Use investment to fuel growth and sales & marketing effectiveness

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When companies think of return on investment, (ROI), theytypically consider capital investments. Purchases of new machines or softwareaimed at specific tasks with a measurable return on invested capital such as productivitygains, increased production, faster billing etc.

However does investing in non-tangible items provide a realreturn to your business, and how do you measure that return?

Most companies are reluctant to spend money on intangiblessuch as employee training and development, or nonproduction related expensesrelated to plant and equipment. Let’s face it, its tough to measure a clearreturn on investment of intangibles.

It might be easier to measure the impact of not making theinvestment, such as high employee turnover, poor quality, poor customerservice, and lost market share.

I am working with a client that has made significantinvestment in what would normally be called intangibles, and has seen anexcellent return on that money. I typically don’t name clients but since thisarticle is focused on the positives I think he won’t mind.

Aardvark Memphis is a full service property maintenancecompany, with the largest fleet of sweeper trucks in the tri-state area. Theyalso do warehouse sweeping and scrubbing, retail teardown and build outs, floormaintenance and nearly everything related to maintaining retail or industrialproperty.

I’ve worked with them for about a year on strategicplanning, diversification and sales and marketing effectiveness.

One of the reasons I’ve had to work with them on sales andmarketing is they’ve never done any. The company has been in business for 14years, has been profitable for 13 of those years and has never done any reallevel of sales. They have experienced excellent growth entirely throughcustomer referrals and word of mouth.

What sets them apart? A high level of commitment to qualityand doing whatever they do right. The owner spends money on things that mostowners wouldn’t consider. For instance he washes his fleet of trucks everyday.He maintains all of his equipment to original OEM specifications, and investsin technology from GPS to track routes to maintenance logs. He has a high levelof commitment to employees and customer alike.

While the return on the money he spends on “intangibles” maybe had to justify in hard numbers, the results are hard to argue with. The highlevel of commitment he gives to quality and appearance creates expectations forhis employees. They clearly see his commitment and follow that lead whethercaring for the equipment or performing work at a customer location, theexpectation is, only best effort is enough.

The results speak for themselves, growth, profitability,customer loyalty and limited sales expense.

Can Small Business concepts work in big corporations?

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I read an article in Forbes on-line today by Matt Symonds asking “Can Entrepreneurship be Taught to Big Business”?  It seems that several business schools are trying to find a way to develop a term called “intrapreneurship”, or corporate entrepreneurship.

They see the need to drive small business innovation and flexibility to large corporations. While I certainly see the need to do so I will never believe that most large corporations will ever embrace those qualities with anything other than “lip service”.

Large companies have basically insulated themselves from their customers through cost cutting, and outsourcing. When was the last time you called a large company with an issue and got a live person on the phone without going through a series of maddening prompts? I had an issue with a credit card charge a few months back and was actually given the option of paying a fee for the opportunity to talk to a customer service representative. I have to admit I opted out.

The issues with large corporations go much deeper than the obvious however; the issues are fed by fear of liability, seemingly lack of trust of employees and turf management.

I’ve had experiences with numerous large companies over the years and am constantly amazed that many remain viable.  

One in particular that I’m familiar with is an excellent example of what I’m talking about. It’s a large Fortune 100 company in a highly regulated market. Product sales were historically driven by high quality and name recognition. As is common in most industries new competitors are entering the market putting cost pressures on the market leader.

They have responded by:

·     Increasing sales goals on field reps, while:

o   Cutting costs in inventory for sale

o   Cutting levels of service personnel and spare parts

o   Cutting billing and support personnel

o   Eliminating training and customer education

o   Centralizing all quotes and pricing delegations to headquarters functions, while maintaining almost no customer contact from that level.

In short there are conflicting goals and little or no customer contact beyond the sales reps in the field. To me this is a recipe for failure.

Large corporations whether through fear of litigation or lack of trust have layers of management and hundreds if not thousands of policies and procedures aimed at standardizing everything, where is the room for innovation in this environment?

