Do You Really Need that Software Tool?

I’ve heard the same story many times, and it goes something like this. “They told us we needed it, so we bought it. We paid an expert to set come in and set it up for us and train us. Here we are six months later, and we’re still not using it. We don’t even really understand what it does, but we were told it would solve our problem.”
Businesses do this with marketing automation tools, accounting software, content curation tools — you name it. Fill in the blank with any type of software you want. It never ceases to amaze me how often business owners will invest time and money on software without understanding what it does, or how it will help the business make more money.

Background

In 1997, when I first launched into my technology career prior to becoming a consultant, I worked in a high-tech manufacturing facility, which quadrupled its size and output during a short four-year period before the tech bubble burst. The aggressive ramp-up was a great opportunity for me to learn about what it takes to scale a business. Month after month, the facility continually transformed as new wings were built, as new robots joined the assembly line and management relentlessly sought to cut cycle times and reduce unneeded steps. When you produce hundreds of thousands of parts per month, finding a way to make a part one second faster has an enormous impact.
Done well, automation can boost profitability tremendously. Done poorly, it can be a disaster. In the last twenty years, I’ve seen the full spectrum in all different sizes of business. In general, I agree with Timothy Ferriss’s comment in The Four-Hour Workweek: “Never automate something that can be eliminated, and never delegate something that can be automated or streamlined.” That’s a good starting place for a business that is considering investing in an automated tool or software package.
There is one key factor that makes automation profitable (or not): bottlenecks. Eli Goldratt, author of The Goal (1984), provides the best definition of a bottleneck that I have seen. According to Goldratt, a bottleneck is “any resource whose capacity is less than the market demand placed upon it.” You can also observe bottlenecks at rush hour in traffic. The busiest street is a bottleneck. Close down the busiest street at rush hour, and traffic will back up for miles. Close down a side street with little or no traffic, and few people will even notice. A bottleneck is not a problem according to Goldratt; it’s an unavoidable phenomenon. Businesses should not try to stop having bottlenecks, but rather be aware of where the bottleneck is.
Before investing time or money in a software package (even a free trial version without a credit card), I recommend asking and discussing the following questions and being brutally honest about the answers.

Where is the bottleneck in the business?

Until you know where the bottleneck is, it is impossible to know if software will help or not. Looking at the question from 30,000 feet, think about it this way: is the bottleneck in sales, in marketing or in operations? Here’s how I break it down. You know that the bottleneck is in marketing if you are not seeing enough of the right prospects. You know that the bottleneck is in sales when you are meeting the right people at the right time, but they aren’t buying. Your bottleneck is in operations if you can’t keep up with the work. From there, it’s necessary to break down the analysis further. For instance, if the bottleneck is in sales, is it because you have one star salesperson who is stretched too thin and spending too much time pursuing small accounts? Are your salespeople spending too much time manually entering data into a computer instead of meeting with prospects?
In my experience, finding the bottleneck is the hardest and most important step of the process. In a small business, the people are usually the bottleneck. It might be the business owner, who is pulled in every direction to put out fires. In some cases, the office manager or operations manager is the bottleneck. In technology companies, developers can become bottlenecks.

Is there anything we can just stop doing (or do less of)?

Before getting trigger-happy with automation, it’s important to explore different ways to solve the problem. Are key staff members stuck in meetings all day instead of doing their most important work? Does the owner deal with interruptions all day, unable to focus on high-level objectives because there are too many fires to put out? Sometimes, the solution is to stop selling an unprofitable product or service, or introduce a price increase. Other times, the solution is to eliminate redundant process steps or reassign tasks to different team members. Automation only makes sense after the team has thoroughly explored these simpler avenues. Otherwise, the business may spend time and money to get better at doing something that doesn’t matter.

What will our workday look like after the software is integrated into the business?

If software truly solves a real problem in a business, it changes the way work is done. Whose time will the software free up, and how will they use the recovered time? What new tasks will be required each day in order for the software to do what the business needs it to do? Who will be responsible for performing those tasks, and what checks and balances will the business put in place to make sure they get done? Think of any automated solution the same way you would think of hiring an employee. The software will have a job to do, and it will need a supervisor.

