Word of mouth

Whenever I speak to a business owner about how they market themselves, the most common answer is – Word of mouth.

That answer tells me this business has very likely plateaued and become mired in the status quo because while “word of mouth” marketing is great, it’s also painfully slow and a very unreliable way to build a business.

Word of mouth is the equivalent of a free lunch.

It’s great when it comes your way, but do you really want to rely on it to feed yourself and your family?

It takes a lot of blind faith to build your business on this method and is a very dangerous path to take.

Referrals have to be proactive, orchestrated and systematized.

Once you understand the psychology behind referral marketing, you’ll never take a passive approach again.

Think back to a time you recommended a restaurant or car dealer to a friend.

Did you do it as a favor to the restaurant or car dealer or did you make the referral because it made YOU look and feel good?

You did it because you wanted your friend to have the same great experience you had.

Keep that psychology in mind when proactively orchestrating your own referral marketing system.

It has to be reliable and deliberate.

When I first got into the car business I learned my automotive marketing and selling practices from the worlds greatest salesman – Joe Girard.

His system was created because of his “Rule of 250” he learned by observing the average attendance at a funeral was 250 and for weddings, the average number of guests was 250 for the groom and 250 for the bride.

He realized that if every person he met knew an average of 250 people then every person he did business with represented a potential 250 referrals.

So systematizing your process of delivering your product or service so that it was an exceptional experience and systematizing your nurturing and referral process is critical to growing your business.

Word of mouth is nothing more than a hope and a prayer method.

The optimal strategy for referrals is to have a system of consistently asking for one.

By putting a system in place for generating referrals, you dramatically increase the reliability and constancy of word of mouth marketing.

Relying on the goodwill of others is a fools’ errand.

The best referrals come from your ideal best customers so build your referral system around two things.

  1. Target your ideal best customers – the 5% to 20% that generates 65% to 80% of your business.
  2. Focus on the specific problem this group of potential customers has that you have a unique solution to.

If you are a B2B Biz, we have a technique called “Vendor Well” that is a unique and effective word of mouth referral system.

 

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Cash Is King

Remember this statement: Cash is King

Here’s an all too familiar scenario.

At the end of the quarter, your accountant calls and says “I have good news and bad news.”

The good news is you made a profit.

The bad news is you owe $50,000 in taxes and you don’t have the cash available to pay.

Now what?  You either borrow money from a bank or you can go to your investors and ask for a cash infusion.

Neither are pleasant nor long-term solutions.

How many small business owners actually understand their financial statements well enough that they can and do make intelligent meaningful decisions so they can make more money?

I would venture to say less than 20%.

Successful businesses do two things

#1 they make money and #2 they generate cash.

How many of you understand the difference?

You can make a profit and still go out of business because you have a negative cash flow.

Cash flow will keep the doors open, long after profitability will.

Making money is about your profitability and cash is about the wealth-generation of your enterprise.

You can’t spend profit; you can only spend cash.

I heard a great analogy from a man named Mike Holly.

In the financial statement story, there are three characters: Vanity, Sanity, and King.

Revenue is Vanity

Profit is Sanity and…

Cash is King

Everyone wants to grow their business but they mistakenly believe growing revenue or sales is the end-game. It is not.

Those that chase growth based on Revenue are on a fools’ errand. It causes you to make bad decisions because you are operating from the notion that everyone is your market and there is nothing further from the truth.

When Revenue is your end-game and everyone-is your-market is your mind-set, you spend money foolishly on things that don’t matter for customers that don’t matter.

Things like inventory for the 80% that are generating little to no profit.

Sanity is looking at the world in black and white. Sanity hates being in the RED.

Sanity manages costs and expenses so that margins are high – both gross and net margins are important to Sanity.

So, here is the short Story-line for the characters:

Vanity goes out and generates sales or revenue. From that revenue, we deduct the cost of the product or service which leaves us with gross profit and that’s where Sanity steps in.

Sanity’s role is to manage those costs and the overhead expenses associated with running the BIZ; things like rent, utilities, wages, employee benefits, insurance, etc, etc, etc. So, we deduct these additional expenses and that brings us to net profit.

But wait, the business then has to pay taxes, and sometimes distributions to investors. What is left is called retained earnings or for this simplified version – cash.

The King hates surprises. The King wants consistent positive cash flow.

Bottom line: You want to be operating from your 80/20 Sweet Spot so that not only are you making a healthy profit but you have a consistent and predictable cash flow month in and month out year-in and year-out.

Implementing our Profit First system will cure this.

Cash is King.

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Become a marketing farmer with three simple steps:

Become a marketing farmer 👩‍🌾 with three simple steps:

Step 1 Lead Generation marketing: to generate leads with the sole intent to find people who are interested in what you have to offer. 