Many years ago I worked at a senior level of a then Fortune 500 company. The saying there was “nails that stick out get hammered down”. I fear that’s as true today as it was then, maybe just more eloquently put.

I agree that lack of innovation, flexibility, poor communications are issues that are making large companies less competitive and vulnerable to smaller faster businesses. I also think that every company runs the risk of growing to a point that it loses the things that made it successful in the first place.

Only the most effective leadership can address these issues and prevent them or turn them around. That leadership ability must permeate through all levels of the organization. In a small business there are less layers to filter and interpret the message. Large corporations have many more opportunities to block out even the most effective focus and direction.

Until business schools can understand and resolve these issues which are based in human nature I do not see small business concepts being embraced by most corporations.

Biggest problems facing small business may be small business

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Ask any businessperson what the biggest problems are that they face in this or actually any economy, and they will invariably list three or four external issues that have a negative impact on their business. While the issues they list may be real, they are probably impacting every business to some degree; they all deal with them differently.

When I was doing research for my book, “Bottom Line Focus”, I ran across some interesting data that validated the theme I was using.

In the United States only about 3% of all companies provide the majority of revenue and job growth. They were referred to as high impact companies.  They went further to say it took an average of 17 years to become a high impact company.

What was disturbing was that after 4 four years 75% are no longer high impact!

My experience tells me that there are several reasons for this, but most all come back to leadership issues. A small business finds a profitable niche and the founder is hands- on. It grows quickly and adds people without clear vision and adequate processes. The business grows beyond it’s ability to execute. For the record in m coaching business small business is any organization with less that 500 employees.

In my research I found from numerous sources that the following is fact:

·     Over 50% of small businesses do not have a documented strategy or business plan.

 ·     Only 10% of businesses execute their strategy.

 ·     75% of business improvement initiatives fail due to lack of sustainability.

 ·     85% of leadership teams spend less than one hour per month on strategy.

 ·     On average 95% of employees are unaware if or don’t understand the company’s strategy.

 All of these factors can be traced directly to leadership. While external factors certainly impact business my advice to clients is to take care of the things they have direct control over and they will be in a much stronger position and have more options in dealing with the external issues that they have limited control over.

One of the most common things I run into on a regular basis is management so busy with fighting fires and hand holding poor processes that they tell me they simply don’t have time to develop a strategy. It is hard to convince them that having a solid foundation with a thorough S.L.O.T. analysis would go a long way in identifying root causes of current problems and inadequate processes. It is also a great forum to develop a team approach to strategy, vision, and problem solving.

The planning process is also useful in developing leadership qualities within the management team, as well as identifying potential weaknesses within the management structure.

Successful businesses develop management teams that function together to empower employees to innovate and solve problems. Unsuccessful companies often don’t progress beyond the point of a top down management style that becomes less and less effective with growth. 

Effective change management is proactive

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Change is a constant. It's always been with us, it always will be, and it's never easy. That's something that doesn't change. 

But the challenge of dealing with it is greater today because the pace of that change is accelerating. Only fifty years ago, we had decades to adjust to significant changes. Today we often have only a year or two. Science, technology, transportation, and communications are advancing so rapidly that all of life seems to be in constant transition.  

That means that at times you may have to be ready and willing to make major changes to your business and your life. You must be willing to abandon everything you’ve built, if necessary, in order to survive and prosper.

Most people can't do that. People naturally don't like change because it creates uncertainty. They instinctively resist it because they fear the unknown. 

Effective change management is learning to anticipate the need and deal with it on our own terms. We must anticipate change so we're not surprised by it. And we must anticipate where their market or industry  is headed so we can get out in front of it.  

Wayne Gretzky, one of the greatest hockey players of all time, captured the essence of this principle when he said, "A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be."

