Most of us have heard of ‘Supply and Demand’. A few of us have reached the point of our own businesses being simultaneously ‘overworked and underpaid’. So isn’t it time to apply the theory and improve things for ourselves and our customers?
Let’s do a quick refresher on supply and demand. You can check the full description Wikipedia, but here is a translation:
If you have more work and more opportunities in your pipeline than you can easily handle, then the demand exceeds the supply. You are overdue to change something. You have 3 choices:
- Flail and fail: Continue to price your services at a point where you cannot cope with the inbound work. You will be exhausted and your customers will be disappointed because running long distance on empty does not work!
- Increase supply: Not so easy when ‘your’ services are the primary product. Scaling up may be some people’s dream, but others (like me!!!) were happier to see the back of their employees than their bosses when they left corporate life.
- Increase prices: Now there’s an idea! This should lower the demand to a point where you can meet it.
Assuming that your choice is to raise prices, be aware that some of the ‘opportunities’ in your pipeline will choose not to pay the new prices. And that is OK. That is, in fact, very OK It is even the whole purpose of this exercise – some will go but enough of them will choose to pay to keep you busy. Busy enough, but not too busy.
Benefits for you:
– More time to concentrate on fewer clients.
– Better compensation for the time you are working.
– Choice of whether to hire more and share the benefits of your business
Benefits for your clients:
– Better service from your business
– Better quality in the services purchased
– More reliable service since the business will be more ‘available’
You know how this works on the famous little graph, right?
1. You were, at some point, producing Quantity Q1, at price P1, which satisfied the market demand, D1.
2. Demand went up to D2. Sweet! People liked your product!
3. So either you get to increase the Quantity or increase the Price, or… sell more than you can supply and flail in the gap.
If you are lucky enough to find yourself overworked and underpaid, I hope that you have the courage to cross that gap and make a change. I am. And when it comes to that famous little graph, I am excited to finally apply with my actions something that I learned with my mind decades ago and 6,000 miles away in high school. Won’t that be something?
At a Referral Institute conference – all about referral marketing – that I attended last week, an attendee took the microphone from the floor. He said that his generation (OK – so he was younger than me!) must be good at networking because they have such large networks; being the generation of Facebook and Twitter and LinkedIn and all that. It may be that he understood the situation better than I heard, but what I heard was confusion between:
• Having networks: Holiday-card lists, Facebook friends, LinkedIn connections etc.
• Networking: spending time building relationships.
• Network marketing: You marketing products to that network. Think Amway, Tupperware et al. If you do it wrong, watch out for that Facebook friend count – it may just drop.
• Referral Marketing: Rather than marketing to your networks, you and your business network make referrals for each other.
I first ‘met’ referral marketing when I joined BNI in 2008. I gave and received referrals and found out that it just worked. As a web developer, my clients ask me about services that overlap, or are just outside my expertise. So I consistently have opportunities to refer SEO people, graphic designers, photographers, videographers, PG guys, Mac guys…
That simple? It is and it is not. Just like sales closing is a skill that people train in, so is referral marketing a skill that can be learned. I went on to receive training from The Referral Institute, which I would recommend to any business owner or sales professional. Mike Macedonio, one of the people who trained was a co author of a great book that you can purchase here.
Which is where the beginning of this post and the end of my post from last week about Pipelines and the sales process come together. I figured out the information in ‘my’ spreadsheet on my own, but it was all highly influenced by the training. Which is why I really encourage you to read the book or attend the training and figure it out so that it will work for you.
Most of our businesses have just embarked on a new set of goals. But do we know if we are on track to achieve them? I went to a BNI conference a year ago where I truly got the message that businesses need to know their ‘closing’ ratio – the proportion of inbound contacts that actually turn into sales. [ Edited to add. It was the Referrals for Life Day, in Santa Rosa, CA. The speaker who got me thinking about all this was Sarah Owen, of the Referral Institute, UK]
My inner-statistician and outer-control-freak bellied up to the computer with barely concealed glee. ‘We’ opened a spreadsheet and data-dived for what we could find of my sales pipeline, drawing on those trusted resources – the in-box, to-do list, my calendar, saved voicemails and annotated business cards.