 

Step 2 Capture their contact information: Add them to your database. 

 

Step 3 Nurture them: Stay in constant contact with them with information that is personalized and they value, while occasionally making a sales pitch. 

 

90% of all salespeople (businesses) stop following up after 4 contacts. 

 

By the 6th to 7th follow-up nurturing message, you have earned top of mind awareness. 

 

By the 9th contact, when your prospect is ready to buy, you have a 90% chance they’ll contact you. 

 

Follow these three simple steps every day and over time you will have thousands of raving fans who only buy from you and become your outside sales force. 

 

Joe Girard was my “book-mentor” when I first started selling cars. He is the reason I became more of a marketer than a salesman.

He is listed in the Guinness World Records as the “world’s greatest salesman.”

Between 1963 and 1978, he sold over 13,000 cars at a Chevrolet dealership in Detroit, MI. and he did it retail, one at a time, no fleet sales.

Here are his stats:

  • He averaged 6 cars per day.
  • His best day was 18 vehicles.
  • Best month was 174.
  • The best year was 1,425.
  • He sold more cars than 95% of all dealerships in North America.

What was his secret, besides work ethic and a likable personality?

It’s the one thing I emulated and it brought me enough success that I eventually was able to purchase my own dealership at the age of 39 – constant follow-up with everyone he ever met.

Joe sent a “personalized” card every month to his entire list of customers and prospects.

By the time he was in the business 10 years, almost two-thirds of his sales came from repeats and the vast majority of the rest came from referrals.

Top sellers in any industry have mastered being a market farmer first and a salesperson second.

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Seventy to eighty percent of all small businesses are unsaleable on either the terms or timetable the owner wants because they’re not operating from their 80/20 Sweet Spot

80/20 Sweet Spot Rule of Thumb:

If the owner IS the business, it’s worth nothing.
If the owner runs the business, it may be worth something.
If the owner cashes a check from his yacht, and the business is totally independent of him, then it is worth money.

Think back to when you first started your business.  You were driven to create something out of passion or a particular talent. The vision probably included not only providing a good life for you and your family but probably also leaving some sort of legacy for your family, employees or community.

It is unlikely you even thought about your Exit Strategy; about focusing on growing the value of your business as well as making it saleable.

But you should have.

Maybe now you are one of the 6 million-plus baby-boomers who own a business and the thought of saleability is just beginning to loom.

Here are some sobering thoughts: [source: Exit Planning Institute]

One: 70-80% of all small businesses are not saleable for the terms and/or timeline the owner wants because it won’t pass the due diligence test. One of those tests is whether the business is dependent upon a single person or small group of people – lack of systematization.

No sophisticated buyer is going to even want to purchase a business like that.

Two: 80 to 90% of an owners financial wealth is locked up in their businesses.

Three: 63% of the business owners indicated they needed the income from the business to support their lifestyle.

Four: 56% of the business owners indicated they needed to harvest the value of their business to support their lifestyle post-transition

How devastating can these scenarios be to an owner who is planning on the sale of his business to fund his retirement?

How valuable would your business be if you had the following:

  • Great customers who spend 4x’s, 16x’s and even 64x’s the average. Who are a joy to work with. Who refer others just like them. Who pay on time with no hassle. Who fit perfectly into your culture, values and Guiding Principles.
  • Employees who are motivated and engaged.
  • An offering or offerings that are unique enough to differentiate you from your competition.
  • Teachable Processes & Systems – so that the success of your business is not dependent on any single person or team, most specifically, you the owner.
  • Profitability and cash flow far above industry norms.

All of these things happen when you are operating from your 80/20 Sweet Spot and can all happen within a very short period of time.

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What are your Guiding Principles?

Guiding Principles are the core values, laws and rules we each live by. They define who you are, how you make decisions and they define your business.

In business, just as in life, eventually you will come up against a lot of people and situations that challenge your principles and core values. It’s vital to your success and emotional sanity that you never lose sight of who you are.

Guiding Principles are a blend of your personal ethics, core values and the personal rules of success we have defined for ourselves, on what is right and what is wrong. What is acceptable and what is not. What makes you happy, and what doesn’t. Your Guiding Principles hardly ever change. They are the “voice” that guides your every decision for life.

Guiding Principles trigger that nagging voice in your head that punishes you when you break them and give you the reassuring pat on the back when you follow their guidance. It is the conscience that keeps you on the straight-and-narrow path to right decision and becomes the very soul of your business.

If you want to leverage their power, make them part of your daily conscious thought. Start paying attention to your emotions in different situations. Every time something triggers strong negative emotions (like anger), ignore what triggered it for a moment and think about what Guiding Principle of yours has been broken. Similarly, when you feel strong positive emotion (like giddiness) think about why that incident made you feel good. Those inner thoughts and feelings are your Guiding Principles.