Prospects frequently ask me "What if we try something different and it doesn't work I respond the same way each time, "Do you think sticking with the status quo is a viable option? How’s that working for you?”

Obviously it isn’t or I wouldn’t be there.

We change only when the pain to change is less than the pain to remain as we are.

Nothing wrong with that. But too often we don't recognize how much pain we're in until it's too late.

Many of today's business owners and managers are in denial. They are refusing to face the seriousness of the changes that are occurring in the workplace from such things as –

·     Global competition.

·     Advances in technology.

·     Automation.

·     Increased governmental intervention.

·     Immigration.

·     Changing values and motivations of workers (Gen X, Gen Y).

What are you doing as a leader to anticipate change? 

What are you doing to stay current with new market and employment trends?

What are you doing to encourage and help your employees upgrade their skills and knowledge?

If you're like most business executives, I'm afraid your honest answer would have to be, "Not nearly enough."

You are your company's change agent.

That means that you must intentionally develop your company's workforce and processes to stay in front of change. Personally dealing with change is one thing. Helping others deal with it is another.

You can help people more effectively manage change by –

·      Helping them understand the reasons for it by taking time to communicate clearly about the issues and the options. Make sure everyone involved understands the rewards of change and the consequences of not changing.

·      Considering the impact of changes on the people involved and taking steps to minimize adverse effects.

·      Giving people opportunities to share in the positive benefits of change. People want to know WIIFM? (What’s in it for me?)

·      Implementing new policies, procedures, and approaches as organized components to well-conceived plans rather than as knee-jerk reactions to circumstances. 

Educate for better marketing results

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Education based marketing, EBM, is another aspect of inbound marketing. There are two classes of marketing:

•  Sales based marketing, in which you take the role of a salesperson and deliver a sales message.
• Education based marketing, where you take the role of an expert or educator to help prospects understand their problems and the solutions to them.

Sales based marketing is based on a sales pitch or selling message. It is used to help a salesperson reach out to prospective customers, such as cold calling, telephone solicitation, and direct mail, .

These kinds of activities today are called interruption marketing. We are inundated with Emails, television commercials, junk mail, and telephone solicitors. There is so much noise generated by sales based activities that the average prospect no longer listens. My personal method when watching my favorite hockey team is the mute button. I just don’t listen. I also use SPAM blockers, junk mail folders and any other method I can to cut down the volume.

So how do you get through the massive amount of “noise” being generated by millions of companies and directed at your prospect?

Simply put you don’t. Even if a prospect likes your product and your message most won’t take the time to sift through the pile to see what’s worth looking at.

Most prospects today don’t look or read much of anything sent to them, if they have a need or want they do an Internet search, find the product or service they are interested in and learn about it.

What do they learn? In a word everything. They can find shopping services that compare features and price. They can find consumer driven quality reviews.  They can study head-to-head comparisons between competitors.

For example is there a more sales driven industry than auto sales? How do the majority or people buy a car today?  Speaking for myself, I research what I want on-line. I go to Kelly Blue book and price the vehicle with the options I want and print the summary. I then use Kelly again to get a realistic value for my trade and print that. I go to the dealer armed with my information knowing what I want, what it will cost me and what I am willing to pay. The traditional back room haggling is eliminated, if it starts in that direction I get up to leave. The last three vehicles we’ve purchased no one has allowed me to walk out the door. I got my deal because I educated myself.

So education based marketing simply put is educating your customs that you understand their wants or needs, and that your solution is the beat value for their money. Better marketing results today mean getting your message heard because prospects seek you out as a subject matter expert.

We need to acknowledge the fact that marketing has changed. They are going to look for the information somewhere, it’s readily available, how much can you gain if they get it from you?

I have an entire chapter in my book, “Bottom Line Focus” on education for better marketing results.

Biggest problems facing small business in 2010

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A while back I wrote an article on the biggest problems facing small business in general. It generated a lot of interest and is by far my most read article. That tells me that business leaders are not only searching for answers but are also searching for the right questions.

