Tag Archives: increasing revenue

Eight factors that increase value in your business

For your company to be valuable or even sellable there’s a lot more to consider than just the bottom line such as will your customers continue buying or will a competitor start chipping away at your margins?

It’s important to understand what drives up or undermines your company value. And there’s a way to find out – using the Sellability Score.

‘The Sellability Score was created by a team of researchers led by John Warrillow, author of the international bestseller Built to Sell: Creating A Business That Can Thrive Without You. The book inspired a movement of entrepreneurs who recognize that the ultimate test of a business is not how big it is, but how valuable it can become’ http://www.thesellabilityscore.com/

They identified, through research on over 6,000 businesses, that there are eight factors that you can work on that will increase the value of your business

These eight factors are ways to help you evolve your business to give you freedom of choice – to sell, to be able to work sensible hours for the same or more revenue, or to stand back from it almost completely, or even as simple as to be able to go away for a two week holiday without worrying about whether the business is going to implode without you there.

ducks-in-a-Row

So what are these eight factors? I must emphasise that these aren’t magic wand/quick fix answers in the majority of cases. These are areas that you work on over time building value that way. Beware anyone who says they can wave a magic wand and give you overnight success.

1. Financial performance
This is particularly important if you are looking to sell. You will need to show any potential purchasers that your sales and profit projections for the future are based in sound historical fact. They will have in their minds what return they want on your business and also how risky they think it is. And not having comfort over your projections increases the risk to them and therefore decreases the value of your business and what they are prepared to pay.But it’s also incredibly valuable for you as a business to have budgets and forecasts and measuring performance against your budgeted figures.

Action: Create a budget and measure performance against it.One of my big mantras is – What gets measured gets done. If it’s written down and reviewed, then it’s far more likely you will hit your targets

2. Scalability

This is how scalable your business is or how easy is it for you to grow your business. This may sound an odd statement, but the secret to scaling is to sell less stuff to more people! Too many of us fall into the trap when starting out of trying to offer your services (vast) to everyone. It rarely works.Your ability to scale is dependent on you

– being able to teach others your skill
– having products or services that lead to recurring revenue
– aligning your products to your most valuable customers

Action: Review your products and services against these criteria. If they tick all three boxes focus on them and if they don’t tick the boxes, think about either how you can develop them so they do, or possibly contemplate not offering them.

3. The Switzerland structure
Maintaining neutrality. i.e. you shouldn’t be over dependent on a customer, supplier or employee.
You should not have a customer who makes up more than 15% of your revenue, and you should be able to switch supplier. The overreliance on an employee, could be you by the way!

Action: Review your customers, suppliers and employees to see if you need to take any action to reduce your dependence on them.

4. Valuation see-saw
Another equation – the more cash your business needs, the less value it has. If you are selling – if the person buying your company has to write out two cheques when they buy your business – one to buy the company and another to pay for working capital – it’s going to make you a less attractive purchase.

So this is all about cash management
– Not holding too much stock
– Having tight processes around invoicing and debt collection
– Getting the most favourable terms with your suppliers and so on

Action: Do all of the above!

5. Reliability/Repeatability
This is back to something I alluded to earlier on in Scalability. The more reliable your income streams are, the more value your business has. One off transactions are at the bottom of the scale, where you want to get to is a recurring revenue stream. Mobile phone companies are good at this with their two year contracts, then auto renewal products such as your antivirus on your laptop, other renewable memberships. Or selling one product, but then getting regular income off consumable products – printers and paper, nespresso etc.

Action: Think about any ways in which you can offer your services or products on a recurring basis.

6. The Wow factor
Getting you and your product differentiated. It’s too easy to think you have to offer everything to everyone. How do you get heard on that basis?Dinosaurs

 

 

 

Action: You want to have a niche – identify the thing(s) your most valuable customers value about your products/services and sell more of that to them and to others like them.

7. Customer satisfaction
This almost goes without saying. But what you need to be able to do, is to prove that your customers are happy. It’s not good enough to say that you pride yourself on excellent customer service without providing the facts to prove this.Action: One easy way is to implement the net promoter score system .
Or use online review sites such as Revoo and Trust Pilot amongst others.

