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Small Business Profits Tune-Up

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Six practical DIY tools and strategies small business owners can use to improve profitability.

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Small Business Profits Tune-Up

  1. 1. Small BusinessSmall Business Profits “Tune-Up”Profits “Tune-Up”
  2. 2. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Michael McDermottMichael McDermott Author: “2009-2011 Recession SurvivalAuthor: “2009-2011 Recession Survival Guide – 414 Actions Businesses Can TakeGuide – 414 Actions Businesses Can Take to Weather the Storm and Boost Profits”to Weather the Storm and Boost Profits” 804-248-1837804-248-1837 www.SmallBusinessCoachVA.comwww.SmallBusinessCoachVA.com YOUR HOST & SPEAKERYOUR HOST & SPEAKER
  3. 3. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com The Great Recession of 2009-2011The Great Recession of 2009-2011 is OVERis OVER (technically)(technically) But nobody will believe itBut nobody will believe it until companies start hiringuntil companies start hiring again, housing prices reboundagain, housing prices rebound and the global debt crisis eases.and the global debt crisis eases.
  4. 4. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com You can hold out until then by becoming theYou can hold out until then by becoming the highest customer-satisfaction, lowest-costhighest customer-satisfaction, lowest-cost competitor in your marketplace. While yourcompetitor in your marketplace. While your competitors are cutting back and hunkering down,competitors are cutting back and hunkering down, this is the time for you to capitalize on opportunitiesthis is the time for you to capitalize on opportunities and focus on your strengths. Here are the mostand focus on your strengths. Here are the most inexpensive, cost-effective and D.I.Y. projects andinexpensive, cost-effective and D.I.Y. projects and tools, the “low hanging fruit”, for tuning up thetools, the “low hanging fruit”, for tuning up the profits and competitiveness of your business.profits and competitiveness of your business.
  5. 5. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com The 7 Elements of aThe 7 Elements of a Profit Tune-UpProfit Tune-Up 1.1. Cash Flow and Lowest Cost CompetitorCash Flow and Lowest Cost Competitor 2.2. Pragmatic Business PlanningPragmatic Business Planning 3.3. Branding and “Guerrilla” MarketingBranding and “Guerrilla” Marketing 4.4. The “Profit Equation”The “Profit Equation” 5.5. Create “Lifetime Customers”Create “Lifetime Customers” 6.6. Employee EngagementEmployee Engagement 7.7. Get Outside HelpGet Outside Help
  6. 6. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Cash FlowCash Flow AndAnd Becoming the “LowestBecoming the “Lowest Cost” CompetitorCost” Competitor
  7. 7. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com #1- Get Your Cash Flowing#1- Get Your Cash Flowing Cash is the lifeblood of everyCash is the lifeblood of every business. Without reliable cash flow,business. Without reliable cash flow, you won’t even have the ability to stayyou won’t even have the ability to stay in business so none of the otherin business so none of the other elements of profit improvement areelements of profit improvement are very important, though they all canvery important, though they all can contribute to improving it.contribute to improving it.
  8. 8. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Cash Flow BasicsCash Flow Basics  SHOW ME THE MONEY!SHOW ME THE MONEY! Unless you can trackUnless you can track it, you can’t manage it. If you are not usingit, you can’t manage it. If you are not using QuickBooks or other simple accounting S/W, getQuickBooks or other simple accounting S/W, get it. QB-free starter package.it. QB-free starter package.  Start using a “break-even” graph. Add your fixedStart using a “break-even” graph. Add your fixed and variable expenses together, plot on an x/yand variable expenses together, plot on an x/y graph. Calculate/estimate total weekly salesgraph. Calculate/estimate total weekly sales (with margins) needed to make “break-even”.(with margins) needed to make “break-even”. These are your weekly sales goals…get to workThese are your weekly sales goals…get to work on the “Profit Equation”!on the “Profit Equation”!
  9. 9. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com The Elements of Cash FlowThe Elements of Cash Flow  Accounts receivable (money customers owe you)Accounts receivable (money customers owe you)  Accounts payable (money you owe to others)Accounts payable (money you owe to others)  Inventory (what you keep in stock to sellInventory (what you keep in stock to sell and payand pay interest on money you borrowed to purchase itinterest on money you borrowed to purchase it))  Accrued wages and taxesAccrued wages and taxes  Cash on-hand in the bankCash on-hand in the bank Use cash flow management to minimize theUse cash flow management to minimize the length of time funds are "tied-up" so you canlength of time funds are "tied-up" so you can reduce the amount of working capital you needreduce the amount of working capital you need for operations.for operations.
  10. 10. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Cash Flow ManagementCash Flow Management The biggest contributor to cash-flow problems isThe biggest contributor to cash-flow problems is late payments by customers.late payments by customers.  Get customers to allow “direct pay” bank drafts orGet customers to allow “direct pay” bank drafts or accept on-line payments from your customers.accept on-line payments from your customers.  Use a series of “dunning letters” to improveUse a series of “dunning letters” to improve payments; avoid selling accounts to a collector.payments; avoid selling accounts to a collector.  Invoice immediately and move to a 15 day billingInvoice immediately and move to a 15 day billing cycle.cycle.  Fax or email invoices; save postage and time.Fax or email invoices; save postage and time.  Always include/list your credit terms with orderAlways include/list your credit terms with order confirmations and invoices.confirmations and invoices.
  11. 11. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Cash Flow ManagementCash Flow Management  Ask for longer payment terms from vendors andAsk for longer payment terms from vendors and banks: from 30 to 60 days.banks: from 30 to 60 days.  Buy stock in bulk for discounts and use JIT (just-Buy stock in bulk for discounts and use JIT (just- in-time) delivery. Consignment stock!in-time) delivery. Consignment stock!  Renegotiate your lease; ask for franchise feeRenegotiate your lease; ask for franchise fee concessions.concessions.  Accept credit cards from customers (the CCAccept credit cards from customers (the CC company fees may be worth the cash flowcompany fees may be worth the cash flow improvement and increased customer volume).improvement and increased customer volume).  Move from weekly to semi-monthly payroll cycle.Move from weekly to semi-monthly payroll cycle.
