5 Way Formula, Conversion Rate, Customer Loyalty, Customer Service, Net Promoter Score, Raving Fans, Referral Based Business, Success

During recent coaching sessions, the subject of Net Promoter Score (NPS) came up.  My clients wanted to learn what NPS is and how it might benefit their businesses.  Thus, I thought this is a good time to share a few ideas about NPS.

What Is Net Promoter Score?
Simply put, NPS is a very simple, direct, relatively easy, and effective method to measure your customer’s (client’s, patient’s) loyalty to your business and the likelihood they will refer your business to others.  In other words, how healthy is your customer experience and your customer relationships?  It was developed by (and a registered trademark of) Fred ReichheldBain & Company, and Satmetrix Systems. Net Promoter Score was introduced by Reichheld in his 2003 Harvard Business Review article “One Number You Need to Grow”.  NPS can be as low as −100 (everybody is a detractor) or as high as +100 (everybody is a promoter).  An NPS that is positive (i.e., higher than zero) is felt to be good, and an NPS of more than 50 is excellent.

Why is NPS Important?
Time after time in measuring conversion rate (as per the ActionCOACH 5-Way formula) by lead type, it is obvious that referral leads have the highest conversion rate of all lead sources.  Therefore, it is extremely important for your business to deliver a great customer experience (GCE).  A great customer experience will result in a high NPS.  A high NPS will enable your business to have a robust and consistently effective referral system.  The formula is

GCE -> HNPS -> NewCustomers -> Revenue -> Profit

Many successful ActionCOACH clients have achieved completely referral based businesses, with the ability to add as many new loyal customers as they can serve.  An added bonus to a referral based business is lower customer acquisition cost and higher lifetime customer value.

How to Develop Your Net Promoter Score
At its core, NPS is derived from a single question customer survey.  The question is

On a scale of 0 to 10, how likely is it that you would recommend our company/product/service to a friend, family member or colleague?”

Those who respond with a score of 9 to 10 are called Promoters, and are considered likely to exhibit value-creating behaviors, such as buying more, remaining customers for longer, and making more positive referrals to other potential customers. Those who respond with a score of 0 to 6 are labeled Detractors, and they are believed to be less likely to exhibit the value-creating behaviors. Responses of 7 and 8 are labeled Passives, and their behavior falls in the middle of Promoters and Detractors.  The Net Promoter Score is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. For purposes of calculating a Net Promoter Score, Passives count towards the total number of respondents, thus decreasing the percentage of detractors and promoters and pushing the net score towards zero.

There are a variety of thoughts within the NPS consulting industry as to:

  • When to survey, and how often?
  • Types of surveys – relationship vs. transactional
  • Additional questions (if any), how many, what should they be?
  • How many people should be surveyed?
  • Format of the survey

There are many resources available to enhance your understanding and implementation of NPS.  This blog was based upon a great web article by Christian Reni

( https://customergauge.com/news/how-to-calculate-the-net-promoter-score/ ).

If you wish to build your business on a solid foundation of raving fans who are both very loyal and who consistently refer new customers, NPS is an essential part of your toolkit.  My colleagues and I at ActionCOACH can assist you in building and implementing this important business building strategy.

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Adding Value, Blinding Flashes of the Obvisous (BFOs), Bucket Lists, Culture, Entrepreneunship, Goal Setting, Matter More, Mindset, Mission, Price Anchoring, Serve more to Earn more, Success, Unique Value Proposition, Vision

Paul Dunn continued with his presentation by switching gears to speak about the concept of price anchoring.

He presented a case study based upon the fact that most people remember the last thing they see or hear.  The case study involved adding eight words at the end of a price quotation for a product or service
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Result: 30% conversion rate for price alone, 90% conversion rate with the addition of those 8 words!