8. Hub and SpokeThis is degree to which they business relies on you and it affects the value of your business. If everyone reports to you, or your customers and suppliers will only speak to you, you are at the centre of your business. You are the hub and your company – to be blunt – is worthless company if you are looking to sell.

Action: If you want a profitable business then this may work for you as you keep your overheads down, but if you are looking to sell, or take a step back, or even aim to take a two week holiday, then you will need to look at the structure of your business to see how you can shift the reliance on you to others

If you’d like to know more, let me know.

karen.espley@thechameleonguide.com

http://www.thechameleonguide.com

 

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How to sell the way your customers want to buy

One of the key questions we ask our clients when we work with them is ‘ What business are you in?’  Most people will tell us they are the thing they sell, so for example, this week, I had ‘a financial adviser’, ‘an events planner’, ‘an accountant’, and ‘a sales trainer’.

But is that really what the customer is buying? The customer using the financial adviser may be looking for help to ensure they can retire with no money worries, or the customer using the events planner may be trying to organise a surprise 50th birthday party so will be looking for a memorable experience.

When you buy a drill, you aren’t buying it because it’s a drill, you’re getting it to make holes in order to hang up pictures or put up shelves.

At The Chameleon Guide we work hard with our clients trying to get to what it is their customers are buying off them because this will affect the marketing messages they use.

But not only is it important to understand why they are buying off you, your other challenge is to find out how your customers like to be sold to, and where they can be found for you to get them to buy your product or service.

Percentage of customers who will buy from us

In order to find out these things – you need to talk to your customers (see my previous blog on the importance of communicating with and keeping your existing customers).

In my quest for understanding how best to communicate with customers, I came across a book by Kristin Zhivago called ‘Roadmap to Revenue – How to sell the way your customers want to buy’.

It’s split into three parts

– Discover – Finding out about your customers
– Debate – Analysing  and discussing what you’ve learned to come up with a list of priority activities that are most important to your customer
– Deploy – Work on the delivering the action plans you came up with in the Debate section

I’m going to briefly cover off the ‘Discover’ bit – the finding out about your customers.

Kristin recommends an in-depth interview process – here are the top tips summarised:

  1. Identify the customers you want to interview
    Your top customers are a clear option, but if you can do more, so much the better. If you have multiple channels or services, try and get a good range across all the different areas.
  2. Email requesting the interview
    The email needs to be either come from the top or be shown to be endorsed by the owner/CEO/MD i.e. this is an edict that has come from the top.
  3. Interview process
    a. Only do phone interviews – you will get much more information from people as they aren’t being put on the spot by you facing them
    b. Record the phone interviews – this allows you to concentrate on the call totally
    But still take notes
    c. Confidentiality – let the customer/client know it’s completely confidential. This must be followed through even after the process and someone internal thinks they know who an interview belongs to. Do not let on as to who it is.
    d. CEO/Owner led calls – It’s highly recommended that the owner/CEO does the first five interviews as this will really give you a feel for how your customers/clients are feeling. You may end up wanting to do them all! After that, it’s better, if possible, to get an external agency to do the calls, but you may not have that luxury.
  4. Handling customer/client complaints
    If the customer complains at all, do not try to tell him/her how things have improved. Acknowledge the issue and thank them for their honesty and that it’s really helpful information to know.
    Do not get defensive – this will put the customer off and make them less inclined to share honest information with you.

She suggests a structure for the questions which are deliberately written in such a way as to get the best from your customer/client. These questions are far more focussed on understanding how the experience was for the customer – you will get far more valuable information this way. And they will feel much more valued rather than you asking if they’d write a testimonial. Come back to that a later stage after you’ve interviewed them if they’ve been particularly glowing – but do not ask them in the interview because you’re back to ‘what’s in it for me’ rather than what’s in it for them..

If you have any key suppliers or partners, it may be worth interviewing them as well.

The information you get from the interviews will inform all aspects of your selling, from customer service, to the website to the information you give customers etc.

The questions are very customer-centric and you may well get resistance internally, particularly from sales people who always want to ask more direct questions about getting more business or shy away from asking the hard questions. Resist them! Her structure really works. One of my clients used the technique and got some tremendous feedback from his clients, including some more business.