  12. 12. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Be the Low-Cost CompetitorBe the Low-Cost Competitor  Use the “80/20 Rule” (Pareto Principle).Use the “80/20 Rule” (Pareto Principle). Chances are that 20% of your expenses areChances are that 20% of your expenses are responsible for 80% of your cost. Make aresponsible for 80% of your cost. Make a detailed list of ALL expenses and break largerdetailed list of ALL expenses and break larger budget items down into the smallest line itemsbudget items down into the smallest line items possible. For example, break “office supplies”possible. For example, break “office supplies” and “transportation” and “shipping” down intoand “transportation” and “shipping” down into their smallest components. Sort them fromtheir smallest components. Sort them from largest $ at the top to smallest $ on the bottomlargest $ at the top to smallest $ on the bottom and work on reducing the top 20%.and work on reducing the top 20%.
  13. 13. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Be the Low-Cost CompetitorBe the Low-Cost Competitor  Sell idle assets, inventory, machinery, displays, etc. GetSell idle assets, inventory, machinery, displays, etc. Get over it: the value of anything is what someone will pay forover it: the value of anything is what someone will pay for it TODAY; not how much you paid for it six months ago orit TODAY; not how much you paid for it six months ago or how much you sold it for two weeks ago. Remember thathow much you sold it for two weeks ago. Remember that you’re paying interest every month on the money youyou’re paying interest every month on the money you borrowed to buy the materials and keep it in inventory.borrowed to buy the materials and keep it in inventory. Use craigslist.com, auctions.yahoo.com and ebay.comUse craigslist.com, auctions.yahoo.com and ebay.com and to buy inexpensively. Government surplus auctions:and to buy inexpensively. Government surplus auctions: www.govdeals.comwww.govdeals.com  Printer ink and copier toner cartridges. Save 50% to 75%Printer ink and copier toner cartridges. Save 50% to 75% off the price of brand new cartridges by using re-filled inkoff the price of brand new cartridges by using re-filled ink cartridges available online and a local company will pick-cartridges available online and a local company will pick- up & deliver refilled: doug.hendrickson@rapidrefillink.netup & deliver refilled: doug.hendrickson@rapidrefillink.net  Turn off lights when not in use. Install a timer thermostatTurn off lights when not in use. Install a timer thermostat and stop/reduce heating/AC at night.and stop/reduce heating/AC at night.
  14. 14. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Be the Low-Cost CompetitorBe the Low-Cost Competitor  Look at total “cost to serve” individual customers or customerLook at total “cost to serve” individual customers or customer segments. The downturn may have caused some customersegments. The downturn may have caused some customer segments to become simultaneously smaller and more costlysegments to become simultaneously smaller and more costly to service. Read the book:to service. Read the book: Killer Customers:Killer Customers: Tell the Good from the Bad and Crush Your CompetitorsTell the Good from the Bad and Crush Your Competitors Authors Larry Selden and Geoffrey Colvin estimate that theAuthors Larry Selden and Geoffrey Colvin estimate that the top 20 percent of customers (by profitability) typically generatetop 20 percent of customers (by profitability) typically generate almost all of the organization’s profits. By comparison, thealmost all of the organization’s profits. By comparison, the bottom 20 percent of customers typically generate almost allbottom 20 percent of customers typically generate almost all of the losses. Working to keep the top 20% of customers andof the losses. Working to keep the top 20% of customers and improving the bottom 20% will significantly improve theimproving the bottom 20% will significantly improve the bottom line of any organization.bottom line of any organization.
  15. 15. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Be the Low-Cost CompetitorBe the Low-Cost Competitor  Work with anWork with an independentindependent insurance agent (rather than ainsurance agent (rather than a captive agent) who will work with many insurancecaptive agent) who will work with many insurance companies and get you the best rates. Ask them tocompanies and get you the best rates. Ask them to evaluate your coverage and reduce costs. Stopevaluate your coverage and reduce costs. Stop insurance on unused vehicles or equipment.insurance on unused vehicles or equipment.  Check the accuracy of your Worker’s CompensationCheck the accuracy of your Worker’s Compensation experience modification and worker classifications.experience modification and worker classifications. Exclude owner’s salary from taxable base.Exclude owner’s salary from taxable base.  Shipping: the U.S. Postal Service offers flat-rate shippingShipping: the U.S. Postal Service offers flat-rate shipping to everywhere in the domestic U.S. if you use their flat-to everywhere in the domestic U.S. if you use their flat- rate envelopes or flat-rate boxes. As long as your itemsrate envelopes or flat-rate boxes. As long as your items fit inside, you pay one price for shipping whether it'sfit inside, you pay one price for shipping whether it's going across the state or across the country--plus yougoing across the state or across the country--plus you get the boxes and envelopes free. This can be especiallyget the boxes and envelopes free. This can be especially valuable for shipping small but heavy items.valuable for shipping small but heavy items.
  16. 16. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Be the Low-Cost CompetitorBe the Low-Cost Competitor  ““Mistake-Proof” your business and reduce costly errors or scrapMistake-Proof” your business and reduce costly errors or scrap  Engineering (gas tank, dryer lint screen, spell check)Engineering (gas tank, dryer lint screen, spell check)  Decision treesDecision trees  ChecklistsChecklists  Failure Mode Effect Analysis (FMEA). Works great for serviceFailure Mode Effect Analysis (FMEA). Works great for service businesses.businesses.  5S and Visual Systems5S and Visual Systems  Process Flow Analysis: define your “core processes” and use flowProcess Flow Analysis: define your “core processes” and use flow analysis to remove unnecessary steps, approvals, time, bottlenecks,analysis to remove unnecessary steps, approvals, time, bottlenecks, customer annoyances, etc. VERY EASY!customer annoyances, etc. VERY EASY!  Recycle – can you sell your scraps, rejects or trash?Recycle – can you sell your scraps, rejects or trash?  Barter – have idle time or excess product? 50% of something isBarter – have idle time or excess product? 50% of something is better than 100% of nothing. Sign up with local barter organizations.better than 100% of nothing. Sign up with local barter organizations. Two barter networks in Richmond.Two barter networks in Richmond.  Call your industry professional association for cost saving researchCall your industry professional association for cost saving research ideas.ideas.
