Even Though the Economy is Good Don’t Make These Mistakes

Great news – the economy is on a roll. 

For most businesses and owners, it seems like they can do no wrong.  There are more opportunities than many can handle.

Therein lies the “rub”.

Everyone who has been in business for more than 5 years knows this won’t last. In fact, the rumblings on the street are that we have maybe 6 months to 18 months left in this good economy, and then the sloppy and the lazy are going to get killed.

We have all experienced the sloppiness and laziness anytime we walk into too many businesses or call on the phone.  Too many businesses are beginning to believe they are “gods” and can do no wrong.

Yikes! The reckoning is a-coming folks.

One of the first places bad business practices raises their ugly head and we see the first signs of “slop”, is on the phone and it’s the easiest to fix.  Poor communications skills, no follow-up and follow-through, less than stellar attitude, poorly educated on the culture, immutable principles, and Unique Selling Proposition [USP] of the business are all the first places to look.

Another area of slop that is getting overlooked is marketing. Cultivating and nurturing relationships with existing customers and especially with your best ones – the 20% that are generating 80% of your revenue, profits and cash flow.

When the economy is good and it appears you have more customers than you can handle, it can be hard to focus on the Wildly Important.

Your existing clients are your very, very best source of growing and stabilizing your business.

Those who are going to not only survive the next downturn but actually grow, expand and take market share, are the ones who are proactive now in creating and nurturing trusting relationships with their very best, ideal clients.

There are 3 main ways to increase sales and profits in any business:

  1. Acquire more new customers to buy from you.
  2. Increase the amount of money your customers spend each time they buy from you.
  3. Get you customers to buy from you more often.

Most businesses, small and large, spend the majority of their time, effort and money focused on number 1:  getting more customers.

Just adding more customers is rarely the best strategy.

But by implementing 80/20 sales and marketing you will avoid the mistakes your competitors are making in this great economy and besides there is far more money to be made with far less time, effort and expense by focusing on numbers 2 & 3: increasing the amount of money your customers spend and getting them to buy more often and the best and easiest way is with your existing BEST clients.

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Grow Your Business Based on a Favorite Clients plan

Are you focusing all of your energy, time, money and marketing efforts on out-playing, under-pricing or out-shouting your competition, when instead you should be playing an entirely different game than everyone else by focusing only on your favorite clients?

When you’re rebuilding or growing your business, there’s a sequence of steps you must follow.

Here are the first two critical steps:

First, relabel yourself. What is it that makes you unique – your Unique Selling Proposition [USP].  You have to set yourself apart from your competition.

A unique selling proposition (USP) is your unique answer to these questions:
• What does your product or service do that your competitors doesn’t?
• Why should I buy from you instead of anybody else?
• What guarantee can you make that nobody else can make?

Here’s an Example of a USP:
When Domino’s Pizza first came on the scene, they had a game changing proposition – “hot, juicy, delicious pizza – delivered to your door in 30 minutes or less – or it’s absolutely free.”

They were specific, 30 minutes or less and they gave a Risk-Free Guarantee.

AVOID platitudes like the plague.
Like they could have said:  “Best pizza in town delivered to your door.”

Best pizza”anybody could say that.

“delivered to your door”good, but how many questions does that raise?
How long will it take?  Will it be cold and soggy when I get it?… What happens if it isn’t?

Look around your market and see how many businesses say similar things to what you say.

Platitudes mean nothing!

Second, is to identify your ideal audience, AKA: your favorite customers & clients – the 20% that generates 80% of your revenue, profit and cash flow. During this same phase, you are identifying the diseased clients in your midst that you have to stop serving. Only by identifying and firing the deadwood will you ever free up the time, resources and staff to under-promise and over-deliver through innovative systematization.

Here is the criteria to use to help you identify your ideal customers and clients:

1st: rank by their monetary value to your business – revenue and/or profitability.

2nd: Now cross out those who make you cringe (character, attitude, likable…). These are the people that when you see their number on caller ID, your stomach churns.

3rd: We identify and rank for each of the following qualifiers:

  • Cash-is-King: Do they pay on time or better yet early?
  • Frequency: Do they purchase on a regular basis?
  • Potential: Could they generate a significant amount of revenue for you in the future?
  • Communication Skills: Do they communicate with you well?
  • EBA: Is your Emotional Bank Account high enough that if/when you make a   mistake they give you chance to fix and forgive?

4th Now we rank by secondary qualifiers – here are some ideas. Each business owner is unique and may have their own criteria to add as well.

  • Opportunity: Does working with them give you opportunities you would not otherwise have?
  • Referrals: Do they refer others to you?
  • History: Do you have a long history of working with this client making you feel confident you clearly understand how they will behave in all situations?
  • Add a blank column for your own personal unique qualifiers

5TH: Finally, we help you identify your personal Immutable Principles. These are the principles you WILL NOT compromise.

