Customers are the lifeblood of a business. Without them you’re nothing. Don’t get so hung up on your product that you forget this simple axiom, “Having a customer is ALWAYS more important than having something to sell to them.”

“Life is a series of missed opportunities, so go for yours.”™

Author: Victor Urbina

To read Victor’s previous columns, click HERE.

A timeless classic I doubt many of you have heard. You probably know the artist who wrote it, but I’ll bet money you forgot he wrote it. Bruce Springsteen wrote this song as social commentary on America’s addiction with TV.

In the song he tells you he stayed up with his baby “’til half past dawn.” But, “there was 57 channels and nothin’ on.” In the end he loses his baby because of TV and does what any rational man would do. He channels his inner Elvis and shoots the damn thing. The TV, not his baby you psycho!

Interesting story, but what does any of this have to do with business? Well, pull up a piece of grass and let me tell you.

Re-arranging Chairs On The Deck Of The Titanic

People are abandoning TV at a rate that makes people rushing off the Titanic look slow. As you might imagine this is not sitting well with cable & satellite companies. They’re stuck in contracts with networks that were signed before anyone could’ve imagined streaming becoming as popular as it today.

Consumers tired of their bills going up every time they renew are pushing back and closing their wallets.

This further complicates the situation for cable & satellite companies as their cost per viewer on a lot of the channels you’ve never heard of skyrockets. The companies respond by dropping channels, but not prices.

It’s a vicious cycle really. But it does highlight a great point. Numbers…they matter.

Money Math

If I’ve said it once I’ve said it a-thousand times. Know your numbers. Use them to make decisions about your business.

Even though the cost per channel number cable & satellite companies complained about is very high level it’s better than not knowing any numbers. I’m sure they also have numbers like profit per subscriber. Cost to acquire a new subscriber. Renewal rates. And subscriber lifetime value. But if they don’t, they should.

The same goes for your business. Do you know what your average sale was for 2016? Do you know how many customers, clients and patients you had?

These are two VERY basic numbers you should know. If nothing else so you can start making some basic decisions about marketing your business. Let me give you a quick example.

Break Out The Calculator

OK, let’s say that last year you had 500 customers. These 500 customers generated $20,000 in gross sales. A basic average sale calculation gives you an average ticket of $40, perfect.

Now let’s say that last year you also spent $1,000 on marketing. Well doing another very basic calculation you’ll find that your marketing generated a 20-to- 1 return on investment. What this means is that for every dollar you spent on marketing it generated $20 in sales.

But let’s dig a little deeper to see how much it cost you to make those sales.

Let’s say that all your expenses, both fixed and variable, totaled $15,000 last year. This number gives you a cost per sale of $30. So on average your business made $10 for every customer last year. That’s great, but what can you do with this number?

Well, this is where it gets interesting.

Advanced Money Math

Now that you know how much money each customer is worth you can start tracking leads. What’s a lead? A lead is customer before they become a customer, when they first walk into your business, before they buy.

Let’s say you start counting the number of people that walk into or call your business every day for a month. At the end of the month that number 60 let’s say this is the number every month. If you use your 2016 numbers you can estimate your cost per lead. In this case it’s $16.67, that’s how much you already PAID to have that person call or walk into your business.

More importantly though, is that every one of those leads is a walking-talking $10-bill in pure profit.

If you knew these two numbers, would you do things differently in your business? Would you let an employee ignore the phone or someone who walks in? If you do it’s like taking a $10-bill out of your wallet and ripping it up into pieces.

Why It Matters

Late last year I started a new business. We develop and market nutraceutical (supplements) products that help people live a healthier life.

We didn’t really do our full launch until this year though. So far we haven’t started to scale the business.

We’re testing our marketing message so it resonates with our target customer and we come as close to break even on the first sale as possible. Our numbers look promising.

You might look at these numbers and say, “You’re making less than $3 per sale, how can this be promising or even sustainable?” Well, two reasons.

Number one, as I already mentioned we’re still testing our marketing message. To be cash positive at this point is an accomplishment in and of itself. Once the message is dialed in, cost per sale will drop.

This is because there’ll be more buyers sharing the cost of the marketing that doesn’t change.

Number two, the more important reason is that business make all their money on the back end. From repeat buyers because at that point your cost per sale is almost zero. So, the goal of any business is to have as many repeat buyer as possible. To reach critical mass. Our goal is to get to 5,000 customers by the end of the year.

By monitoring our numbers I’ll be able to tell how our marketing is performing. When it’s time to try something new. When to retire a current product and introduce new one.

It’s decision by numbers, not emotion or hunches. Because numbers is the only thing that matters in business.

57 Channels (And Nothin’ On)

So, TV land complaining about their numbers should make you wonder what’s going on with yours.

Should you focus on return customers because you lose too much money on each new one? Are you letting $10-bills walk out of your business because you didn’t know any better? Definitely things you should look into ASAP.