  17. 17. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com PragmaticPragmatic StrategicStrategic PlanningPlanning
  18. 18. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com #2-Tune-Up Your “Value Proposition”#2-Tune-Up Your “Value Proposition” ““Measure Twice, Cut Once”Measure Twice, Cut Once” Always start with your plan, your business model. Tune-up yourAlways start with your plan, your business model. Tune-up your business strategy FIRST; it saves a lot of time and expense later.business strategy FIRST; it saves a lot of time and expense later. Small/medium businesses can “strategically plan” like the majorSmall/medium businesses can “strategically plan” like the major companies because much of the value of strategic planning iscompanies because much of the value of strategic planning is embodied in creating your “Value Proposition”.embodied in creating your “Value Proposition”. A value proposition is a short paragraph defining your customers,A value proposition is a short paragraph defining your customers, how you differentiate your business from your competitors, how youhow you differentiate your business from your competitors, how you leverage in your organization’s unique strengths and how you planleverage in your organization’s unique strengths and how you plan to make a profit. It is your argument why customers should buyto make a profit. It is your argument why customers should buy from you rather than from your competitors.from you rather than from your competitors. Spend time to get this right and get help if necessary. Preparing aSpend time to get this right and get help if necessary. Preparing a value proposition begins with:value proposition begins with:
  19. 19. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com  Get intimate with your customers – be fanatical andGet intimate with your customers – be fanatical and obsessive. Determine the 20% of your customers whoobsessive. Determine the 20% of your customers who are responsible for the 80% of your profits and visit themare responsible for the 80% of your profits and visit them with a questionnaire or conduct your own “focus group”.with a questionnaire or conduct your own “focus group”. What do your clients/customersWhat do your clients/customers reallyreally want? Whatwant? What services, features, benefits or products are you offeringservices, features, benefits or products are you offering that theythat they don’tdon’t care about? What do they like andcare about? What do they like and dislike about your current product or services? Do youdislike about your current product or services? Do you make it easy or hard for customers to buy from you ormake it easy or hard for customers to buy from you or use your services? Really listen to customer/clientuse your services? Really listen to customer/client requests; these are often the leading edge ofrequests; these are often the leading edge of product/service improvements. Contact the bestproduct/service improvements. Contact the best customers of your competitors; what do your customerscustomers of your competitors; what do your customers like about them?like about them?
  20. 20. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com  Get some CRM (customer relationshipGet some CRM (customer relationship management software) to capture your customermanagement software) to capture your customer data and make it easy to manipulate. There isdata and make it easy to manipulate. There is FREE or inexpensive software.FREE or inexpensive software.  CompetitorsCompetitors – mystery-shop them, talk to– mystery-shop them, talk to common suppliers and vendors, research theircommon suppliers and vendors, research their web sites. Reverse-engineer their services andweb sites. Reverse-engineer their services and products. If you have many competitors, startproducts. If you have many competitors, start with the largest or most successful; they got thatwith the largest or most successful; they got that way for a reason. Find out what they are doingway for a reason. Find out what they are doing wrong and exploit that in your strategy andwrong and exploit that in your strategy and marketing.marketing.
  21. 21. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com  Identify your industry’s and your businesses “KeyIdentify your industry’s and your businesses “Key Success Factors”; the “basics” of your business. Retail:Success Factors”; the “basics” of your business. Retail: inventory turns, shrinkage. Professional services: clientinventory turns, shrinkage. Professional services: client retention. Manufacturing: throughput time,retention. Manufacturing: throughput time, rejects/rework.rejects/rework.  DifferentiationDifferentiation – If there is nothing different about your– If there is nothing different about your business, people will only buy from you because ofbusiness, people will only buy from you because of convenience or price, nothing more. Competing on priceconvenience or price, nothing more. Competing on price (even in this economy) is a race to the market-price(even in this economy) is a race to the market-price bottom and youbottom and you cannotcannot compete with Wal-Mart. EVERYcompete with Wal-Mart. EVERY business can be differentiated through unique services,business can be differentiated through unique services, features, quality, branding, guarantees, etc. Youfeatures, quality, branding, guarantees, etc. You successfully differentiate only when you THOROUGHLYsuccessfully differentiate only when you THOROUGHLY understand both your customers and competitors.understand both your customers and competitors.
  22. 22. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com  Think creatively about new businessThink creatively about new business strategies:strategies:  Position your business through branding orPosition your business through branding or features as the “high-end” option in yourfeatures as the “high-end” option in your market or position in a demographic: ethnic,market or position in a demographic: ethnic, age, gender, etc. “Total customization”?age, gender, etc. “Total customization”?  Cirque du Soleil created a brand new marketCirque du Soleil created a brand new market with no competition by combining the bestwith no competition by combining the best features of related entertainment industries:features of related entertainment industries: the circus and live theater. What can you dothe circus and live theater. What can you do inin youryour industry?industry?
  23. 23. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com  Think creatively about new business strategies:Think creatively about new business strategies:  ReallyReally understand your core strengths andunderstand your core strengths and differentiations. You may have a skill or knowledgedifferentiations. You may have a skill or knowledge base or other business asset that you can turn into abase or other business asset that you can turn into a new service or product for current or potentialnew service or product for current or potential customers. Best Buy created the Geek Squadcustomers. Best Buy created the Geek Squad  The best growth ideas and the most successful newThe best growth ideas and the most successful new adjacent business strategies come from customers.adjacent business strategies come from customers. Capitalize on micro-segments of your business forCapitalize on micro-segments of your business for development and growth (those small, off-shoot linesdevelopment and growth (those small, off-shoot lines of business) before competitors catch on.of business) before competitors catch on.  In-N-Out Burger: Make it simple but clearly betterIn-N-Out Burger: Make it simple but clearly better than any other competitor. 232 restaurants offeringthan any other competitor. 232 restaurants offering ONLY burgers, fries and beverages.ONLY burgers, fries and beverages.