Over a year of use the spreadsheet has shaken down into a daily ‘go to’:
– Close ratio: The proportion (numbers or value) of deals that actually close
– # Contacts needed each month to reach sales goals
– Where contacts come from
– How busy the next couple months are likely to be
– Overly healthy pipeline? Knuckle down and bring in more subs!
– Light on incoming work? Need to get out to do a bit more networking.
– There are also classic pipeline management columns.
The image above shows one month of data, with a close ratio of 52% (9,600/18,400) , but I can run analysis across a whole year.
So what were the benefits?
1. Close Ratio:
– About 30% of my contacts are ‘leads’ who do not qualify as true prospects. Either my services are not right for them, or they do not have the time or budget. Most of these identify themselves on the first call. If I take 3 – 6 calls like this each month, that is fine by me – I can often refer them on to another business.
– Over a year, my close ratio is about 50%. So I ‘lose’ about 20% of my contacts during the sales process. This is NOT fine by me – I think more of these sales would close if I present or managed the process better.
– If my close ratio is 50% and my sales target is $10K of business each month (“Just sayin’…” that is NOT the actual number!) then I would need an average pipeline of $20K each month.
This was my bonus discovery. Having a year of data for this really tells me which of my marketing is worth while. These were the sources that identified themselves:
– BNI: Referrals from my current BNI membership and activity
– Clients: Referrals from my current clients
– Friends: People with no business overlap who refer business to me.
– Local Networking: Other than BNI (Chamber of Commerce, local Web forums etc)
– SEO: People who found me through search
– Social Media: Prospects who contacted me because of my Social Media presence.
3. Pipeline Management
Those other columns that I do not discuss her contain the steps it takes as a contact moves from lead or referral to prospect to proposal to client.
In a blog post last week, Warrior Preneur Ann Evanston asked 3 questions. I replied to her post, but the questions still deserved more focused answers.
[Edited 1/2/12 to add: Ann Evanston’s initial post asked the following 3 questions:
“1-Are you developing a social media marketing strategy that is direct contact and follow-up, or advertising?
2-Are you developing your time accordingly based on that strategy?
3-If you have chosen direct contact and follow-up, as your social media marketing strategy, have you developed your strategy to include “follow up” (lead generation/relationship building) from social media?“]
So just in time for he New Year, here is the direction that I am planning to take.
Are you developing a social media marketing strategy that is direct contact and follow-up, or advertising?
Planning direct contact through
1. Facebook – it is where the people are. Post on my own page and also post consistently on pages that are likely to refer business to me.
2. Blogging. Use Facebook to publicize the new blog posts.
3. Twitter. Need to learn more.
Open to Facebook advertizing – I see how incredibly focused it is – I know it can play Ads to people asking about building websites or following competitor pages.
Are you developing your time accordingly based on that strategy?
I’d love to think it could be done in less, but this is my expectation
2 hr/week. Develop and write 1 blog post
1 hr/wk. Plan and schedule Facebook Posts
2.5 hr/wk (30 min/day) Respond to comments on my SoMe activity and check SoMe activity by referral partners to see if I can add value.
2 hr/week. Visit the blogs of referral partners – or fellow bloggers in Blogger Monday or any other Blogger Challenge I take on – to comment on those blogs.
If you have chosen direct contact and follow-up, as your social media marketing strategy, have you developed your strategy to include “follow up” (lead generation/relationship building) from social media?
My SoMe experience so far has been contacts from people who follow my Facebook page. Once they have contacted me, they go into my whole ‘pipeline management’ process to ensure they get phone calls and further information.
My main products are custom websites. So I provide business services to business owners. Most clients come to me by referral, and most referrers are people whose businesses complement mine – graphic designers, Mac consultants, PC consultants, printers, SEO experts, Social Media consultants… So when I am online representing my business, I take a structured approach to building relationships with businesses who are likely to refer to me. I put time aside to visit their pages and support them online.
Are you willing to share your answers to these 3 questions?
When you own or are deeply involved in a business, putting your company website ‘out there’ can feel similar to putting yourself out there – finishing up a site launch has some emotional vulnerability similar to selecting your own photo for Match.com. The decisions are important and you may find yourself echoing a couple of thoughts:
“The Better is the enemy of the Good” Voltaire, French writer and philosopher.
“Good is the enemy of Great” Jim Collins, American author and business teacher
Two great quotes, two centuries and two continents apart, that appear to say the same thing. They only become different when a call to action is added:
“Don’t let good be the enemy of great!”
sounds so much more inspiring than
“Don’t let great be the enemy of good!”