To clarify that point, many business leaders know their organizations aren’t doing as well as they want they just don’t know why.Things such as declining revenue, shrinking profit margins, and losses ofcustomers are obvious, but they are the result of problems not the real issue.This is further confused by a poor economy, is my company doing poorly because the economy is slow, or are the causes internal?

Poor economic times allow weak organizations to fail. That may sound harsh but think about it, dollars are still in circulation, there arejust fewer of them. Consumers still need goods and services, they are just more cautious about buying them. I used the example if there are five auto repair shops in an area, people still need their cars repaired, they just won’t do it as quickly or as often. The top service providers with the loyal following will survive, the marginal ones will not.

The top problems for business in 2010 aren’t new, they are simply being magnified, and they will continue to become more and more critical. We need to accept that “business as usual” will never mean the same thing. Technology is making the world smaller. There are new competitors entering nearly every market every day. The Internet has created an environment where small companies can level the playing field with large corporations by reaching millions of people with their message with little or no cost. Good news as well as bad news on a product or service travels far and fast.

So the biggest problems for business in 2010?

1.    Lack of a clear vision and plan – Most companies don’t have one. Throwing something at the market and hoping it will stick will become tougher and tougher. Find a niche and excel at it.

2.    Lack of execution– When you decide on a strategy execute.

a.    Over 90% of strategies that are developed are never executed.

b.    75% of improvement projects fail.

c.     85% of leaders spend less that 1-hour per month on strategy.

d.    Over 90% of employees don’t know the company’s strategy. (This is a direct result of top management not documenting and communicating it)

e.    Well over 90% of organizations don’t have meaningful performance measurements in place.

3.    Ineffective leadership – Things are moving faster and are more complex, and an effective leader must develop an environment that fosters innovation and open communications to take advantage of all human and capital resources.

4.    Sales and marketing effectiveness - this leads back to planning and leadership. Many companies have not taken the time to decide what their USP is. They try to compete in conflicting areas, such as lowest price and highest service. One takes away dollars and the other adds cost. Part of the planning process should include a very clear answer to one simple question, “with all of the products and services available to my customers why should they buy from me?”

In my book I had a chapter that stated flatly that all businesses have problems.While this may seem obvious my experience has taught me that not all leaders deal with problems in the same way. Many unfortunately try to deal with them by ignoring them, others by treating a symptom, still others by trying to blame someone. A few actually use meaningful data to get to the root cause and fix the issue.

The economy seems to be rebounding in 2010. The questions iswhat have you done as a business leader to position your organization to take advantage of it?

What is inbound marketing?

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I’m not sure if the term itself is new, but I first heard it used about six months ago. Whether the term is new is irrelevant the concept is not.

The most effective marketing strategy has always been one of educating the customer as to why your product or service is the best value for them. Notice I didn’t say lowest cost, but best value, it provides the best return on their investment.

In my book, Bottom Line Focus, I talk about marketing as providing useful information to your customer base that let’s them know you understand their needs or problems and provide them options for solutions.

But you can't help them understand your products or services and how they will benefit from them unless you understand their needs. You can't start building your branding and marketing strategy around a sales pitch about why your new "turbo widget" is the sexiest thing on the market. You must first understand why people buy turbo widgets.

What are they trying to achieve? Do they want to look younger, prettier, thinner, or more successful? Do they simply want to go faster? What do they want and why? 

Once you pinpoint your prospective customers' problems and needs, you must understand why your widget is the best solution available. If it isn't, you need to determine what you must do to make it the best.

Now, here comes the tough part. You need to convince your prospects to agree with you that your turbo widgets are the best. I say it's the tough part because in this age of the Internet and proliferating channels of communication, traditional marketing approaches – radio, TV, print advertisements, sales literature, and celebrity statements – are all becoming less effective. 