Questions include:

  • What do you think of our service?
  • Have you had any interaction with our staff? How was it?
  • If you were John Bloggs (the CEO) tomorrow, what’s the first thing you would focus on?
  • What problem(s) were you trying to solve by using our service?
  • How did our service help you solve your problem?

There are a total of 12 and they are all based on open ended questions which may well result in sub questions being asked hence why the interview can take in excess of an hour to complete.

If you’d like a sample of the questions with tips and template emails to send out, let me know and I’ll email it to you (karen@thechameleonguide.com)

Clearly, once you’ve done all the interviews, you need to do something with it!

This is the Debate phase of the book, where you analyse the information in-depth and report it back to the management team.  Essentially, you will be identifying and prioritising the results in terms of what you need to focus on. This could be very broad ranging, from your website, through to how you sell and to how you manage your customer service. The book covers off how to manage this process in great depth before going on to the final phase of Deployment (actually implementing the changes). It’s rather less easy to summarise here, so I recommend the book – ‘Roadmap to Revenue – How to sell the way your customers want to buy‘ * if you are keen to follow the process through as she describes it.

What she proposes, is not a quick solution unlike Net Promoter Score. It requires a lot more effort, planning and commitment of the organisation, but is very powerful and will help you map how to match your customers’ buying process so they buy more from you. Resulting in happy customers and happy you.

For more information on how to grow your business email me – karen@thechameleonguide.com

http://www.thechameleonguide.com

* I get no commission from book sales

Do you know how much more business you could get from your customers?

I’m sorry if that sounds quite a mercenary question, but it’s meant with the best intentions. Not only for you and your business, but also, and as importantly, for your customers.

The cost of getting new customers

In business, we spend a lot of effort and money trying to get new customers, sales people are rewarded for bringing new customers into the business and probably the largest proportion of our marketing spend goes on trying to acquire new business rather than keeping the customers we’ve got, let alone thinking about how to grow our business with these customers.

We’ve seen all the great introductory offers banks give. To new customers. How annoying is that? When we’ve been loyal to them, it feels like they think they’ve done their job getting us on board, complacency sets in and they’re off to find new shiny things.

But if we look at the statistics, maybe we should start taking a bit more notice of our customers.

It costs six to seven times as much to gain a new customer than it does to keep one.

And 68% of people will leave a supplier based on the treatment they receive compared with ‘only’ 14% who will leave due to dissatisfaction with the product or service.  How we treat our customers is nearly five times more important to them than the actual thing they came to us to buy in the first place.

service19

Many a (un)happy hour can be spent regaling our friends with the horror stories of our customer care nightmares.  Over the years I have sent quite a few rather more than scathing letters to CEOs of various organisations in utter frustration with the, what feels like, obstructive inaction of their staff.  Who I assume are mostly bound by process and procedure resulting in the ‘computer says no’ response.

A classic this week ‘But Ms Espley, I don’t want to go the refund route because the process for refunding your item (a Sony Vaio laptop. Oh, I’ve finally gone public on them!) is very long winded, time consuming and complex’. Only because they make it so. This is after nine months of having a malfunctioning laptop that has had more factory resets than I’ve had hot breakfasts, a cursor that jumps erratically, and a range of other ‘features’ that renders it useless as a laptop. It’s been back to them once and returned in a worse state than when I sent it to them. And they still didn’t want to give me a refund.  As I tried to explain to the brick wall that was the customer relations manager (who called in response to one of my aforementioned scathing missives to the CEO), that if they’d just given me a refund, or a new laptop months ago when the issues arose, I’d be singing their praises from the rafters. As it is, a) I shall never use Sony again and b) you now all know about it!  *

The downside of poor customer service

And that is the other downside of poor customer service; we tell others and in this world of rampant social media, it’s a dangerous thing indeed to upset too many of your customers.

The plus side of this, is that if you keep your customers happy, then not only will they buy more from you, but they tell their friends too. And that suddenly wonderful social media plays a big part in that.

  • The statistics vary, but around 80% of people will read reviews which will affect their likelihood of using a particular supplier.  And it’s an inverse rule – you can read ten great reviews and then read one poor one, and you will seriously consider not using that supplier, unless that 11th review was obviously written by a fruit loop with a bee in his bonnet.  When I was on my midlife crisis walkabout in 2013, I religiously used Trip Advisor to help me work out which the best campsites were and what tourist attractions I should spend my precious money on.