What is our implementation strategy?

Any software worth implementing is going to require up-front investment. The team will need to learn to use it, and everyone will need to adopt new disciplines. There will be risk involved. Data will need to move into a new system. Resist the temptation to assume that you will be able to “plug it in and go.” Will every team member need to install a new mobile app on their phones? If the software promises to integrate with existing apps, there is a world of potential complications. For instance, does everyone need to remember to check that little check box every time they enter a new client into the system? What happens if someone forgets? The devil’s in the details.

How easily can we back out if we don’t like it?

Most subscription-based services offer a trial period. However, the trial period is only of benefit if a team fully utilizes the software during the free trial and is ready to pull the plug on the last day if needed. How much time will it take to get everything on board with the new software? If it turns out not to work, will that time be a total loss? Will you be able to export your data out of the new system? (That is a non-negotiable for me. I never even consider buying software that will hold my data hostage.)

Finally…are we hiding behind software to avoid conflict?

This reality check is worth doing at every stage. For instance, if there is a suspicion of theft or dishonesty, or an employee with a negative attitude who always has an excuse for refusing to cooperate, this needs to be handled head-on. Conflict avoidance leads to all manner of dysfunction, including the tendency to try comfortable solutions first. Bob is too busy to get his job done? Let’s try automating some tasks to free up his time. Never mind Bob’s two-hour lunch breaks, or the fact that he wastes a lot of time standing around. If a team member is not pulling their weight, people notice, whether they talk about it or not.
All of this thinking and discussion may sound like a lot of work, and it is. But it’s less work and less expense than implementing the wrong software. It’s less than the cost of losing a valuable customer, and the wrong software (or a poor implementation of the right software) can cause that to happen. For instance, the free software that everyone was in a hurry to start using might be full of security holes and result in a preventable data breach.
The connected age and cloud computing have provided us with a virtual candy store filled with distracting shiny objects. Trying out new software is fun. It’s exciting to imagine the possibilities! But will it really make the business more profitable? Only discipline can ultimately do that. Automated tools can amplify the benefits of discipline, but they are not a substitute for it.

Break it Down

In 1994, I took my first job as a burger-flipper at Wendy’s. (Actually, they started me on fries — I had to work my way up to burger flipper). I was fortunate in a number of ways to have the opportunity to learn a handful of things from that job: most especially, the keys to scaling a business. Wendy’s, like most fast-food restaurants, borrows from the same model that McDonald’s uses. As far as I can tell, their success can be attributed to one factor: they break it down

Continue reading “Break it Down”

3 Reasons Your Business Is Not Making Enough Money

Crisis Mode

Since 2007, I’ve worked with businesses of many types, and I’ve found one complaint to be universal: “We need more customers!” While many businesses are struggling due to lack of revenue, I find that the reason for the shortfall is often not what the owner thinks it is. Businesses that are desperate to increase revenues most often try solutions that make the problem worse. For instance, a business might throw thousands of dollars at an advertising campaign and receive little or no response, creating a more severe cash shortfall.

Continue reading “3 Reasons Your Business Is Not Making Enough Money”

The #1 Reason Businesses Leave Money on the Table

Cash in the grass with room for your type.

Small business owners often struggle year after year to bring in enough cash to keep things going. Operating in constant “survival mode” is draining and leads to disillusionment. Most tragically, it usually can be avoided. The irony of the situation is that we tend to ignore our biggest opportunity, even when it is sitting right under our nose.

Why do we do this? Continue reading “The #1 Reason Businesses Leave Money on the Table”

Strategies for Selling Products that Don’t Offer Immediate Gratification

Various ice cream cones.

Immediate gratification sells itself. If you’re selling cupcakes, lattes or mindless entertainment, your challenge largely boils down to getting in front of the customer before your competitor does.