  24. 24. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com BrandingBranding andand Guerrilla MarketingGuerrilla Marketing
  25. 25. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com # 3 – Have You “Branded” Yet?# 3 – Have You “Branded” Yet? Branding is one of the best things you can do to improve your marketingBranding is one of the best things you can do to improve your marketing message. Properly done, it helps to focus your message and to multiply themessage. Properly done, it helps to focus your message and to multiply the positive affects of your various marketing methods. Because it is basedpositive affects of your various marketing methods. Because it is based around your target audience, differentiation, market positioning and youraround your target audience, differentiation, market positioning and your “value proposition” it helps create a feeling of trust, familiarity and“value proposition” it helps create a feeling of trust, familiarity and consistency with current and potential clients. When potential customersconsistency with current and potential clients. When potential customers are looking to select a supplier/service provider and there are no facts toare looking to select a supplier/service provider and there are no facts to base the decision upon (except for your testimonials!) most people will gobase the decision upon (except for your testimonials!) most people will go with the most “familiar” option.with the most “familiar” option. Most buying decisions are based upon emotion rather than logic; a “feeling”Most buying decisions are based upon emotion rather than logic; a “feeling” rather than a “fact”. Your business needs to make an emotional connectionrather than a “fact”. Your business needs to make an emotional connection with your client or customer. Branding and a variety of marketing mediumswith your client or customer. Branding and a variety of marketing mediums help make that connection.help make that connection. When you sell your business, your “Brand”, by itself, can have considerableWhen you sell your business, your “Brand”, by itself, can have considerable cash value.cash value.
  26. 26. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Basic branding includes just a few elements:Basic branding includes just a few elements:  Market PositioningMarket Positioning – this will be the toughest part because it requires– this will be the toughest part because it requires identifying a target market, differentiation, etc. but it is at the heart ofidentifying a target market, differentiation, etc. but it is at the heart of branding.branding.  Business NameBusiness Name – picking a company name is NOT the time to be clever.– picking a company name is NOT the time to be clever. Choose carefully one that reflects what your company does and stands for.Choose carefully one that reflects what your company does and stands for. If it is too late to change your company name, there is still a great deal youIf it is too late to change your company name, there is still a great deal you can do to update thecan do to update the appearanceappearance of your company name with eye-catching,of your company name with eye-catching, complimentary colors and graphic fonts. You can also play with effectivecomplimentary colors and graphic fonts. You can also play with effective Internet URL/names different from your company name.Internet URL/names different from your company name.  Logo/Photo/Drawing/ImageLogo/Photo/Drawing/Image – Customers today are engaged more by the– Customers today are engaged more by the visual image than by the written word. Try to connect a design to your typevisual image than by the written word. Try to connect a design to your type of business and make it unique.of business and make it unique.  Slogan or Tag lineSlogan or Tag line – a unique, memorable statement that identifies the– a unique, memorable statement that identifies the “heart” of the primary selling point of your business. SERVPRO (a disaster“heart” of the primary selling point of your business. SERVPRO (a disaster recovery company) has the best tag line ever:recovery company) has the best tag line ever: ““Like It Never Even Happened”Like It Never Even Happened”
  27. 27. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Your brand must be consistent and must go everywhere, onYour brand must be consistent and must go everywhere, on business cards, stationary, promotional items, clothing, vehicles,business cards, stationary, promotional items, clothing, vehicles, etc.etc. If you are creative, you can try branding yourself. Or, forIf you are creative, you can try branding yourself. Or, for surprisingly little money, you can have a professional create yoursurprisingly little money, you can have a professional create your branding. Some printers will create a colorful logo for free or a smallbranding. Some printers will create a colorful logo for free or a small fee. Approach one of the local business schools and see if there isfee. Approach one of the local business schools and see if there is a marketing or graphic design class or student that would like toa marketing or graphic design class or student that would like to take your company on as a branding assignment. DIY your owntake your company on as a branding assignment. DIY your own logo atlogo at www.logoyes.comwww.logoyes.com . Better, contact a local ad/ marketing. Better, contact a local ad/ marketing agency to create for you. The fees can be very reasonableagency to create for you. The fees can be very reasonable considering the long term value!considering the long term value! Be careful though, branding is a two-way street. A good brand canBe careful though, branding is a two-way street. A good brand can take you places but a poor one will set you back! This is one oftake you places but a poor one will set you back! This is one of those situations where it is better to shell out a little cash to have itthose situations where it is better to shell out a little cash to have it done right.done right.
  28. 28. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Guerrilla MarketingGuerrilla Marketing You may have the best concept, service, or product ever, but if nobodyYou may have the best concept, service, or product ever, but if nobody knows about it and you can’t sell it, nothing else matters! Several studiesknows about it and you can’t sell it, nothing else matters! Several studies have shown that companies that maintain or increase marketing inhave shown that companies that maintain or increase marketing in economic downturns averaged higher sales and growth both during theeconomic downturns averaged higher sales and growth both during the downturn and after. The most important aspect of guerilla marketing isdownturn and after. The most important aspect of guerilla marketing is measuring results and testing different marketing methods.measuring results and testing different marketing methods. The place to start is to simplyThe place to start is to simply askask every lead or customer you get: “How didevery lead or customer you get: “How did you hear about us?”. Keep a check sheet next to your primary telephoneyou hear about us?”. Keep a check sheet next to your primary telephone and keep a day-by-day record, especially right after a marketing campaign.and keep a day-by-day record, especially right after a marketing campaign. Test different marketing methods. Direct marketing may work well in oneTest different marketing methods. Direct marketing may work well in one geographic area but not in another, for example. Over a period of time, yougeographic area but not in another, for example. Over a period of time, you will begin to see which of your marketing programs works best and whichwill begin to see which of your marketing programs works best and which are a waste of money.are a waste of money. Start a historical “Marketing” binder with document protectors to maintainStart a historical “Marketing” binder with document protectors to maintain examples of ALL of your marketing methods and results.examples of ALL of your marketing methods and results.