Paul finished up by returning to his original concept by saying “The shortcut to more is to MATTER more.”
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And a quote by Richard Branson
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A very impactful speaker who spoke briefly the afternoon of the first day and then returned to speak to the coach’s conference (day 3) was Trav Bell, the Bucket List Guy (http://www.thebucketlistguy.com/).

  • After saying that a bucket list is about what you learn about yourself during the journey, he had the entire audience participate in two hands-on exercises:
  1. We were given 10 minutes to begin writing our “reverse” bucket list – a list of things, adventures, accomplishments, and people we had already met or achieved that we were proud about. We then shared items from our list with a partner.  This was a great exercise, one which I completed on my return flight to NY.
  2. After presenting his acronym MYBUCKETLIST as a framework for our bucket lists:

Meet a personal hero
Your proud achievements

Buy that special something
Ultimate challenges
Conquer a fear
Kind acts for others
Express yourself
Take lessons
Leave a legacy
Idiotic stuff
Satisfy a curiosity
Travel adventures

Trav gave us 15 minutes to select a letter, add an item to our list and then act on that item.  Many in the audience signed up for guitar lessons or made pledges to their favorite charity.

Both exercises were empowering and great examples of coaching.  I highly recommend you seek out a partner, or coach to create both bucket lists.

Trav concluded by saying “People are dying at 40, being buried at 80.”  Don’t be one of them.

 

Another presenter to the coach’s portion of BEF was Traci Diaz of Break Free Consulting.  Traci gave us many ideas, one of which stood out:

The Central Question to ask yourself several times each day is:
What choice can I make, and action can I take, in this moment, to create the greatest value?”

 

The BEF was concluded by Brad Sugars.  Brad stretched everyone’s vision by challenging everyone to create their 100-year vision!  He reiterated an Owner’s/CEO’s/ Leader’s responsibility to enroll and inspire their team:

  • Vision – 100 years in the future, if the mission is accomplished
  • Mission – the value your company brings to the world
  • Culture – the rules of the game

He reminded us of the ActionCOACH formula for success
Dreams X Goals X Learning X Plans X Actions = Success

It is useless to lead a team that is not confident and productive
Productivity comes from passion and focus
Realize that the better you get at _____ the easier it becomes – tackle the difficult to make it easy.

After drawing the following flipchart, Brad added that you MUST be congruent with your identity, or create MORE identity
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A case study example of expanded identity:

A doctor raised his identity from doctor to entrepreneur who happens to be in the medical business.  Result – went from one office with him as the only provider to nine offices with more than 400 providers.

We coach for break-throughs, not just learning.

 

After the conference, I observed a great example of communicating a Unique Value Proposition in the parking lot of my hotel:
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I hope you have formed your own BFOs from this blog series.

The 2018 Business Excellence Forum will be in San Diego from February 18th to the 20th.  If you wish to join me and about 700 other business owners, CEOs, leaders, executives and business coaches, or if you would like to accelerate your success, please contact me or any of my ActionCOACH colleagues.  Our mission is to create

World Abundance Through Business Re-Education

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Adding Value, Blinding Flashes of the Obvisous (BFOs), Business Coaching, Culture, Leadership, Learn to Earn, Mental Strength, Mindset, Mission, Responsibility, Serve more to Earn more, Success, Vision

Day two was kicked off (no pun intended) by Tim Brown, 1987 Heisman Trophy winner, NFL Hall of Fame member, and very inspirational speaker.  Here are some of my Tim Brown BFOs:

  • Be the coach
    • Be sure of yourself & your approach
    • Emphasize team
    • Look for & guide team members to see their abilities & potential
  • Talent is not enough – you need mental strength to succeed
  • Realize that sometimes a mindset change may be required to move forward
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  • Seek mentors …
    • Who can show you something about yourself
    • See what you cannot see within you
    • Say what you need to hear, not what you want to hear
  • Don’t be adverse to using a proven system from elsewhere
  • Little things lead to big results

The next speaker was Richard Maloney, President of Engage and Grow, a strategic partner of ActionCOACH.  In the course of presenting the benefits and outline of the Engage & Grow 12-week program, Rich enlightened us about the current poor state of employee engagement, strategies to raise the level of engagement and the benefits thereof:

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across the USA only 24% of employees are highly engaged.  Another way of looking at that is

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on average two out of every ten of your team are so highly disengaged that they would sabotage your company, or jump ship.  If you think your team would score as more engaged, think again.  A survey of their clients found a 30% gap between senior management’s guess and the team’s actual level of engagement.