On the other hand, you face an entirely different challenge if you sell family dentistry, estate planning services or life insurance. There’s no immediate payoff and no urgent reason for your client to move forward (unless they have an abscessed tooth).

Buying Motives

The key to selling anything starts with understanding why people buy it.

If there is no emergency compelling your prospect to buy today, you have two basic options. The old-school approach is to create urgency by using fear or shame. I am not a fan of this approach. The stereotypical life insurance salesman operates in this fashion (e.g. “You could die tomorrow! What will happen to your family? Just sign here.”)

The other option (which takes more work, but is worth it) is to do some detective work and figure out what makes your prospect tick. Instead of trying to create artificial urgency, discover the natural thought process that makes your prospects decide to make you a priority.

Let’s stick with the life insurance example for a moment. The insurance industry has found that typical consumers are most likely to purchase new life insurance policies (or increase their existing policies) in the wake of a major life event, such as a death in the family, getting married or the birth of a child.

Successful insurance salespeople focus on building personal relationships with their prospects. Naturally, they are in the loop when these events happen. Instead of using scare tactics to motivate a prospect to buy today, they plant a seed in the prospects mind and continue to patiently nurture the relationship, knowing that the right time will come.

Slow Pain vs. Acute Pain

It has been said that if you put a frog in a pot of water and raise the temperature slowly enough, the frog will sit there and let you boil it. People are not much different. Most people are willing to put up with a lot of pain, as long as it doesn’t come on suddenly. Surprises are jarring. When people are caught by surprise, they are quicker to spend money.

It’s easy to sell tow truck services. People are caught by surprise and they need their problem fixed immediately. By contrast, someone might complain every day about being tired or overweight, but they’ll put off dealing with it until it becomes unbearable (or until a clever marketer presses the right sequence of emotional levers in their brain).

Identifying Natural Trigger Events

When your product does not solve an urgent problem, the buying motives are not always obvious on the surface. However, people still buy for a reason, and logic has nothing to do with it. There is always an emotional motivator of some kind. For example, someone might procrastinate dental care until a close friend gets a root canal.

For example, here are a few possible trigger events for a company that sells managed Information Technology services:

  1. The internet goes down on a weekday
  2. The existing provider takes too long to respond to a service request
  3. A data breach occurs
  4. The network is crippled by a Denial of Service attack
  5. The company receives a notice that it is being sued because sensitive information was leaked

It is useful to be aware of what these trigger events are for your prospect. However, trigger events may or may not happen. They are beyond the marketer’s control. Furthermore, there is no way to guarantee that your company will be in the right place when the trigger event occurs. Many trigger events are impossible to predict (though not all).

Old-school marketers try to solve this problem with scare tactics, and as far as I’m concerned, this is not much different than the tactics employed by a mugger in a dark alley. There is a much better way to show immediate benefit.

Painting an Ideal Picture

High-performing salespeople know how to paint a picture of what life could look like. They don’t just talk about relieving pain; they show what new things become possible when the pain is gone. As Steve Jobs once said, “A lot of times, people don’t know what they want until you show it to them.” Motivating someone to buy today requires showing them what they didn’t know they wanted.

If you sell professional organizing services, for example, the key to motivating a sale is helping a prospect see what life might be like if they were more organized. Would they get their work done earlier in the day and have more time to spend with their kids in the evening? Would they finally be able to take the vacation to Europe that they’ve never had time to take?

The Pain of Missing Out

When people see a glimpse of what they could be enjoying and realize that they are missing out, they will feel discontent with their current reality. This type of pain is a positive motivator. I still remember the first day I played Nintendo at my friend’s house in 1987. My Atari 2600 wasn’t any fun after that. I was hooked. I had to have a Nintendo at my house. I imagined what it would be like to play Super Mario Brothers at home!

Creating a New Buying Experience

Your product may not be shiny or sexy. People are not naturally excited to go see the tax accountant. However, there is an opportunity here to use your creativity. You can be the same as all of your competitors, delivering the same boring product or service. Or, you can make an effort to do something distinctive.