When you hire us, we start with our 80/20 Assessment Analysis and have a unique way of grading each of these so that you know, beyond a show of a doubt, who to keep and who to let go and clearly why you should do so.

We get you only the right people, your favorite clients – the 20%’ers who generate 80% of your profits by creating marketing, strategies and systems so that your business works for you instead of you working for it.

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Do You Mind If I Show You Why Your Strategy Is Wrong?

Unless you have used the 80/20 Principle to create your strategy I am fairly confident that strategy is badly flawed.

For sure you most certainly have an incomplete and inaccurate view of where you make and lose the most money.

It is almost certain that you are wasting far too much time, effort and resources on the wrong people, products, and/or services and not enough on the right people, products and/or services.

You are focusing on the broad part of the pyramid instead of the narrow one.

To create a highly effective business strategy, you need to take a close look at the different pieces of your business that generate your profits and cash flow.

Unless you are a very small business, you make at least 80% of your profits and cash flow from 20% of your customers, 20% of your employees and 20% of your products and/or services.

The real trick is to identify which 20%.

Where are you making the most money and where are you losing the most?

In order to clearly identify which parts of your business are making very high returns, which are just getting by and which are complete catastrophes, an 80/20 Analysis has to be performed of your people and profit-centers for each of these different categories:

  • by product/service or product/service group
  • by customer or customer group
  • by employee or employee group
  • and possibly by any other category of your business that appears to be relevant that you have pertinent data for; things like competitive market segment, department, geographic area, etc.

80/20 Analysis is a task for a “smart” human. It can’t be outsourced simply to a computer.

Numbers always tell a story, but because every business is unique, the story is many times different for each business.

Just knowing the 20% that generates 80% of your results by product/services, customers and employees, gives you a tremendous advantage over your competitors because we now know what, who and where to focus all of our marketing and selling time, energies and resources.

The real low-hanging strength of 80/20 is showing you where you are losing money.

We tend to think that our business is doing the best it can and that the competitiveness of the market has reached its equilibrium and now we need to win market share by sheer force.

Nothing could be further from the truth or more destructive in thought.

By changing our thinking to 80/20 we begin to transform the way we do business at every entry-point, every segment, category and every level.

We begin to eliminate waste. Our inventory costs go down, which improves cash flow.

We need fewer employees because the employee we now have generate more and better results with far less management on our part and you can afford to reward them better thus creating a culture where people actually look at their jobs as a career.

We watch our customer loyalty increase, the frequency of purchases increases and because we are catering to the 20%, when they do purchase, the ticket sale is much higher thus the profit and cash flow increases.

80/20 is Your Guide to Developing Your Business into an Innovative Animal.

The 80/20 Principle is of enormous value in identifying the next big innovative leaps forward for your business.

80/20 is all about simplifying your life.  Getting more and better results with less – less time, less effort, less customers, less inventory, etc. etc.

The 80/20 Principle suggests you turn your business upside down and concentrate all of your time, effort and resources on multiplying the small but Wildly Important Parts [WIP’s] to your strategy.

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80/20 Email Marketing Strategy

There are 4 ways of using Email marketing as an essential part of your marketing mix.

  1. Lead generation. Getting low-cost exposure for your products and services is the first vital element to a highly successful 80/20 marketing process.
  2. Your sales process. An 80/20 sales process educates your customers and prospects on why they should buy from you and why they should continue to buy from you over and over and over.
  3. Your follow-up process. If you want a stable, thriving and growing business you need to keep educating your customers and prospects and following up after the sale.
  4. Getting referrals. The ultimate reward you get for educating your customers and prospects and over-delivering with service and value is having your own private outside army of very happy people who will be thrilled to refer you to others.

Email marketing starts with a well-maintained customer database that includes your customers and prospects Email address.

One of the most valuable assets you can have in any business is a well-maintained list of prospects and customers who trust you and are willing to purchase from you repeatedly and recommend you to their family, friends and associates.

Unfortunately, almost every brick and mortar business I visit ignores this asset.

Ask yourself this: How many businesses that you visit in the course of a week never make any attempt to capture your name, Email address, phone number or mailing address?

It costs a lot of money [actually a lot more than most businesses realize, but that will be a subject for another article] in advertising and expense to get a prospect or customer to walk into your place of business, to call you or visit your website.

You need to capture these leads and follow-up with them otherwise the value of theses leads is wasted.

Plus, by setting up an autoresponder, any small business can send an email to every prospect and customer automatically.

And by utilizing 80/20 Marketing and Sales you enter all the contact details you want into your autoresponder and it can follow-up with your prospects and customers with 80/20 targeted messages automatically for weeks, months and even years.

IMPORTANT POINT: This method should not be confused with spamming. Every one of your prospects and customers will choose to be on your email list and can get off at any time simply by clicking on an “unsubscribe” button in every email you send.

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