I have digressed somewhat from the original purpose of the article, but I’m back on target now and which brings me back to my original question.

If it costs six times as much to acquire a new customer, why on earth are we not spending a lot more money on keeping and delighting our existing customers?   Particularly in the world of B2B where hopefully there is the potential for recurring revenue.

Be nice to your existing customers

At The Chameleon Guide, we are big on looking at existing customers. It can make a massive difference to your business.  One of our clients, the owner of a training company, went to talk to his top ten customers – not to ask for more business, but to ask them about their business and what their plans were. As a consequence of those conversations his customers realised he had a much larger range of training courses than they had thought and which business they had been giving to his competitors. They liked him and what his company did and gave him the additional work resulting in him doubling his revenue. And that was just from his top ten customers.

As Dale Carnegie so succinctly put it ‘the only way on earth to influence the other fellow is to talk about what he wants and then show him how to get it.’ Get your customers to do the talking.

How to engage your customers

There are a number of things you can do to make your customers feel loved.

  1. Talk to your customers as part of an annual review process/account management
  2. Getting customer feedback
  3. Have an on-going dialogue with them
  4. Loyalty schemes

As this blog is in danger of becoming a book, I’m going to cover the first one here and then write more on the other three areas in my next blog.

Talking to your customers

‘Spend a lot of time talking to customers face to face. You’d be amazed how many companies don’t listen to their customers’ ~Ross Perot

This is really aimed at the B2B market, though there may be some useful tips for those selling to consumers, particularly if what you sell is a high cost item, or it is a recurring sale e.g. printer cartridges and there is the opportunity to expand your product range with them.

How often do you talk to your customers?  Or once you’ve got a customer, do you too forget them in your hunt to get new customers?

How many businesses know in-depth what their customers need and want and who they use to satisfy those requirements?

Do you know who your top ten customers are?

Pareto’s principle states you will get 80% of your business from 20% of your customers. We recommend you look at your top ten customers as a starting point. The ones who generate you the most revenue and/or profit.  Focus your attention on them.

Implement a plan for meeting them. Be clear on your objectives when meeting them. Be clear to your customers when you contact them, why you are contacting them.  If it’s the first time you’ve done this, you could perhaps let them know that as a key customer, you are instigating an account management programme of regular meetings to ensure they are getting what they need from you.

The sorts of questions you may like to ask are:

  • What are their strategic goals and plans for the future?
  • What are market conditions like for them at the moment/the foreseeable future?
  • What opportunities and challenges do they have?
  • Are they using your competitors for anything?  And if so what do they supply or deliver that you can’t do (or they perceive you can’t do).
  • Is there anything you should be doing differently, or are there products or services they need that they haven’t found a supplier for yet, or that aren’t being delivered to their requirements?

If you identify any opportunities or challenges that you can support them with, summarise what you’ve identified and ask if you can share with them ways in which you may be able to help. Or if your competitors are supplying services that you too could provide (that maybe the customer doesn’t know you do), then you will hopefully be able to share that with them.   Or it may be that you have some information or other contacts that will be beneficial to your customer. This may not immediately impact on your business, but it’s all part of supporting your customer to be as successful as possible.

The benefits of talking to your customers are:

– Your customer will feel loved – who doesn’t like to be asked their opinion and it shows you are genuinely interested and want to help.
– You will get some valuable market information, be it about market conditions, new innovations or your competitors
– You are more likely to retain the customer
– You may get more business out of your customer
– They may start referring you to others
– They may be prepared to let you use them as a case study/write you a testimonial

If you offer to supply information or put them in contact with other people, then it’s really important that you do so as soon after the meeting as possible. It’s always a great idea to follow up your meeting with an email thanking them for their time and summarising the meeting along with any other follow up actions.

‘In the world of Internet Customer Service, it’s important to remember your competitor is only one mouse click away.’ ~ Doug Warner

 If you have any tips on how to engage with your customers, I’d love to hear from you.

* Re my laptop – I won the battle with the brick wall eventually – a refund should be winging its way to me in the next two weeks…

karen@thechameleonguide.com

www.thechameleonguide.com