For instance, Earl Nightengale tells a story in his classic Lead the Field about a gas station owner back in the days before mini-marts, when gas stations only sold gasoline. The owner noticed people standing in line to pay for their gas, looking around. He placed chocolate bars next to the cash register and increased sales. Over time, he began to add more items for people to buy. It not only grew revenues, but also created appeal that drew more people to buy gas at his station.

It seems, on the surface, that some products and services are easier to sell than others. In reality, every business comes with different challenges. You have an opportunity to stand out from the crowd. The key is to remember that you do not have to do business the same way your competitors do.

Even if your core product does not deliver instant gratification, you can still create a buying experience that is immediately gratifying!

Today, challenge yourself to think about what you could do that no one else is doing. What would your customers really appreciate? What could you do that they would tell all of their friends about? What would make people curious enough to pop into your office just to find out more about you?

If you’re willing to invest the effort into coming up with creative answers to these questions, you will be very pleasantly surprised.

Why Business Owners Undervalue Their Time and Expertise

incandescent lamp which is located inside the color gears

Being underpaid is quite possibly the number one issue affecting the world’s economy. Many of us have been there at one time or another, working long hours and having to beat the pavement just to find enough low-margin work to scrape by for one more month. The symptoms vary on the outside, but one thing is always the same: a persistent feeling of overwhelm and frustration. Worse yet, there’s the feeling of resentment that comes with doing work for an unappreciative or demanding client.

The Source of the Problem

At the root, business owners who are not paid well tend not to recognize the value of their own expertise. Many people believe this to be a self-esteem issue, but I disagree. In my experience, it is possible to overcome this problem regardless of how you feel about yourself. You don’t need to believe that you “deserve” the money; you just need an effective approach to winning the business, and school doesn’t teach us how to do that.

The real problem, as I see it, is “the curse of knowledge.” When something becomes second-nature, we tend to forget how difficult and painful it was before we mastered it. We don’t think about standing up or walking; we just do it. But for a toddler learning to stand for the first time, it takes every ounce of mental energy just to avoid falling down. You have forgotten more about your craft than your client will ever know. What seems obvious and elementary to you may feel overwhelming and intimidating to the client who can hire you.

Even highly-confident individuals have to deal with the curse of knowledge. In fact, confidence is a liability when it comes to dealing with this problem. When we fail to recognize how wide the gulf is between our knowledge and our prospect’s knowledge, confidence comes across in a way that feels insulting to the person sitting across the table. It’s also easy to make a client or a prospect feel stupid, or too embarrassed to ask the questions on their mind. This is lethal for business.

When we act as if what we do is easy, it can create erode the perception of our value. The prospective client may start to think, “I can just do this myself.”

Breaking the Curse

The solution is simple; teach what you know. How you teach is up to you. You can apply to become an adjunct professor at a community college. You might create an internship or an apprenticeship. You could put together a workshop for small businesses. Regardless of the method, the idea is to learn the skill of transferring your knowledge. There are two important reasons for this.

First, when you teach your skills, you gain a new appreciation for how much you know. You begin to realize just how much there is to explain. When you watch someone else navigating the same learning curve that you’ve long since mastered, you become more conscious of how hard it was once for you. This gives you a more useful perspective on how much you should be charging for your service.

Second, when you begin teaching your skills, you gain the ability to duplicate yourself. This creates scalability and credibility as a business. You are no longer one person wearing all of the hats; you’re a true business owner building an enterprise.

Challenge yourself to start teaching what you know. You may be surprised at how quickly your income starts to increase.

4 Reasons Your Small Business Isn’t Ready for Social Media

Social Media

Contrary to popular belief, social media is not the silver bullet to cure all ills. It is not guaranteed to bring you customers, nor does it necessarily make your business look more credible online. Different seasons call for different solutions, and I have never been a believer in selling one-size-fits-all marketing solutions. In fact, I often talk people out of implementing social media.

You aren’t following up with the prospects you already have.