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The Engage & Grow program taps into the science of motivation.

  • A Deloitte survey found that companies with highly engaged teams were eight times more successful over a ten year period than industry peers with lower team engagement.
  • Our job is to change the lives in front of us.

Next up was Paul Dunn, Chairman of B1G1, a global business giving initiative on a mission to create a world full of giving.  Paul’s presentation was in keeping with this year’s BEF theme of Serve More to Earn More.

Paul opened with the following quote from Sir Issacs Newton:
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Using www.internetlivestats.com in order to show that time is increasingly compressed, he displayed some live global stats for that moment: (2/21/2017):

  • 7,519 tweets / sec.
  • 2,472 Skype calls / sec.
  • 58,875 Google searches / sec.
  • 68,234 YouTube video uploads / sec.
  • 2,566,295 email / sec.
  • 42,125 gbytes / sec.

And
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He quoted Peter Diamandis:
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He urged us to EARN more to GIVE more, and vis-a-versa:
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to address these global issues

There are two choices we can make:
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or
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“The challenge is not to be successful, the challenge is to matter more. – Seth Godin

From Simon Sinek’s “Start With WHY”
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This wraps up part three of my 2017 BEFA BFOs.  There will be more Paul Dunn and Brad Sugars in part four.

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Accounting & Financials, Being an Owner, Blinding Flashes of the Obvisous (BFOs), Leadership, Networking, Ownership

  • After a short break, Keith Cunningham continued with many insights born out of a major bankruptcy that occurred in 2001:
    img_9520-small
    And then …
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    Of course, he was speaking about ENRON
  • To repeat a BFO from part 1 – Profit is a THEORY / Cash is a FACT
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  • If the Wall Street analysts had looked at ENRON’s Cashflow Statements, they would have easily discovered that ENRON was in an unsustainable cash situation. So …
    img_9530-small
  • Another great Keith quote “The key to getting rich (generating cash) is to make fewer stupid decisions.” Generate, digest and understand your timely financial statements, and scoreboards.  Your financials and scoreboards MUST be relevant, based on a granular chart of accounts and metrics that are reflective of your goals.  If you do this, you will make better decisions.
  • Get the BUSINESS into business!

Next Mr. Cunningham concluded with what I consider to be the most important message of his presentation:

  • An Owner/CEO/Leader has four jobs that CANNOT be delegated:
    1. Getting clarity about the obstacles
      • Identify and understand the obstacles to success, develop a strategy to overcome the obstacles and then build a machine to carry out the strategy / OSM – Obstacle + Strategy + Machine
      • The Machine is A Plan, the People and Execution
      • Be careful to determine the REAL problem
      • Continually ask yourself what can I do today to improve my situation?
      • Often, we don’t have clarity because we don’t ask the RIGHT Questions
        • “Smart people have really good answers, geniuses have really good questions.”
      • Powerful questions:
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        Powerful Growth Questions:
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      • To identify the underlying reasons:
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    2. Prioritization – Allocation of resources
      img_9549-small
      Another great question:

      img_9550-small
  1. Organizational Chart – Structure and Who
    • Keith said “opportunity without structure is chaos and drama!”
    • One of my coaches says “Abundance cannot exist where there is complexity and/or drama.”
    • Who?
      img_9552-small
      and solve problems
  2. Culture
    • Culture, Not Perks
    • Employees are number 1, not customers
    • The source of all value is your Team (your Who) and your Culture
      img_9555-small
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  • To Summarize – As a CEO/OWNER/LEADER you cannot Delegate:
    img_9553-small
     