We all want to be great, right? Overall – yes. But is ‘great’ always right in every situation? And can great ever be achieved on the first iteration?
A great wedding is not so great if it causes the marriage to start in debt.
A great education is not so great if is in the wrong field for the individual or if the time and cost are greater than the benefits.
A great blog post is not so great if 10 good ones could have been published in the same time.
Let us not forget that art and design – including websites – are subjective. One person’s ‘Great!’ is another’s ‘Are you kidding me?!?”
A great website and/or a great blog site are obviously desirable, but the pursuit of perfection risks becoming the pursuit of a bright shiny object. Better to respect your own budget, build and launch already, then improve the site and your whole web presence as you find out what your clients and followers really respond to.
Your web presence will thrive if it has life through blogging and other interactions. As you listen to the responses, you will learn where to edit, prune and improve your web strategy. But until you ‘put your business out there’, and start to get feedback, part of the plan is missing.
Get it done within your own budget (good!), get it launched in a timely manner(good!) and then review the opportunity for enhancements on an ongoing basis. This gives you the opportunity for Good to Grow into GREAT
So when it comes to your web strategy, especially your initial launch, our advice is firmly in the camp of:
“Don’t let great be the enemy of good!”
As a website developer I find myself answering similar questions on my first meeting with nearly every client: What are the components? How will we tackle this project? What else is involved? What do these words mean?
Site design, architecture, content, platform, hosting, SEO strategy, social media strategy and development are all critical. If they could talk, each of them would be as determined and as demanding as a vociferous 3 year-old “But I am the most important factor! Nothing else would work or be worthwhile without me! Spend your time and money on me, Me, ME!” Just like dealing with 3 year-olds, we need to consider and pay attention to each of them, but we also need to take our own decisions based on the overall priorities and goals of the project.
The look and the feel: color palette, fonts and layout. the width of the site, colors of the background, the height of the header, the width of the sidebar, the borders of the pictures, the layout of the menu,. Hopefully you will LOVE the design of your site, and feel that it is a strong visual representation of your brand and message.
If you were building a house, the design would be the cohesion of the external appearance – the style of the building and the choice of finishes, interior and exterior, the flooring, cabinetry, drapes etc
Site Architecture – shown through the Site Map
The list of pages that you plan to put into the site, and how they fit under the menu tabs.
For a building, the list of rooms and the function of each room.
The text and pictures that you intend to put into each page. Hopefully, your content will be planned to blend in well with your design.
Like furniture and personal possessions – the content of a room can change as often as you want.
Choosing a platform is like choosing one building method over another – there is no universal right or wrong, but there is a right choice for your needs: wood frame, steel frame, high rise, bungalow, office building, below ground, above ground… As a website owner, ask enough questions of your web developer to feel confident of the platform they are advising you to build on.
Where you are going to place your site after it is built – the code alone is just a pile of code. It needs a server that will be up 24/7.
The plot of land where your building sits.
Search Engine Optimization. Work done to and about your site to push it towards the holy grail of a Page One Google Ranking.
Onsite SEO – work done on your site to make sure that the words people search on are well represented on your site.
Offsite SEO – Links from other sites to your site.
Here are some of the most important points about SEO
1. Google uses about 200 factors in ranking a page.
2. There is no silver bullet – there is no ‘one thing’ anyone can do to improve your sites SEO but many steps, all working together.
3. SEO includes everything you can control on your site, some things you can impact off your site and a lot that you cannot control off your site.
For a commercial building: the signage in the building explaining every room, the signage outside explaining the purpose and the links in directories and maps to help you get there. Print, Radio and TV Ads that you pay for to bring people in.
Social Media Strategy
How you plan to promote your site through Blogging, Facebook, Twitter et al.
For a company in a building – getting your company promoted through business networks, chamber of commerce, conferences, print articles, radio and TV coverage.
Once you and your web developer have decided on the Design, Site Map, Platform, Content, Hosting and SEO strategy, they can go off into their own tech world and build your site, already.
In building construction, this is the time that the contractors move in with their team.
Waking up to find your site covered in malware feels mighty similar to finding nits on your kid. Major ‘Euuuuch!’. Both situations bring an immediate need to ”Drop everything, already and DEAL with it.” Even procrastinators need to move fast on nits or malware.