If you have been in business any length of time, you most likely have a gold mine of prospects sitting right in front of you. This includes your past customers, current customers who could be spending more, your professional network, and the people who once expressed interest and didn’t move forward. If you have not implemented a follow-up system to nurture these leads, social media is not likely to move the needle in your business—nor is any other marketing tool. Any lead generation vehicle is only as good as your ability to follow through.

You’re priced out of the market.

Sadly, small business owners often fail to do even basic market research before launching new ventures. If the value that you deliver can easily be obtained elsewhere for a lot less, you’ll likely just spin your wheels on social media and generate a lot of web traffic or initial interest that doesn’t translate into closed business.

You don’t have the capacity to handle more customers.

This is a bigger problem than many small businesses think it is. If your phone rings more than 6 times before someone answers it (or if prospects are directed to a voicemail box)—or if you’re telling prospects that you can’t meet with them until next month, you have a capacity issue. Your overhead or labor cost may be too high, or your prices may be too low. Your delivery system may be inefficient. But if you’re putting in 12-hour days just to keep up with the workflow, social media is not going to fix that problem.

You have an unclear marketing message.

If it takes you an hour to explain what business you’re in, social media will do you more harm than good. Putting out an inconsistent or incoherent message makes your business look sloppy, unprofessional and even unstable. If you cannot articulate what you deliver in one to three concise sentences, don’t talk about your business on social media until you can.

In order for social media to generate sales leads that convert into paying customers, your business needs to have a solid foundation in place. If any of the above sounded familiar and you’d like to do something about it, give me a call.

Is Your Network Looking Out the Window?

Looking Out the WindowYou may have heard this idea before. It is widely-accepted. Business classes teach it. Networking groups preach it. Businesses owners believe it almost without question.

“You have to educate your network about what you do.”

But there’s a problem with this idea. The problem is this: you can’t educate your network. In fact, you can’t educate anyone but yourself.

Just talk to a few school teachers and ask them about their jobs. Teachers do not simply present information and assume that students will effectively absorb it. Students have to invest significant effort in their own education. Teachers are specially trained to persuade students to make this effort. Any teacher will tell you that it never gets easy.

If it’s not easy for someone who teaches for a living, why should it be easy for anyone else?

In a business networking environment, we as business owners essentially face the same challenge as a schoolteacher. We cannot simply present information about our businesses and assume that everyone will listen and apply the information. We first have to persuade the people in our networks to pay attention to us.

Otherwise, they’ll just look out the window. Or look down at their phones.

Educating adults is no easier than educating children. After 12 to 20 years of school, most adults have mastered the skill of pretending to pay attention in class.

When we give our elevator pitch at a networking group, we have less than five seconds to persuade the other person to listen to the rest of what we have to say. If we fail to immediately grab someone’s interest, they tune out. They might continue to nod their head and make eye contact, but they’ve stopped listening. While you ramble on about your products and services, they’re thinking about their to-do list or last night’s argument with their spouse.

If you want to get attention, you have to give attention. Social media plays a key role in this.

Instead of thinking of social media as a soapbox to broadcast information about your business, try thinking of it as an information-gathering tool to learn about other businesses in your network. In other words, instead of using social media to educate your network, try using it to educate yourself.

You might be pleasantly surprised!

From Information to Connection

An "information" sign on a white background. 3D render with HDRI lighting and raytraced textures.

There has been a slow and steady trend in the marketing world over the past few years that is likely to continue. Demand for information products has become more selective.

An information product is exactly what its name suggests. Books, DVD’s, training courses, whitepapers, webinars and podcasts are all examples of information products. Some are free and some are not. Some are interactive and some are static. But the basic idea behind an information product is simple: you create something that provides valuable information based on your unique expertise.

Businesses often use information products as a way to attract clients. For example, you’ll often find web sites inviting you to download a free e-book. You’ll be asked for your first name and email address, after which you’ll start receiving weekly emails. Done well, this strategy can build credibility over time. (It’s often done very poorly.)

The classic information product model is breaking.