The next presenter was Dr. Ivan Misner, founder and Chairman of Business Network International (BNI).  Dr. Misner has been called the “Father of Modern Networking” and is a well-known speaker and author on the subject of business networking.  You will not be surprised that the subject of his presentation was networking.  Here are a few BFOs from his presentation:

  • When at a business networking function, it doesn’t hurt to ask for business – RIGHT? WRONG!  Networking is all about making and building relationships.
  • Many people, when introduced to a person of certain professions will cut the conversation short – thinking they can’t help me. That is a mistake because you never know who they know.
  • Networking is like farming – you must plant the seeds of a relationship with everyone you meet.
  • Diversify your networks – join industry exclusive, non-exclusive, industry specific, locally based (chamber of commerce, for example), regional and on-line networks.
  • Be aware of the relationship of the time it will take to build confidence with someone you meet based on your profession.
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  • And remember perception is reality
    img_9574-small
    Be aware of how you are perceived.

This wraps up my BFOs from the first day of the 2017 BEFA.  Stay tuned for Part 3.

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Accountability, Accounting & Financials, Blinding Flashes of the Obvisous (BFOs), Business Fundamentals, Key Performance Indicators, Management

I said it last year, and I must say it again, the Business Excellence Forum (BEF) gets better each year.  There were more than 500 business owners, executives, team members and business coaches in attendance in Houston, Texas.  With that many attendees, there was an abundance of formal and informal exchanges of ideas, strategies, success stories and best practices.

This year’s forum had an extensive list of keynote speakers whose presentations yielded many Blinding Flashes of the Obvious (BFOs) and new ways of looking at things.  The following are some of the BFOs that struck a chord with me, most of which will enhance the value I bring to my clients.  I am sure that some of these will have a similar effect on you.

During the opening session, Brad Sugars, founder and Chairman of ActionCOACH shared the following:

  • We often present the concept of Learn More to Earn More. Brad added Serve More to Earn More.  Serve More to Earn more became one of the major themes of this year’s Forum.
  • To serve more, you must set an expanded vision (more about that later) and then you must grow into it.
  • Brad highlighted the difference between a Leader and a Coordinator. Leadership is all about the Vision.
  • During a discussion of referral strategies, Brad challenged everyone to develop a pre-gifting strategy. For example, give a book relevant to your product or service to ten of your top customers and encourage them to pass the books along to people who would benefit from your offering.

Our first keynote speaker was Keith Cunningham, author of “The Ultimate Blueprint for an Insanely Successful Business” and creator of the CFO Scoreboard.  (keystothevault.com)

Mr. Cunningham, while explaining financial reports in very plain, simple language, slips in many gems about business.  Following are some of the most important:

  • For most in business, the universal answer to business problems or issues is growth – most of the time, that is a fallacy. It is often more effective to consolidate your business and address the problems directly before resuming your growth.  After all, your problems may grow bigger as your business grows.
  • “To play the game of business you’ve got to speak the language.” The language is knowing how to read and understand your financial statements and KPIs.
  • You need two things; Language and Scoreboard:
    • Language (Report Card) = Financials
    • Scoreboard (Dashboard) = Optics which leads to strategy
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  • To make more money, get better at business
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  • M+D+A=N – Management -> Decisions -> Activities -> Numbers.  The numbers on your Report Card (Financials) influence your Activities and your activities determine your Report Card.
  • What activities need to change to change your numbers? When you stand on the bathroom scale and are unhappy with the number you see, what are you going to change to eventually see a happier number?
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  • We have too many goals, we need more standards (non-negotiable goals).
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  • Running your business with un-read or improperly formatted financial reports is like playing pin the tail on the donkey.
  • You give what you tolerate – every management failure is caused by a lack of courage.
  • PROFIT is a Theory – Cash is a FACT
  • “It is not about getting big, it’s about getting rich (generating cash).” Too many businesses lately are focused on getting very big.  Many of them are burning cash along the way.
  • The only reason to spend money is to get or keep customers.