  29. 29. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Do you know what it costs to “buy” each of your customers by the typeDo you know what it costs to “buy” each of your customers by the type of marketing? Calculate your customer acquisition cost forof marketing? Calculate your customer acquisition cost for eacheach marketing method:marketing method: $ marketing cost ÷ # of prospects = cost per lead$ marketing cost ÷ # of prospects = cost per lead Conversion rate % of prospects into customersConversion rate % of prospects into customers $2500 ÷ 80 prospects = cost per prospect of $32$2500 ÷ 80 prospects = cost per prospect of $32 = Customer Acquisition Cost= Customer Acquisition Cost 40% conversion (.40) $80.00 per customer40% conversion (.40) $80.00 per customer Is the profit you make from each customer more than your acquisitionIs the profit you make from each customer more than your acquisition cost? When you understand that marketing is about “buying”cost? When you understand that marketing is about “buying” customers you get a better appreciation of why it is so important tocustomers you get a better appreciation of why it is so important to create “customers for life”; once you have a customer you never havecreate “customers for life”; once you have a customer you never have to spend money to buy them again!to spend money to buy them again! Customer Acquisition CostCustomer Acquisition Cost
  30. 30. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com  Testimonials from satisfied customersTestimonials from satisfied customers  ReferralsReferrals  Press ReleasesPress Releases  Free Offer – something that that costs you little such asFree Offer – something that that costs you little such as information sent over the Internet or a workshop.information sent over the Internet or a workshop.  Direct Mail withDirect Mail with youryour customer address list. Phonecustomer address list. Phone follow-up increases results by 300%.follow-up increases results by 300%.  Internet web page. (grade the marketing effectiveness ofInternet web page. (grade the marketing effectiveness of your website for free atyour website for free at www.hubspot.comwww.hubspot.com and get a freeand get a free Internet marketing kit whitepaper). Email marketing:Internet marketing kit whitepaper). Email marketing: www.constantcontact.comwww.constantcontact.com (free trial period)(free trial period) Cost Effective Marketing ToolsCost Effective Marketing Tools
  31. 31. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com  Social media:Social media: www.linkedin.comwww.linkedin.com,, www.facebook.comwww.facebook.com,, blogs, bulletin boards.blogs, bulletin boards.  Frame your marketing message in terms of how yourFrame your marketing message in terms of how your service or product will satisfy a customer’s needs;service or product will satisfy a customer’s needs; write it fromwrite it from theirtheir perspective.perspective.  Building and car signage, window displaysBuilding and car signage, window displays  Stickers and tagsStickers and tags  Strategic alliances (restaurant & bakery, banks & CPAStrategic alliances (restaurant & bakery, banks & CPA & attorneys)& attorneys) What counts is what works for your business but youWhat counts is what works for your business but you won’t know unless you keep track!won’t know unless you keep track! Cost Effective Marketing ToolsCost Effective Marketing Tools
  32. 32. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com TheThe ProfitProfit EquationEquation
  33. 33. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com # 4 – Understand the Profit Equation# 4 – Understand the Profit Equation While products and services differ, some things areWhile products and services differ, some things are common to all businesses and these common elementscommon to all businesses and these common elements are the basis of the “Profit Equation”.are the basis of the “Profit Equation”.  # of Prospects# of Prospects – the number of potential– the number of potential clients/customers who you get from EACH source ofclients/customers who you get from EACH source of marketing. Do you calculate your “cost per prospect”?marketing. Do you calculate your “cost per prospect”? Divide the cost of your marketing by the number ofDivide the cost of your marketing by the number of prospects created (for each different marketing method).prospects created (for each different marketing method).  Conversion RateConversion Rate – the percentage of prospects that,– the percentage of prospects that, throughthrough sellingselling, you turn into paying clients/customers., you turn into paying clients/customers. Calculate by dividing the number of customers into theCalculate by dividing the number of customers into the number of prospects for each marketing campaign.number of prospects for each marketing campaign.
  34. 34. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com # 4 – Understand the Profit Equation# 4 – Understand the Profit Equation  Number of Transactions with Each CustomerNumber of Transactions with Each Customer - This is- This is thethe averageaverage number of times an individualnumber of times an individual customer/client will buy or use you over a period of timecustomer/client will buy or use you over a period of time (month, year).(month, year).  Average Dollar SaleAverage Dollar Sale - This is total sales from all- This is total sales from all customers or a customer segment divided by the numbercustomers or a customer segment divided by the number of customers or customers in a segment.of customers or customers in a segment.  MarginsMargins - This is the percentage of money in each sale- This is the percentage of money in each sale that is left over after you subtract all of your costs.that is left over after you subtract all of your costs. Once you understand the parts to the equation, you canOnce you understand the parts to the equation, you can start to manipulate and improve them.start to manipulate and improve them.
  35. 35. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Profit Equation Profit Elements Base +10% +25% # Prospects 200 220 250 X x X x Conversion Rate 20% 22% 25% ‫װ‬ ‫װ‬ ‫װ‬ ‫װ‬ # of Customers 40 48 62 X X X X # of Transactions per customer 1 2 3 X X X X Average Dollar Sale per customer $100 $110 $125 ‫װ‬ ‫װ‬ ‫װ‬ ‫װ‬ Total Turnover (av $ value of a customer) $4000 $10,560 $23,250 X X X X Margin 25% 27.5% 30% ‫װ‬ ‫װ‬ ‫װ‬ ‫װ‬ Profit $1,000 $2,904 $6,975
  36. 36. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Practical “Take-Away”Practical “Take-Away” Tips and ToolsTips and Tools toto Improve Each of theImprove Each of the Profit Equation ElementsProfit Equation Elements and Boost Your Profitsand Boost Your Profits
  37. 37. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Increase the # of ProspectsHow to Increase the # of Prospects A lot depends upon the type of business you’re in; B2CA lot depends upon the type of business you’re in; B2C or B2B, industry, etc. Of course, you must target youror B2B, industry, etc. Of course, you must target your marketing to where your primary customer base ismarketing to where your primary customer base is looking.looking.  Guerilla Marketing – keep track of your marketing resultsGuerilla Marketing – keep track of your marketing results and use the methods that work.and use the methods that work.  Past Customers – call, email or send them a personalPast Customers – call, email or send them a personal letter. Notify about a sale or complimentary products.letter. Notify about a sale or complimentary products.  Yellow Pages – 35% of people look here when they areYellow Pages – 35% of people look here when they are ready to buy. $$$ready to buy. $$$  Internet – people use this to research yourInternet – people use this to research your product/service. This is a “Pass/Fail” test, make sure itproduct/service. This is a “Pass/Fail” test, make sure it looks professional!looks professional!
