Archive for Blogging

Two Important Metrics for Your Customer Acquisition Process

In my last post, I discussed the importance of understanding the purchasing decision process typically used by your customer segment. In Lean Thinking terms, it is important not to waste time or resources pursuing the wrong decision makers with misaligned tactics.

Can You Improve the Customer Acquisition Process?

Can the cost be reduced? Are there ways to influence the process so it can be more effective?

I firmly believe there are ways to improve all processes so my answer is “yes”. When we see something as a process, we can reflect on the steps in the process and look for improvements or ways to eliminate steps.

To understand “improvement”, we need a way to measure the effectiveness of the process. In this post, I would like to discuss two important metrics for customer acquisition:

What is the Cost to Acquire a Customer? What is the Value of a Customer?

The cost to acquire a customer should include all marketing and selling expenses. This would include obvious expenditures and salaries plus benefits. Don’t forget costs of showrooms, collateral materials, mock-ups, and quoting expenses.

The value of a customer should be seen as the Present Value of future revenues. To calculate present value, I advise you use your cost of equity. If you don’t know your cost of capital, use 30% as your discount rate. Factor in your known or expected retention rate to account for attrition.

When Do the Customer Acquisition, Customer Value Metrics Matter?

First, here is the situation where they don’t matter; an early stage startup.

If your company is a startup, you will probably find this hard to calculate. You don’t yet know what your customers spend, what your retention rate is, or the cost of maintaining a customer (customer service, for example).

As a startup, if you haven’t done this calculation, don’t spend a lot of time attempting to be precise.

When you first start your business, it is more important to get customers at almost any cost than to worry about the cost of getting them. While you must acquire customers at almost any cost to make a startup succeed, you are really working towards a sustainable business model which creates profits which can repay your investors.

As your business matures past the startup stage, the ratio between the value of a customer and the cost of customer acquisition should be between 5/1 and 10/1. Said another way, sales and marketing expenses for most companies ranges between 10-20% of revenues (yes, there are exceptions).

question answer graphic 610x273 - Two Important Metrics for Your Customer Acquisition ProcessIn a more mature business, these metrics can be easily tracked by aggregating expenses properly in your chart of accounts. For some readers, this may be obvious, but I mention it as I’ve seen many financial statements which never bother to calculate the subtotal.

Business leaders should direct their accountants to create the appropriate categories in the chart of accounts. Without direction, most accountants will simply put salaries into a single account, not focusing on the need for operational measurements and controls.

Sales Tip: Know the Purchasing Decision Process of Your Potential Client

In my last post, I discussed possible ways for you to build trust with customers and encouraged you to be patient with the trust-building process.

You can control your behaviors, but your customer is responsible for their behaviors. Not you. Their behaviors may have as much to do with closing a sale as yours.

What is the Current Purchasing Decision Process?

If the cost for your product is relatively low, your target customer may be able to approve the purchase on their own authority. If the sale involves a high value purchase, the customer may need approvals from their superiors in the organization.

If you are selling a product or service, particularly to an enterprise company, this may be even more complex. In addition to approvals from higher levels of management, you may need approvals from multiple stakeholders from multiple departments who have different, sometimes conflicting pain points and buying determinants.

When the selling process is complex, you need a value proposition for every stakeholder. The other choice is to rely on one or a few stakeholders to champion the purchase despite any misgivings by other stakeholders. I believe this is a way to reduce your success rate.

In all likelihood, your selling process from customer to customer will not vary that much. Most organizations have similar authority levels and you will see a pattern to the way purchasing decisions are made.

This should also influence your marketing and trust-building processes. If you know beforehand the typical stakeholders in your sales process, your marketing processes and social media content should span everyone in the process.

Another Way to Rethink Complex Selling Processes

Many startups are finding success by creating business models based on recurring revenues rather than large transactions.

You’ve likely witnessed the practice. Almost all new software applications charge by the month with the software hosted on a server in the cloud. WeWork is selling office space and services by the month. Almost all manufacturing equipment companies now offer leasing options. Leasing is the fastest growing way to finance a car.

You can reduce the complexity of your selling process if you can reduce the authority level needed to make a purchasing decision.