All the BFOs above were from before the morning break!  There is much more to come from Keith and other speakers in the next blog post.

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Adding Value, Customer Service, Mindset, Mission, Serve more to Earn more

I recently used eBay to sell a file cabinet that I no longer need.  Oh, the benefits of more and more of my business being conducted online.  Because of its size and weight, the file cabinet was listed as local pickup only.  When the auction was completed, the buyer paid immediately and contacted me to arrange a time to pick the cabinet up.  When I met Leo, the buyer, at my storage facility I was surprised to be introduced to a Chinese man in full business attire, three-piece suit, beautiful silk foulard tie, the works.  The buyer was accompanied by another Chinese gentleman, John, who was dressed in business very casual attire, khakis, polo shirt, sneakers, you get the picture.

While John maneuvered the van into one of the loading bays, Leo and I took a dolly up to my storage unit to retrieve the file cabinet.  By now you are thinking what does this have to do with business?

While in the elevator Leo explained that he was on his lunch break from Bank of America, and John is his client.  John, he told me, is in the process of opening a daycare center and mentioned that he needed a file cabinet.  When he asked Leo for advice on where to purchase a used file cabinet, Leo suggested eBay.  John had never used eBay so Leo went the extra mile, logged into his eBay account, placed the winning bid, completed the transaction, and accompanied John to pick up the cabinet and to translate.  For me, that was a WOW moment, I was quite impressed by Leo’s dedication to his clients.

So, here are three business related questions I want you to consider:

  1. When was the last time a banker, especially from one of the giants, demonstrated that level client focused service? Or for that matter, what is the service level of many of the large businesses you regularly business do with?
  2. What is the service level you routinely offer to your customers? Do you WOW them on a regular basis?
  3. What would be the resulting increase to your bottom line if you separated your business from your competitors by raising your level of service to WOW?

As Brad Sugars, the Founder and Chairman of ActionCOACH said at our 2017 Business Excellence Forum last month, “Serve more to Earn more.”  Leo is certainly doing just that.  If you would like to make more by serving more, my colleagues and I at ActionCOACH will be happy to assist you.

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Being an Owner, Business Coaching, Entrepreneunship, Ownership, Planning

My wife and I took our grandsons to see, “School of Rock” on Broadway last weekend.  There is one line in the show that struck a chord with me: “Not everyone is cut out to be a rock star, but if you are, then you’ve got to go for it.”

What struck me about that line is how it directly relates to business and my coaching practice: “Not everyone is cut out to be an entrepreneur, but if you are, then you’ve got to go for it.”

In my mind, there are two types of entrepreneurs; active entrepreneurs and everyone else who has a job.  In other words, we are all entrepreneurs.  The days of two-way company/employee loyalty for 30-40 years is gone.  No more gold watches and fancy retirement parties.  Like it or not, we have become a society of “Me, Inc.”  We are our own bosses.

But how do you know if you are cut out to be an active entrepreneur?  Here are some questions to ask yourself:

  1. Am I comfortable with an erratic schedule? Do I have good time management skills?  As an entrepreneur, you likely won’t be working 9-5.  As you gear up, 10-12 hour days are not uncommon; you’ll spend your time networking, blogging, researching, and marketing.  You will need to work on your business every day.
  2. Can I afford it? You need a safety net.  It can take up to six months or more to start to see a steady income.  Depending on the terms of your contracts, clients can take up to three months to pay.
  3. What could I do? Two ways to go here:
    1. Skills and Talents: Evaluate your current career/work situation. Are there any skills that you can take and parlay into a business?
    2. Passion: Hobbies: many people have used their talents and created successful companies from their love of baking or knitting.
  4. What are my strengths and weaknesses? While it might be painful, ask your friends and family.  They will give you some good insight regarding how you are with people, taking initiative, or seeing a project to the end.  A word of caution here, do not let family and friends dissuade you from pursuing your dream.  Also, don’t underestimate self-assessment tools – such as the Myers-Briggs Type Indicator® or the DiSC which can provide self-awareness.