  38. 38. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Increase the # of ProspectsHow to Increase the # of Prospects  LocalLocal newspaper – use the proper section, right handnewspaper – use the proper section, right hand page, repetition!page, repetition!  Use partners and affiliates with related businesses.Use partners and affiliates with related businesses.  Word-of-Mouth – offer an unusual/remarkable service;Word-of-Mouth – offer an unusual/remarkable service; “freebies” to the social leaders in your target markets.“freebies” to the social leaders in your target markets.  Radio – use the right station and negotiate rates. Best inRadio – use the right station and negotiate rates. Best in combination with other media. Repetition!combination with other media. Repetition!  Networking – people buy from people they know andNetworking – people buy from people they know and trust.trust.  Seminars – free information and position yourself as anSeminars – free information and position yourself as an “expert”.“expert”.
  39. 39. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Convert Prospects into CustomersHow to Convert Prospects into Customers  Written Guarantee – determine what customers are mostWritten Guarantee – determine what customers are most afraid of and guarantee that won’t happen. $ back vsafraid of and guarantee that won’t happen. $ back vs satisfaction.satisfaction.  Testimonials – display them prominently on your website andTestimonials – display them prominently on your website and in advertising.in advertising.  Be Persistent – many sales don’t take place until after theBe Persistent – many sales don’t take place until after the third or fourth contact. Get their contact information. Ask forthird or fourth contact. Get their contact information. Ask for referrals.referrals.  Use Sales Scripts. For example, don’t ask for a sale with aUse Sales Scripts. For example, don’t ask for a sale with a question that can be answered with a “No” answer. Assumequestion that can be answered with a “No” answer. Assume they want to buy and ask a detail question: “What day wouldthey want to buy and ask a detail question: “What day would you like to start?” or “Would you like me to bill you or do youyou like to start?” or “Would you like me to bill you or do you want to use a credit card?”want to use a credit card?”  Build Trust & Rapport – “How can I help solve your problem?”Build Trust & Rapport – “How can I help solve your problem?” rather than selling them something. Find out what they needrather than selling them something. Find out what they need and address how you can fill that need.and address how you can fill that need.
  40. 40. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Convert Prospects into CustomersHow to Convert Prospects into Customers  Educate on value, not price – people want aEducate on value, not price – people want a good dealgood deal, not necessarily the lowest price., not necessarily the lowest price.  Demonstrations. They make $ for COSTCO.Demonstrations. They make $ for COSTCO.  Throw in an inexpensive, “value-added”, offerThrow in an inexpensive, “value-added”, offer  Buy One Get One (BOGO) freeBuy One Get One (BOGO) free  Display/promote your professional certificationsDisplay/promote your professional certifications and awardsand awards  Appeal to convenience: home delivery, severalAppeal to convenience: home delivery, several payment options/financing.payment options/financing.  Urgency – give them a deadline to buy beforeUrgency – give them a deadline to buy before supplies run out or a sale ends.supplies run out or a sale ends.  Accept trade-insAccept trade-ins
  41. 41. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Increase the Number ofHow to Increase the Number of Transactions per CustomerTransactions per Customer  Create and maintain a customer database: name,Create and maintain a customer database: name, contact information including e-mail, address/ZIP code,contact information including e-mail, address/ZIP code, sales history, day/month of birth, etc.sales history, day/month of birth, etc.  Underpromise & Overdeliver – promise to deliver onUnderpromise & Overdeliver – promise to deliver on Friday and get it there on Thursday. Be consistent andFriday and get it there on Thursday. Be consistent and reliable.reliable.  Contact customers quarterly with information aboutContact customers quarterly with information about product or services, B-Day card, special offers,product or services, B-Day card, special offers, newsletter, reminder of next service, pressnewsletter, reminder of next service, press articles/reviews, etc. Calendarize or use a contactarticles/reviews, etc. Calendarize or use a contact management system.management system.  Offer a service contract which requires more products orOffer a service contract which requires more products or services.services.
  42. 42. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Increase the Number ofHow to Increase the Number of Transactions per CustomerTransactions per Customer  Offer first time buyer incentive – low cost butOffer first time buyer incentive – low cost but high perceived value and limited time.high perceived value and limited time.  Ask them to come back before they leave: “MayAsk them to come back before they leave: “May I make your next appointment?”I make your next appointment?”  Frequent Buyer or VIP programFrequent Buyer or VIP program  Offer on Next Purchase – 10% off nextOffer on Next Purchase – 10% off next purchase.purchase.  Customer Satisfaction Check – call customers toCustomer Satisfaction Check – call customers to gauge their satisfaction. Reminds them aboutgauge their satisfaction. Reminds them about you and you can ask them if they needyou and you can ask them if they need something more.something more.
  43. 43. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Increase the Average Dollar SaleHow to Increase the Average Dollar Sale  Up Sell – create different levels of product or service and sellUp Sell – create different levels of product or service and sell up.up.  Add-On Sales – “Do you want fries with that?”Add-On Sales – “Do you want fries with that?”  Sell a service agreement/contract, warranty, insurance.Sell a service agreement/contract, warranty, insurance.  Offer payment terms or financing in exchange for largerOffer payment terms or financing in exchange for larger orders.orders.  Create Package deals by linking complimentary products andCreate Package deals by linking complimentary products and services.services.  Bulk Buy Deals – reduced price for a higher minimumBulk Buy Deals – reduced price for a higher minimum purchase.purchase.  Train your sales team and use sales scriptsTrain your sales team and use sales scripts  ““Four-for-the-Price-of-Three” offersFour-for-the-Price-of-Three” offers  Shopping List – give them a list of things they will also need ifShopping List – give them a list of things they will also need if they buy something. “If you buy X, you will also need Y andthey buy something. “If you buy X, you will also need Y and Z.”Z.”