But actually, that's good news for small and mid-size companies. The Internet has leveled the playing field. Big companies used to be able to buy very influential testimonials. Today, Internet blogs and forums are the equalizers. Take any product or any brand and do a blog search on it. You will find dozens, if not hundreds, of comments indicating the marketplace perception of that brand. 

By employing Web 2.0 techniques strategically, you can make a big splash on a limited budget. With the rise of social media marketing, ingenuity is becoming more important than dollars. And it's been proven that consumers respond better to engaging dialogue than to expensive broadcasting. 

So what is inbound marketing? It’s providing enough useful information to your prospective customer base that they seek you out. Your company becomes the recognized expert in your field. Inbound marketing can be viewed as welcome marketing, providing free and useful information about their issue or need and offering great solutions. Traditional marketing can be called invasive marketing, blaring out price, or product features at a mass audience hoping some of the noise finds it’s mark.

While traditional marketing was once the accepted practice it never worked really well. A great direct mail program is one that gets 2% response. Now with the never ending array of TV commercials, Emails, newspaper and magazine ads, you need to find a way of reaching your customer that isn’t “lost in the noise”. Having them seek you out is by far the best return on your investment. You may have less traffic to your website or office, but the traffic you do receive will be much better qualified and knowledgeable about your product or service.

How do you improve leadership results?

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In our book Bottom Line Focus,  we talk about effective leadership being scarce. There are literally hundreds of books written on the subject, with no shortage of ideas and programs. Why then is effective leadership so hard to find?

I think first you have to clarify exactly what does effective leadership mean to you and your organization? In order to improve anything you have to have a clear understanding of three things.

• What does it look like when it’s better?
• Where is it now?
•  How do you measure progress?

So what constitutes and effective leader? 

First and foremost a leader gets results. If he or she doesn’t they may be popular but they won’t be a leader long. The difference between a leader and an effective leader is how those results are attained.

In todays highly complex, highly technical, and global environment effective leaders must learn to make use of all resources around them. This is a change from the days when the top person was expected to know everything and touch everything.

To do that you need to attract and retain excellent people, you need to create an environment that is open to communication and innovation, and you must allow them to fail. Innovation with penalties for failure creates a “don’t rock the boat” mentality.

So an effective leader gets results, develops great people and is an active listener and communicator. They are open minded, non –threatening and just as important non-threatened.

So the next step is where is your organization now? One way to tell other than simply results is to look for warning signs:

Take an honest look inside your organization. How many of these issues are present?

·     Excessive meetings with no agenda and no results

·     Consensus-driven decision making (CYA for all us older folks)

·     Lack of personal accountability

·     Poor communication between entities

·     Reluctance to terminate poor performers

·     Misaligned and uncoordinated efforts (silo effect)

·     Personality conflicts and power struggles

·     Apathetic and unmotivated employees

·     Inconsistent results

·     Poor time management

·     Reactive rather than proactive effort

·     Micro-management

·     Declining sales and / or market share

·     Lack of teamwork

·     Duplication of effort

·     High employee turnover

·     Substandard quality

·     Numerous unresolved issues and postponed decisions

All of these are symptoms of leadership issues.

Effective leadership creates an environment where things get accomplished, employees feel valued and part of an overall team.

If you want to be successful, you must be supported by an energized and competent management team. If you're not, your flow of communications is hindered in two directions. Your instructions don't go down the chain of command the way they should, so things aren't done the way you want. And communications from below don't come up to you in an accurate and timely manner, so you find out about important matters too late or not at all.

In order to be an effective leader of others you must first learn to lead yourself.

Better bottom line results start and end at the top

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I've been saying that accountability is absolutely necessay for better bottom line results. I've also been preaching that accountability starts at the top. I ran accross an article written by a collegue that says essentially the same thing. It's nice to see some support in this area.

 Follow the link to the article. 

 http://www.leadershiparticles.net/Article/The-ACCOUNTABILITY-Challenge-for-Today-s-Business-Management/816