Assuming these items don’t scare you, what’s next?

  1. Plan. Our philosophy at ActionCOACH is to start planning as early as possible.  Most businesses grow organically, without planning.  Often, that leads to problems down the road.
  2. Research. Talk to other people who are already doing it.  You need to know the good, the bad, and the ugly.  Arm yourself with as much information as possible.  Additionally, there are many excellent books that address entrepreneurship as well as your area of expertise.  Never stop learning.
  3. Get all necessary certifications. The cost of the schooling may be tax deductible.
  4. Start small. Get the word out with friends and family about the service(s) or product(s) you are offering.  Word of mouth is one of the most effective marketing tools.
  5. Don’t wait until you get laid off. Lay the groundwork as soon as possible.
  6. Most important, hire an ActionCOACH to help you write a business plan, outline goals, and be the most effective president of “Me, Inc.”

Even if you decide you do not wish to be an active entrepreneur, it is necessary to take most of the steps outlined above to succeed in your career.

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Accountability, Business Coaching, Learn to Earn, Leverage, Ownership, Responsibility

I pride myself on my organizational skills and attention to detail.  Since my coaching practice depends on both, I’ve developed spreadsheets, procedures, and extensive files on my shared disk drive which enable me to run my business effectively and efficiently.  It’s a system that works well, enables leverage, and keeps me in check.

So, imagine my chagrin when all too late, I – or rather my wife – discovered a typo in my December newsletter that was missed by both me and my assistant.  It’s hard to correct without jamming up people’s inboxes so the most I could hope for is … laughter!

Yes, we have to laugh at these minor transgressions and put them into perspective.  In this case, my assistant indicated 2016, not 2017 for a January seminar.  She herself laughed and said that she was still writing 2014 on checks.  I had little choice but to laugh along with her because this is very likely a universal thing.  (By the way, as I finalize this toward the end of December, I note that although many opened the December newsletter, no one called me out about the typo.)

All too often, we are quick to point out errors and mistakes – as my wife did about the incorrect year.  I think it gives us some satisfaction knowing that we are all flawed.  So how do you overcome setbacks like this?  Here’s a formula:

  1. Be above the line.  Apologize without making excuses.  Saying “I’m sorry” acknowledges the mistake and demonstrates being accountable.  Likewise, if you are on the receiving end of the error, give the person a chance to own up to it without using accountability as a weapon.
  2.  Correct.  After you apologize, ask how you can make it right.  Come up with ideas on your own and collaborate with peers if necessary.  And, on the receiving end, listen and appreciate.
  3. Learn.  There is a vast body of published biographies, auto biographies, business books, articles and knowledge that equate failure and mistakes with prerequisites to success. Bottom line, you’ve got to Learn to Earn.

On the other hand, if you keep making the same mistakes, then it’s time to hire an ActionCOACH business coach to help you break through the obstacles that may be holding you back.  In addition, if you need to design your business to maximize your leverage or would like to learn more about bringing your business and yourself above the line of choice, contact myself or any of my colleagues for a no obligation complementary coaching diagnostic session and learn how we can add value to you and your business.

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Accountability, Blinding Flashes of the Obvisous (BFOs), Business Coaching, Business Fundamentals, Management, Success

Many of us have heard that 80% of your results are achieved by 20% of your efforts. Since Pareto introduced that concept back in 1896 by identifying that 80% of Italy’s land was owned by 20% of the population, it has since been applied to science, engineering, healthcare, and sports. My assistant claims that 80% of what you wear comes from 20% of your wardrobe so the applications are limitless.