  44. 44. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Improve MarginsHow to Improve Margins  Calculate margins for ALL your products/services andCalculate margins for ALL your products/services and stop wasting time on those with low margins.stop wasting time on those with low margins.  Stop Discounting – after awhile, customers EXPECT aStop Discounting – after awhile, customers EXPECT a discount and it loses its affect. Reinforce features anddiscount and it loses its affect. Reinforce features and benefits.benefits.  Increase Prices – check your competition. MostIncrease Prices – check your competition. Most customers won’t notice 10%. Offer a little extra service.customers won’t notice 10%. Offer a little extra service. Increase the price only on selected products/services.Increase the price only on selected products/services.  ““Grade” your customers – 80% of your profits come fromGrade” your customers – 80% of your profits come from 20% of customers. Take better care of your best and fire20% of customers. Take better care of your best and fire those with low-margin/high maintenance.those with low-margin/high maintenance.  Reduce costs and improve productivityReduce costs and improve productivity
  45. 45. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Improve MarginsHow to Improve Margins  Private Label – create a “brand” with special featuresPrivate Label – create a “brand” with special features that you can sell at a higher price. Buy in bulk andthat you can sell at a higher price. Buy in bulk and repackage in smaller quantities for convenience but at arepackage in smaller quantities for convenience but at a higher margin. Repackage with a complimentary item forhigher margin. Repackage with a complimentary item for convenience or utility at a higher margin.convenience or utility at a higher margin.  Sell over the Internet – no salaries or benefits.Sell over the Internet – no salaries or benefits.  Take stock on consignmentTake stock on consignment  ““Just-in-Time” restocking – buy in bulk and pay/getJust-in-Time” restocking – buy in bulk and pay/get deliveries only when you need the stock.deliveries only when you need the stock.  Pay by credit card – pick one with long, interest-free payPay by credit card – pick one with long, interest-free pay period and points. There is an internet site thatperiod and points. There is an internet site that compares business card rates and features.compares business card rates and features.
  46. 46. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com CreateCreate LifetimeLifetime CustomersCustomers
  47. 47. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com # 5 – Create “Lifetime Customers”# 5 – Create “Lifetime Customers”  It is five to six times more expensive to attract newIt is five to six times more expensive to attract new customers than it is to retain existing ones.customers than it is to retain existing ones.  The profitability of a five year customer/client is moreThe profitability of a five year customer/client is more than three times that of a first year customer.than three times that of a first year customer.  A very satisfied customer will tell five others about you.A very satisfied customer will tell five others about you.  The quickest and least expensive way to increase salesThe quickest and least expensive way to increase sales is to sell more to current clients or customers.is to sell more to current clients or customers.  When you sell your business, your long-term customerWhen you sell your business, your long-term customer list will be one of your most valuable cash assets.list will be one of your most valuable cash assets.
  48. 48. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Create “Lifetime Customers”How to Create “Lifetime Customers”  Create and Maintain a Detailed Customer/ClientCreate and Maintain a Detailed Customer/Client DatabaseDatabase – This is one of the least expensive– This is one of the least expensive and most productive things you can do toand most productive things you can do to improve long term business success. Youimprove long term business success. You cannot create lifetime customers unless youcannot create lifetime customers unless you know who your customers are.know who your customers are.  Offer a GuaranteeOffer a Guarantee – publicize it in all marketing.– publicize it in all marketing.  Quality Work/Service/ProductsQuality Work/Service/Products - if the quality of- if the quality of your basic product or service is poor, no amountyour basic product or service is poor, no amount of “spin” or price differentiation will compensate.of “spin” or price differentiation will compensate.
  49. 49. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Create “Lifetime Customers”How to Create “Lifetime Customers”  Frequent AttentionFrequent Attention – You need to “touch” your best– You need to “touch” your best customers at least quarterly either through phone calls,customers at least quarterly either through phone calls, direct mail, e-mail, etc. with information, special offers,direct mail, e-mail, etc. with information, special offers, coupons, loyalty programs, to ask for feedback, etc.coupons, loyalty programs, to ask for feedback, etc.  Value AddedValue Added - There are many low-cost (to you) but- There are many low-cost (to you) but value-added services for customers that you canvalue-added services for customers that you can consider. CONVENIENCE is a very important feature toconsider. CONVENIENCE is a very important feature to customers today. It will not be the BIG things thatcustomers today. It will not be the BIG things that customers remember (like quality work or good service)customers remember (like quality work or good service) because they EXPECT that as a minimum; it will be littlebecause they EXPECT that as a minimum; it will be little unexpected things that you do that they will remember.unexpected things that you do that they will remember. And these thoughtful things can be low or no cost.And these thoughtful things can be low or no cost.  Loyalty ProgramsLoyalty Programs
  50. 50. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Lifetime CustomerLifetime Customer Problem Recovery ProgramProblem Recovery Program In addition toIn addition to retainingretaining your most valuable customers, you need toyour most valuable customers, you need to religiously avoid creatingreligiously avoid creating dissatisfieddissatisfied customers.customers.  Only 1/3 of unhappy customers will ever complain.Only 1/3 of unhappy customers will ever complain.  A very unhappy customer will tell 11 others about their problem with you.A very unhappy customer will tell 11 others about their problem with you.  The net profitability of a lifetime customer is worth several times the dollarThe net profitability of a lifetime customer is worth several times the dollar cost of resolving their complaint.cost of resolving their complaint. Why Customers LeaveWhy Customers Leave  9% leave because they are enticed away by a competitor.9% leave because they are enticed away by a competitor.  9% move away.9% move away.  14% leave because their complaints are not answered.14% leave because their complaints are not answered.  68% never return because they are treated with INDIFFERENCE:68% never return because they are treated with INDIFFERENCE:  They have to wait too long to be servicedThey have to wait too long to be serviced  They have to return repeatedly with the same problemThey have to return repeatedly with the same problem
  51. 51. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com How to Prevent Customer IndifferenceHow to Prevent Customer Indifference  Make a great “first impression” (curb appeal, employeeMake a great “first impression” (curb appeal, employee appeal, initial greeting when they walk in, whenappeal, initial greeting when they walk in, when answering the phone or on the answering machine).answering the phone or on the answering machine).  Acknowledge customers immediately and service themAcknowledge customers immediately and service them promptly.promptly.  AlwaysAlways fulfill special requests from customers when theyfulfill special requests from customers when they ask.ask.  Go “above and beyond” what the customer wouldGo “above and beyond” what the customer would normally expect. Underpromise and overdeliver.normally expect. Underpromise and overdeliver.  Listen and respond to customer ideas.Listen and respond to customer ideas.  Offer a “100%Offer a “100% SatisfactionSatisfaction Guarantee”.Guarantee”.