By the way, did you know that out of the 199 channels available on cable we watch 15 channels per week at most? Amazing! I guess “The Boss” was right all along.

“Life is a series of missed opportunities, so go for yours.”™

Author: Victor Urbina

To read Victor’s previous columns, click HERE.

***

Victor Urbina is an author and entrepreneur who helps businesses generate more new customers and make more sales.

Grab a free copy of his newest book “How To GET MORE New Customers, Clients And Patients With Direct Mail”  Leave your name and email address to get a free “readers only” competitive market analysis (a $300 value) of your business.

Good advertising examples are hard to find. Most of the time advertisers focus on the features of their product or service.

They are completely oblivious to their benefits. As if the world needed another “6-speed transmission”, more “made from scratch” guacamole or knowing customer satisfaction is your “number one priority.”

What advertisers don’t understand is that while these features are important, it’s not what makes us buy.

We’re self-centered animals, the only thing we care about is ourselves. Even when we do things for others. The reason why we do anything is because it makes US feel good or we EXPECT some sort of benefit.

That’s why appeals to logic with amazing features don’t work very well. Let me explain.

All consumers make buying decisions based on emotion. Don’t believe me? Read the book “Buyology” by Martin Lindstrom.

Research shows that when we buy anything pleasure centers in our brain light up like a Christmas tree. It’s very like the “high” addicts get when they take a hit.

It’s only later that we use logic to justify the purchases we made based on emotions. Don’t believe me?

Why do you think people buy luxury cars? To satisfy an emotional need. The need to be admired and respected by their peers to be exact. Because a car is a car. It getting you from point A to point B should suffice, shouldn’t it?

But it doesn’t. That’s why safety records, fuel efficiency, and keyless entry exists. All logical arguments to justify an emotional decision.

So why do advertisers keep appealing to logic? It’s because they’re not very smart. They don’t understand that all we’re interested in is WIIFM. What’s in it for me.

But then someone catches lightning in a bottle. By accident or after years of trial and error.

They come up with an ad that in not focused on their product or service. Instead, it’s focused on the benefits of their product or service. Some even take it one step further. They focus on the TRANSFORMATION their product or service will deliver.

Because no one buys a drill because they want the drill. People buy a drill because they want the holes.

They want the TRANSFORMATION. If you understand how your business does this for people and you use it in your marketing you’ll be unstoppable. Like this example below.

This is a billboard for a local gym. When I first saw, it I made my wife circle back around to look at it again because it was so brilliant.

But let me break down the brilliance for you.

First, their headline is easy to understand and it’s benefit rich. Everyone understand what “Lose 20 lbs in 6 weeks… FREE!” means. There’s no ambiguity.

Second, the headline is made even stronger because it uses exact figures. Not sure what I mean? Try this on for size, which is stronger? “Lose 20 lbs in 6 weeks… FREE!” or “Lose weight in weeks… FREE!”?

We both agree it’s the first one.

Third, they use a before and after photo. In weight loss, this is standard practice, but still you find gyms that don’t do this. Why they don’t is lost on me.

But the picture used in this billboard looks authentic, like it’s a real person from here in town.

Local advertisers shoot themselves in the foot by using photos of people who don’t look “local.” This is a big deal.

If you’re marketing to a specific demographic use images of people who look like them. Like they would live in the area.

Fourth, and this is a biggie, there’s an implied guarantee in the headline. “Lose 20 lbs in 6 weeks…FREE!” Because the headline is so strong it makes me believe that I’ll lose 20 lbs in 6 weeks for free. It makes me think, “I’ll try it, what do I have to lose?”

Now I’m going to share with you a little trick my mentor taught me. If you’re not sure your headline is strong enough to make people stop and notice do this. Isolate your headline and write the words “for more information call…” immediately after it. Not sure what I mean?

Like this, “Lose 20 lbs in 6 weeks… FREE! FOR MORE INFORMATION CALL…” If you’re trying to lose weight doesn’t that headline make you wanna pick up the phone and call?

One opportunity to make the ad better. I would test replacing the website with a phone number. I would add the line “Free recorded message tells you how, 915-123- 4567, call now!”

I know you might think this is “old fashioned” and “everyone” goes online, but listen to me for a minute.

This is a billboard. Billboards are seen by people who are driving. Typically, people drive with both hands and keep their eyes on the road. This makes it hard for them to pick up their phones and go to your website.

Furthermore, people have bad memories. By the time they get home they might’ve forgotten all about your billboard. Or if they do remember, they’ll forget the website and how to spell it.

In a worst-case scenario, they will have talked themselves out of looking up your business. They think that they won’t have time to go to the gym. Or that they’ve tried gyms before and they’ve never lost weight. Or a million other reasons why your gym WON’T work for THEM.