As a business coach, my clients frequently complain that there’s just not enough time to get everything done.  Upon discussion, we have a lightbulb moment in which the client realizes that s/he is spending 80% of their time on trivial matters and only 20% of their time cultivating their core business, the very antithesis of what they should be doing.  During our coaching sessions, I suggest these ways to increase their productivity – and profits – by incorporating the 80/20 rule:

  1. Focus on the 20% of your customers who are generating 80% of your profits. Cultivate those relationships and watch your bank account grow!  Delegate the rest to your sales team and help them to nurture the future 20%.
  2. Identify the 20% of your friends and business associates who can provide 80% of your support, be it marketing or emotional. Conversely, eliminate the 20% – or more – of those who drain you of your energy or stand in the way of your success.
  3. Find the 20% of the tasks that you truly enjoy which bring the greatest reward and put 80% of your energy into them. The rest can be delegated or outsourced.
  4. 80% of a business’s problems come from 20% of the business. Is the 20% related to production?  Delivery?  A particular employee?  Periodically review your processes, policies and procedures.  Communicate expectations to your staff regularly.  This is about fire prevention.

The common thread here is to simplify as much as you are able.  Granted, the way we work has changed dramatically over the last two decades and we’re now “on” 24/7.  However, by discovering how we are using our time, we can make informed decisions about how we choose to spend it.

My colleagues and I are ready to assist you in applying Pareto’s Law to your business and your life.  Contact any of us for a no obligation complementary coaching diagnostic session and learn how we can add value to you and your business.

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Adding Value, Customer Service, Total Product DEfinition

I am a picky eater; I tend to frequent restaurants with menus that have items and preparations that I like.  In addition, I prefer restaurants that are flexible, and I’ve walked out of more than one after hearing “Sorry, no substitutions.”   My wife, not so much.  She has a very brave palate and is always willing to experiment with the new and unusual.  So imagine our delight when we found a restaurant in the Stockbridge, MA area many years ago that had a menu that appealed to both of us.

The restaurant was very successful and always crowded.  We appreciated the reasonable cost, the dependable quality of the food, and the reliable service.  The place was a home run for us and for the other residents and visitors to the Berkshires.

A few years went by and for reasons that are unknown to me, the owner hired a new chef who promptly – and completely – changed the menu.  For some people this would be an adventure.  However, to my wife and me – and judging by the decline in customers – this was business suicide.  I know we are not returning when my wife tells me that she has trouble finding something to order.  Gone were our favorite dishes.  Gone were the selections that catered to the bland eater and the daring.  Worse, they instituted a “no substitutions” policy.  We kept checking the restaurant’s website hoping that the owner and chef would come to their senses and revise the menu.  No such luck. As you can probably guess, the restaurant closed within a few months of this change.

In business, there are thousands of examples like this.   A successful business sells a product, then ostensibly to entice another customer base, creates a product that is not of value to the targeted new customer and worse, alienates the long time patrons.  Ultimately, the business fails.

So, what is the lesson here?  As a business owner, you MUST understand three things about your offering:

  1. You MUST understand what your customers value, not what you value. Oftentimes, they are very different things.
  2. You MUST understand all aspects of your offering, not just the obvious. For example, the obvious offering of a restaurant is the food.  Patrons also value the service, flexibility, décor, parking, dress code, cleanliness, consistency, reputation and variety, to mention a few.
  3. You MUST understand that every customer will value something different from other customers. Joe will value the food, but Mary will value the ambiance. And they seldom value the same aspects that you value.

Failure to fully understand your customer’s value proposition and consistently deliver that value is a recipe for disaster.  Yes, it’s important to grow, to improve, and to innovate your product base to give people options and to attract new customers.  However, if you consistently deliver great value to your customers you will be blessed with many raving fans.

If you would like to increase the value your company offers to your customers to accelerate your growth, my colleagues and I at ActionCOACH are ready and able to assist you.

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