  52. 52. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com The Three Best Practices for aThe Three Best Practices for a Problem Recovery ProgramProblem Recovery Program  QuickQuick - Take care of unsatisfied customers BEFORE- Take care of unsatisfied customers BEFORE the end of the transaction. Make sure that you askthe end of the transaction. Make sure that you ask exiting customers if they were satisfied with the service.exiting customers if they were satisfied with the service. Look for negative attitudes, facial expressions, bodyLook for negative attitudes, facial expressions, body language as well as what they SAY. Where you senselanguage as well as what they SAY. Where you sense dissatisfaction, apologize and try to resolve the problemdissatisfaction, apologize and try to resolve the problem on the spot. The more quickly you resolve the issue, theon the spot. The more quickly you resolve the issue, the less someone will expect the value of the fix to be. Theless someone will expect the value of the fix to be. The longer that someone has to wait or the more effort theylonger that someone has to wait or the more effort they have to invest to have their problem resolved, thehave to invest to have their problem resolved, the greater the value of fix they will expect.greater the value of fix they will expect.
  53. 53. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com The Three Best Practices for aThe Three Best Practices for a Problem Recovery ProgramProblem Recovery Program  PersonalPersonal - Telephone or send a post card or e-mail to- Telephone or send a post card or e-mail to your customers within a week of the transaction to gageyour customers within a week of the transaction to gage their satisfaction. Where you discover a problem, calltheir satisfaction. Where you discover a problem, call them or send them a personalized, hand written, qualitythem or send them a personalized, hand written, quality card (not a form letter) with an apology along with acard (not a form letter) with an apology along with a small gift.small gift.  CustomizedCustomized - customize the resolution to the problem- customize the resolution to the problem based upon the customer and the issue. The more youbased upon the customer and the issue. The more you know about your customer/client and what they like andknow about your customer/client and what they like and need, the more customized (and effective) yourneed, the more customized (and effective) your resolution can be.resolution can be.
  54. 54. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com EmployeeEmployee EngagementEngagement
  55. 55. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com # 6 – Employee Engagement# 6 – Employee Engagement Nobody ever washes a rented car. Involvement and theNobody ever washes a rented car. Involvement and the feeling of ownership are the quickest and leastfeeling of ownership are the quickest and least expensive methods to increase profits through improvedexpensive methods to increase profits through improved productivity and cost savings. Employees admit toproductivity and cost savings. Employees admit to working at only about 70% of capacity. When money isworking at only about 70% of capacity. When money is the only reason you give people to come to work, don’tthe only reason you give people to come to work, don’t be surprised when they are always asking for a raise orbe surprised when they are always asking for a raise or work half as hard to achieve “balance”? Engagingwork half as hard to achieve “balance”? Engaging hearts and minds costs virtually nothing because ithearts and minds costs virtually nothing because it involves mostly just increased communication andinvolves mostly just increased communication and employee time.employee time.
  56. 56. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com  Teach them about your business model, aboutTeach them about your business model, about the key success factors of your business andthe key success factors of your business and about profit/loss as it applies to your business.about profit/loss as it applies to your business.  Ask them for ways to help save money.Ask them for ways to help save money.  Create measurements (metrics) for everyCreate measurements (metrics) for every important process and performance indicatorimportant process and performance indicator and communicate these to all employees.and communicate these to all employees. People pay attention to what they get measuredPeople pay attention to what they get measured on. Simplyon. Simply measuringmeasuring performance will improveperformance will improve it.it.  Involve employees in your customer andInvolve employees in your customer and competitor profiling, “mystery shopping”. Engagecompetitor profiling, “mystery shopping”. Engage non-sales employees one-on-one withnon-sales employees one-on-one with customers.customers.  Ask employees for their opinions and ideas.Ask employees for their opinions and ideas.
  57. 57. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com GetGet OutsideOutside HelpHelp
  58. 58. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com # 7 - Get Outside Help# 7 - Get Outside Help  One networking guru states that in order to get the most out ofOne networking guru states that in order to get the most out of networking you should join three organizations:networking you should join three organizations:  Your local Chamber of Commerce. GRCC (Greater Richmond ChamberYour local Chamber of Commerce. GRCC (Greater Richmond Chamber of Commerce is large and active and has a good business library).of Commerce is large and active and has a good business library).  A local major business/social organization such as Rotary or KiwanisA local major business/social organization such as Rotary or Kiwanis  A networking group such as BNI or PRO (Professionals Referral Org.)A networking group such as BNI or PRO (Professionals Referral Org.)  Another valuable resource: a local peer advisory group such as theAnother valuable resource: a local peer advisory group such as the Virginia Council of CEO’s, if you are eligible.Virginia Council of CEO’s, if you are eligible.  Subscribe to free Internet newsletters on marketing, technology,Subscribe to free Internet newsletters on marketing, technology, purchasing, strategy, etc.purchasing, strategy, etc.  Join your industry association and participate actively.Join your industry association and participate actively.  Consider engaging a business coach or consultant. They can be aConsider engaging a business coach or consultant. They can be a true investment. A business coach functions like a physical trainertrue investment. A business coach functions like a physical trainer taking you out of your comfort zone to improve your performance.taking you out of your comfort zone to improve your performance.
  59. 59. Michael McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com www.SmallBusinessCoachVA.com Every business can be improved cost-effectively. Like tuning up your car, a few simple changes can dramatically improve your bottom line performance. If you would like more details about the information contained in this presentation or a free “tune-up” consultation call us: Mike McDermott 804-248-1837 Mike@SmallBusinessCoachVA.com

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