Some examples of Guiding Principles are: [note how each is written out and clear to understand; no one word platitudes!]

  • Honor all Commitments – both the spoken and unspoken ones. If you say you are going to do something and 30 seconds later you realize it is going to cost you more in time, effort or money than you thought, tough! Do it anyway. There are few things more valuable than your own reputation and integrity. (Note: One of the easiest ways to Honor every commitment you make is to Under Promise/Over Deliver).
  • Compatible: Do not spend an inordinate amount of time trying to convince someone who does not want what you have to offer. Life is all about relationships – the right relationships. Surround yourself with people who support you, support what you are doing, and root for your success.
  • Be Honest and Transparent – Clarify Expectations (make sure everyone fully understands including yourself) Avoid platitudes like the plague.
  • Win-win or No Deal thinking: This is why I implemented One Best Price. Life’s too short to deal with a ding dong. I don’t mind honest negotiators but I have no time for win-lose negotiators.  That is someone who not only feels it’s okay to leave nothing on the table for the other side but thinks they have to take the table as well.
  • Under Promise/Over Deliver: Go the Extra Mile.  Always do more than is expected of you. 

    You want people like you, to like you.  So, create and nourish relationships who have your same “Speed of Trust”.

    Choose to work only with the 20%!!

    Your best customers share your same worldview and Guiding Principles

    Write down your own principles. Over time, as you get to know them better, refine them. Make them concise. Make them conscious. Your Guiding Principles will keep you on track.

 

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How to Get Your Ideal Customers to Raise Their Hand and Beg You to Sell Them More

The real key to success is not having better answers…it is rather in having better questions.

One of the most effective 80/20 strategies you can utilize is to interview your TOP clients and find out what they wish you could change about your industry, what they wish you could provide them or sell them, what they wish someone, anyone could solve for them, what would make their lives so much easier, what would help them grow and expand their business.

Then, do your very best to fulfill every wish. It isn’t that you disregard everyone else, it’s just that you create your systems and solutions based on what your 20%’ers want and don’t want.

Your other “average” clients will benefit as well due to the trickle-down effect.

If you are going to be the business in your marketplace that dominates, you have to come to the realization that you can’t be all things to all people.

First, you need to go back to your 80/20 Assessment Analysis and pay special attention only with your ideal, top clients.

If you have 1,000 customers, it is likely that as few as 10 or maybe as many as 200 qualify as your ideal, top clients.

You interview these people and you talk to them, ask them smart probing questions and you LISTEN to them.

Ask them why they do business with you?

Ask them if there are any other products or services they would like to see you offer?

Ask them what they like least about your industry in general and you in particular?

Ask them what you do well that really, really pleases them?

Ask them what they hate most about other types of businesses – like restaurants, cleaners, auto dealers, shopping in general?

Ask them about their aspirations, challenges, short and long-term goals?

Our 80/20 Assessment Analysis consists of anywhere from 12 to 15 different qualifiers.   Contact me to learn more.

Never waste your time, staff or resources providing what your top, ideal customers don’t want or don’t care about.

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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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The Exponential Effect of Combining 8020 Online and Offline Marketing

 

Adding 8020 online marketing and selling to your brick & mortar business has to simply be a part of any marketing and sales process.

Regardless of the business, making sales and providing real service are two of the most vital measurements of any 8020 business.

Yet, the vast majority of small business owners don’t adequately use their online presence (website, social media, Email marketing) to complement and enhance their offline marketing and sales process.

Implementing 8020 online business strategies and tactics is fun, highly leveraged and can be outrageously profitable.

In fact, adding 8020 online sales and marketing strategies, systems and tactics to your brick and mortar business is probably the easiest way to increase your cash flow fast without the aid of a mask and a gun.

Best of all, it is moral, ethical and the easiest way to ensure you never break the laws of God or man.

8020 online marketing helps and serves your prospects and customers while adding extra profits and cash to your bank account while at the same time bringing stability to your business.

Too many small business owners make the mistake of thinking they can make a fortune in their brick and mortar business selling products and services without integrating solid 8020 online marketing methods.

When you combine various elements of 8020 online and offline marketing and sales into your prospecting, sales, and follow-up process the potential to increase your profits and cash flow grows exponentially.

And that can be multiplied by increasing the amount of money each customer spends every time they purchase and increases the likelihood of them referring like-minded new prospects.

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 your 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.

But by implementing 8020 sales and marketing 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.

Also, which I’ll share with you at a later time, when you really take time to build trusting relationships with the 20% that generate 80% of your sales, profits and cash flow, through education and exceptional service, you build a steady stream of high quality 8020 referrals.

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