Both events can bring out the desire to wallow around in various stages of grief, but both blights call for immediate action in the middle of emotion
|Denial||No, it’s not really!… Maybe there is just one?… Maybe it’s a boy?… Maybe it’s a gay boy nit, all on his own!||That sure is an ugly graphic telling people to stay away from my site…Maybe if I hit refresh it will go away? Heck, it’s not showing up in IE! What does Firefox know anyway?|
|Anger||It’s that stinkin’ **** kid she caught it from! Why do they have to be in our school anyway?||Who DID this to me?!? What did I do to them? I bet I can track them down if I try!|
|Guilt||I should have braided their hair every day. I should have kept it cut shorter. I should have sprayed them with tea tree oil/||I should have read those emails. I should have applied those upgrades. I never should have sent that stuff in email…|
|Bargaining||If I just give the kid a really good bath, maybe that will get rid of them? If I throw out all that clutter maybe that will do it? If I clean under the bed every week they’ll never come back||I know, I’ll call the hosting company. It’s on THEIR servers! I think they should clean it up for me!|
|Depression||Oh this is going to cost so much money and be so much work and it is such a loss of face…||Oh this is going to cost so much money and be so much work and it is such a loss of face…|
|Resignation||OMG! 24 hours to wash & fold every item of clothing in the house, pick up and quarantine every soft toy and vacuum every floor multiple times. 24 miserable, unavoidable, lonely, consecutive hours. OMG!||Aargh! Send the site off to the professional site-scrubbers or rebuild it from scratch on a new server. Rebuild.it.from.scratch… Figure.out.how.to.remove.malware… Figure.out.point.of.entry… Block.it.forever…|
|Expense||I love the Nit Pixies of San Rafael, they call themselves a Mom’s best friend and they may be ‘cheap at twice the price’ but they are still seriously COSTLY!||You mean, I need to pay someone to clean this up or replace it? And I need to do it right now?|
Seriously though, I have had 2 new clients come to me with malware in the last couple of months. Just like nits, malware can be quarantined, removed and blocked. And just like your house will be truly deep cleaned and de-cluttered after a nit attack, so will your site and your files be cleansed with all the old trash moved out. Gleaming, perfect and locked down against all intruders. Unfortunately, the similarity ends there. Nits are WAY more likely to come back, and nits are way more likely to come from your friends than from some random hacker.
“If the websites that you build were really cars, what type of cars would they be?”
This question came to me from a member of my local co-opetition. The lady beamed at me. “My company builds Cadillacs” she announced proudly. Like that was meant to be the end of it. I mean, how could I compete with that? Well, let’s not get into what Europeans like me think when they first see a real Caddy. Let alone a pink Mary Kay Caddy!
I was flailing for an answer… “Hybrids?” Because we are efficient and cost effective? VW Beetles or Mini Coopers because we are kind of friendly, funky, fast and a tiny bit alternative? Morgans because we have style, Baby, style? Maybe I’d better dig deep and come up with an American car.
My final answer is that the question itself is wrong: Cars – at least those on the road – are an incredibly narrow subsection of the overall world of ‘Vehicles’. Vehicles range from broken down $5 skateboards up through kid bikes, performance bikes, motorbikes, family cars, sports cars, SUV’s, luxury cars, commercial trucks, HGV’s, earth movers, tunnel diggers, light aircraft, commercial jets, space rockets.
Cars tend to have a new / resale value somewhere between $2,000 for a used beater to $75,000 for new luxury. I know that there are a few up in the $200,000’s but they are a real rarity. Any running car has a certain real or donation value, if only for its parts.
Websites on the other hand? Not only is the sky the limit at the upper end with the big retail stores investing tens to hundreds of millions annually, but there is a lower end to the web world that not even wheel-less shells of old cars sitting on bricks in the front yard can lower themselves down to. You’ve seen some of these sites… yellow, purple and striped survivors from 1997 who are somehow out there still at the lower end and LandsEnd.com at the high end.
So back to the original question – what kind of vehicle do we build? Let’s just say we are more like the manufacturer than the vehicle. Volvo builds cars, trucks, buses, boat engines and aeronautical components. And that is what we will do for our customers: give them the vehicle they need for the journeys they plan to take.