This also influences who you consider to be a “lead”. If you are a B2B business and have a high transaction cost, you may need to target Vice Presidents or CxO’s. If the cost can be lower, maybe Managers and Directors can be decision makers. If you are a B2C business, the income levels you target can be lower.

In both cases, the universe of potential leads is expanded.

This can also be a higher margin way for you to market your products. Since the out-of-pocket costs are lower, you likely can ultimately create more revenue for yourself than you realized from a one-time transaction. Price resistance is lower for lower cost products and services.


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About the Author: Bob Kroon is a coach for high-performing Founders, CEO’s, and Owners. He founded Expeerious, LLC (expeerious.com) in 2015 to exclusively focus on coaching the success of Top Executives. For over 25 years, Bob served variously as CEO, COO, Division President, and Group Vice President.

 

The majority of his career was in manufacturing durable goods. Bob is an enthusiast and practitioner of Lean Thinking since 1986. He also has broad skills in M&A including financial modeling, deal structure, diligence, and post-close integration.

Bob’s current clients are diverse and include businesses in healthcare, agricultural products, robotics, luxury goods, and education.

To learn more about how Bob coaches and thinks, you can find over 200 questions he’s answered on Quora. Visit his website at: www.expeerious.com for additional blog posts.

Why and How to Clean Your LinkedIn Connections

If you’re like most early adopters of LinkedIn, you may have utilized the platform for your job search, recruiting or connecting with old coworkers. Over the years, the platform has changed quite a bit, evolving into a robust professional networking and social selling machine. You may find yourself connected to people that no longer serve you and your objectives. Examples include:

  • People you’ve worked with in the past that aren’t relevant to your current situation
  • Other people in the same industry that could be viewed as your competitors
  • Recruiters for an industry which you are no longer a part of
  • Colleagues, suppliers, partners or competitors from an industry that you are no longer a part of

Whatever the case is for you, in order for LinkedIn to be a valuable networking and selling tool for you, you’ll want your first level connections to be high quality and relevant to your objectives.

Here’s how to evaluate a connection to see if you should remain connected at the first level. Ask yourself:

  • Can I be of service to this individual from a professional networking standpoint which will benefit both parties?
  • Can he/she be of service to ME from a professional networking standpoint?
  • Do I compete with this person for business?
  • Does this person want to sell me something that I’m not interested in?
  • Do I want this person to see what I’m doing to market myself or my business on LinkedIn?
  • Can I learn from this connection and if so, what?
  • Can they introduce me to someone of value to my network and business?
  • Is there a personal reason why I want to stay connected to this person?

Answers to these questions will be the determining factor for your decision to remain connected or not. I suggest removing connections that are not serving your higher purpose. This is NOT personal. You can always connect with them on any of other social networks, such as Facebook, Twitter or Instagram. Always keep in mind that LinkedIn is for business networking, not socially hanging out.

Once you’ve cleaned your LinkedIn connection list, you can now build it with the type of network that WILL serve your higher purpose and help you grow your business.

To learn how to remove unwanted connections, watch this two minute video I made for you, and be sure to check out our LinkedIn Lead Generation services to help you generate more business! (link to LinkedIn services)

Six EASY Steps to Creating A Blog

Get Your Blog Up and Running with Six Easy Steps

Consider this:  companies that publish new blog posts just 1-2 times each month generate 70% more leads than companies that don’t blog at all (source: www.business2community.com).

If that doesn’t make you want to start blogging for your business, then you may as well not continue reading this BLOG post.

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But if it does interest you, then you may be wondering where you should start?  Here are six steps to help you get going.

1.    Determine Your Platform

There are ways to get a blog up and running with little or no cost.  How fancy you wish to make your blog is up to you.   There are free options, such as www.wordpress.com or www.blogger.com.  You can use a generic template and focus your efforts on the written material.

If you already have a website and someone to maintain it, then you could ask that person to add a blog feature.  Believe me, they will know what to do!

Or, if you are starting from scratch and want a full fledged website that includes a blog area, you may need to hire someone to create a WordPress site for you (ask us!).  Or you could learn how to do it yourself.