In case you haven’t noticed, we’re all inundated with information. People have less time to consume generic information products. We don’t have time to read your email newsletter or your free e-book — unless.

Unless it has exactly the information we’ve been looking for and haven’t been able to find anywhere else.

Unless it quickly grabs our attention by saying something new and interesting.

Unless it answers a burning question that’s been on our minds for weeks.

Or, unless we have a personal relationship with the information product’s author and we are seeking to build our connection with that person.

A Surplus of Information

Blogger Mark Schaefer wrote about a phenomenon in 2014 that he dubbed “Content Shock.” He pointed out that while the amount of content available for consumption on the internet is growing without bounds, our ability to consume that content is not. There is no limit to the number of new blogs, YouTube channels or email newsletters that any number of people might create. However, there are still only 24 hours in the day. We have become more selective about what we watch or read. We have no choice in the matter. We can’t read it all. So, how do we choose?

When one market dies, another emerges.

Our minds are over-saturated with information, but on the other hand, we’re starving for human connection. And that is the key to mastering content marketing.

A Shortage of Connection

Schaefer illustrates how the oversupply of content has created an equally severe shortage of another resource: attention. While fewer people are seeking information, greater numbers of people are facing the challenge of getting others to pay attention. In today’s hyper-productive, tech-focused world, people are craving real and meaningful human-to-human connection.

Have you ever sat across from someone at a coffee shop who was only halfway listening to what you were saying? Have you ever tried to deliver a speech to a tuned-out audience? Have you ever tried to start a conversation about something that mattered deeply to you, only to have them change the subject? Have you ever written a blog post and felt frustrated that no one read it? Ever put together an event and had no one show up?

If you can identify with any of the above, then you’ve felt the frustration that most of the world is feeling right now. We don’t need another email newsletter. We want someone to listen to us with their full attention.

If you can solve that problem for someone, you’re in business. Easy? No. Doable? Yes.

Create a Connection Product

What exactly is a “connection product”?

Like its name suggests, it’s anything that makes it faster and easier for people to connect. Unless you live in a cave, you have been buying connection products for your whole life. Here are a few examples of connection products:

  • Civic and social clubs like Rotary or Kiwanis
  • Toastmasters
  • College fraternities and sororities
  • Churches and other houses of worship
  • Political parties
  • Social media sites like Facebook and Instagram
  • Meetup groups
  • Concerts or other live music events

I could list hundreds of examples of connection products, and most likely, so could you. The demand for this type of product is likely to grow even more aggressive over the next ten years. Everyone has something to say, and we’re all having to work a lot harder just to get someone to listen and understand our message.

Seth Godin articulates the nature of the solution perfectly: “When you tell us about your business or non-profit or public works project, tell us first how it’s going to help us connect.”

If you look around you, you won’t have a hard time finding someone who is already doing this successfully. Here are a couple of examples from the nonprofit space.

For example, in 2006, I attended a leadership conference for The Hunger Project in New York City. At the time, I had sent small donations to a few nonprofits. The Hunger Project reached out to me by phone and invited me to lunch (which none of the others had). They invited me to the conference, where I had the opportunity to meet people from all over the world who had gathered to participate in a conversation about how to bring a sustainable end to world hunger. The energy in the room was powerful and life-transforming. I was a different person at the end of that conference. I had seen new possibilities that I could never forget.

Fast-forward to this year, I went to the Nashville Vegfest. (A Vegfest is a marketplace for plant-based vegan products and services). I gave a few hours of my time volunteering at their event, and in return, I got to meet a handful of great people that I would likely have never met otherwise. I also got to spend quality time with my friend Helene, who organizes the Triangle Vegfest in Raleigh. The trip gave me a chance to be a small part of a rapidly-growing movement. Read the post on my personal blog for more details about the event.

If you’re looking for ways to market your business, the key is to create more ways for people to connect. People want to connect with people who understand them. They want to connect with communities that will accept them. They want to be part of something greater than themselves.

If you create a product that gives people this opportunity, they will buy it.