But, everyone drives around with a cell phone in their car. Most cars today have some sort of hands-free Bluetooth feature. All phones have a loud speaker. Why not drive them to a phone where they can learn more while they drive. Before logic takes over and beats down the emotional decision you want them to make!

I’m not in any way associated with this gym just to be clear. I would however, love to hear from them to find out how their billboard campaign went. I’m sure they did VERY well.

When advertising don’t appeal to logic. Appeal to a customer’s self-interest. Focus on the transformation not the features or even the benefits. Do this and you’ll be light years ahead of your competitors.

Remember, “Life is a series of missed opportunities, so go for yours.”™

Author: Victor Urbina

To read Victor’s previous columns, click HERE.

***

Victor Urbina is an author and entrepreneur who helps businesses generate more new customers and make more sales.

Grab a free copy of his newest book “How To GET MORE New Customers, Clients And Patients With Direct Mail”  Leave your name and email address to get a free “readers only” competitive market analysis (a $300 value) of your business.

What would you do with $185 MILLION? Quit your job? Pay-off all your debt? Treat your family to some VERY nice gifts? Our friends at Wells Fargo are going to use it to pay the fine the Consumer Financial Protection Bureau gave them for opening unauthorized accounts.

You probably think $185M is just a drop in the bucket for them. It might be. But it doesn’t stop being $185M they would rather not pay. It stings a little. It doesn’t matter who you are.

The fact they were doing this doesn’t surprise me. It’s not that I think they are a greedy corporation. They’re just like all the others. They have a social conscious, BUT are always worried about their stock price.

If keeping your job depends on how much you sell, then you’re going to find ways to cheat the system. It’s self-preservation. But, there is a GREAT business lesson that you should learn from this fiasco. So do as they say, don’t do as they do. Here’s what I’m talking about.

Wells Fargo is the KING of return-on- equity in the banking industry. This mean that they generate the most money for every dollar people invest in them. They’re admired and copied by other banks for this, they’re the “gold standard.” They have done a lot of this by training employees to cross-sell and up-sell EVERY chance they get.

Let me give you an example.

I’ve been banking at Wells Fargo for as long as I can remember. I have both personal and business accounts with them. Because of this I’ve experienced their cross-selling and up-selling. Almost every time I visit a teller I get asked if I want to apply for a Wells Fargo credit card. They’ve done it so much that it’s starting to get annoying because my answer to them is always no.

But I AM impressed because they almost NEVER forget to ask. They know that one day I’ll “break.” So here’s the big lesson.

If your business has up-sells and cross-sells that you’re not offering ALL your customers you’re leaving A LOT of money on the table.

If you’re afraid to come across as pushy or greedy to your customers, get over it. If you’re employees don’t want to sound salesy, replace them. If the products and services you offer improve the lives of your customers, then it’s your moral responsibility to offer ALL of them to them.

The easiest way to do this is to have a sales script for EVERY customer you come in contact with. I’m not talking about a robot-like sequence you follow either. I’m talking about points that you want ALL your employees to make when they’re talking to customers or prospects.

You DO want write out a script that they use at the beginning. As they get better at using it you allow them some wiggle room to “make it theirs.” As long as they hit all the points. If not, then it’s back to the script, word-for- word.

If you don’t have anything to cross-sell or up-sell, then find things. It can be something as simple as books of stamps. Haven’t you wondered why they offer you stamps at the grocery store? And don’t limit yourself to products and services that YOU have to stock or fulfill. Here’s why.

You can partner with a non-competing company that shares your customers and offer THEIR products or services. The two of you then split the profits. It works both ways too, they offer you to their customers.

The best part about this strategy is that the customer acquisition costs is MUCH lower than generating a new customer on your own.

If you’re STILL not sure what you can up-sell let me give you one word. DELUXE! You should ALWAYS have a regular and deluxe version of what you sell. This was one of the first things one of my mentors taught me. It was so obvious I couldn’t believe I had never thought of it. But here’s why deluxe is important.

A percentage of your customers will buy your deluxe offer because of how they see themselves. They don’t consider themselves to be like “everyone” else. They’re “specia” The kind of people that buy “ONLY the best.” When you only offer them “regular” they’re unsatisfied and might go look for someone who will sell to their “special” self-image.

Final warning. Don’t make the mistake Wells Fargo made and threaten to fire your employees if they don’t up-sell or cross-sell enough. Train them and track their sales as a coaching tool. You could even offer them an incentive if they meet certain goals. But make sure the goals are attainable so that they don’t cheat to reach them.

A simple cross-sell and up-sell program WILL put extra money in the bank for you. Asking for the sale doesn’t mean everyone will take you up on your offer, but a closed mouth won’t get fed.

Holler at you again in two weeks and remember, “Life is a series of missed opportunities, so go for yours!”™

Author: Victor Urbina