2. Create a Plan

While you are getting your blog set up, you should take some time to plan out your blogging topics and a schedule.

Before you begin, ask yourself the following questions:

  1. How often can you (or one of your team members) realistically write a blog article?
  2. Whom do you wish to reach?
  3. What do you wish to communicate?
  4. What does your target audience wish to know or hear about from you?

3. Create a List

Once you’ve answered these questions, brainstorm on article ideas. Brainstorm on as many ideas as you can during this phase.  You can always add or remove ideas as you go.

Break up your ideas into common topics.  For example, if you are an Insurance Agent, you could break the topics up the following ways:

  • Home Insurance
  • Auto Insurance
  • Health Insurance
  • Life Insurance
  • Disability Insurance
  • Long Term Care Insurance

Depending, of course, on which areas are your specialty.

A word of caution:  when you are writing your list of topics, steer away from those which are self-serving.  If you only write about your business and how awesome you are, your readers will not stay on your site long, nor will they be back.  Consider what your reader wants to know about, not what you want them to know about you.

4. Create a Schedule

Since you asked yourself how often you can realistically write, plot out the dates on the calendar and assign blog post topics to each entry.   If you’re worried about not getting around to it, also block out a couple of hours on your actual calendar that you will dedicate to writing your blog posts.  I find I am much more productive when I have a plan AND a schedule before I write one word!

5. Writing Blitz

It’s also helpful to block out a few hours each month to write 3 or 4 blog articles to publish during that month.  If you can write more, great!  But tackling several articles at one sitting checks it off the list until the next month.

Be sure to include your key words in your article titles so that you can rank higher in the search engines (SEO).  Also, by naturally using your key words throughout your blog post, you will rank higher.

6. Share it!

Now that you have a blog set up and you’ve begun writing, be sure to share it!  Even though you will get organic traffic to your blog post when people run a search on your key words, you still want to get it out to your audience.  Post a link on all of your social media sites.  Tweet about it and schedule additional tweets for the rest of the week.  If you belong to any groups on LinkedIn or Facebook, be sure to post a link to your article there as well.

Put sharing options on the actual blog so that others can share it too.  You can also set up an RSS feed whereby others can sign up to receive notification automatically whenever you write a new post.

Hopefully you can see that while maintaining a blog can be an effort, it is completely possible to break it down into 6 steps in order to get started.

Happy Blogging!

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Why Blog? Three Reasons to Get Your Blog On

Blog, Baby, Blog!

Someone recently told me that blogging is “so last year”. Well, not so according to the Social Media Examiner’s 2013 Social Media Marketing Industry report.  It reports that 70% of small businesses and 58% of large businesses intend to increase their blogging activity in 2013. Why? Because of the tremendous value and power of blogging. 

Here are three of my personal reasons for getting your blog on:

Build Your Brand Having a great brand doesn’t do anything for you if no one sees or understands it. Blogging gives you a free platform to showcase and promote your brand and what you’re all about. You can share your blog on all of the social media platforms, through email campaigns and newsletters.

SEO Visibility Ah yes, that popular little word acronym for Search Engine Optimization or SEO. Google loves and rewards websites that continuously offer new and relevant content. It’s no longer just enough to stuff keywords into your website. You need to change your content regularly to get to and remain at the top of the page on Google searches. Blogging is the perfect way to do that AND to please your visitors. Additionally, if you link your blog to your social media accounts, you get links back to your site AND it is all searchable!

Industry Thought leadership when you provide thought provoking, quality, information to your target audience you begin building yourself as an industry thought leader. If a potential client is considering you or your company this could put them over the top to actually reach out to YOU. It’s an easy and cost effective way to gain loyalty and build your business. 

If you think about it, you could write a book. You could travel about speaking and sharing your knowledge about your industry. You could make videos showing who you are and what your company offers. You could offer free advice once you get a potential customer interested. Or you could do all of these for FREE and on demand. Blogging, in my book, is a terrific use of resources and gives back way more than you put in.

For additional, more detailed information about blogging, pick up my book “How to Become a Social Media Content Machine – Wordflirt’s Guide to Cranking out Killer Content”.