Customer Concentration Risk: One Of The Biggest Risks To Your Business!

You may be focusing on the wrong indicators in your company. Your revenue may be growing, your profit margins good, and your net profit plentiful, yet you may be close to impending problems. Customer concentration risk is one of the biggest risks to your business so you must make it an important part of your key performance indicators. You can measure concentration both in terms of market and customer, and both areas need to be monitored for the reasons in this article.

Why Should You Care About Concentration?

Issues relating to concentration come in many forms. While I want to address both market and customer concentration risks separately, there are some broad implications you need to consider.

  • Market Cycles – Every market has a cycle. If you are overly exposed to a cycle this will cause wild swings in your revenue stream.
  • Pricing – In many industries, the larger the order size the more control the customers have over pricing.
  • Customer Acquisition – The more happy customers you have, the easier it is to acquire new customers.
  • Capital – It is easier to attract and lower your cost of capital when you have less concentration risk.
  • Margins – There is a better chance of earning larger profit margins when you lower your concentration risk.
  • Operations – Predictable revenue allows you to generate cash and makes it easier to plan and invest properly in your support structure. Thus you can serve your customers in the right way.
  • Valuation – Buyers pay more for businesses that have lower concentration risk.

Customer Concentration Risk: A Sign Of Poor Health!

Customer concentration has caused many companies to stall and many to go out of business. In small businesses this can be a challenging issue because first customers make up sizable portions of total revenue, and many times there is no net profit in the business. It is important to work your way out of this situation as quickly as possible. A critical goal for every business is to have no customer make up more than 10% of revenue or profit. Eventually you want that number to drop to 2%. I cannot tell you how many of my clients with total revenue over $10 million violate the 10% rule when we first meet.

Violating the 10% rule is critical for several reasons, but really there is one issue. This one issue becomes fully apparent when a large customer goes away. Your business model becomes meaningless. In many cases, the operating structure you’ve built up can no longer be supported by the current client base. Firing people leaves the business lacking enough structure to support growth. The company struggles to grow, and net profit margin still appears unacceptable. However, what is now obvious is that your business was struggling to grow to begin with, and the business model was flawed.

If your business does not have a regular flow of new customers coming through the front door while it keeps customers from going out the back door, you have a business model problem.

Market Share Concentration Is An Important Leading Indicator!

Securing a threshold market share is important in order for your company to be recognized as a leader or key participant in any given market. However, having excessive market share can create risk to the company in the event that something happens to adversely affect that market. Being diversified and not overly dominant in a single market is important (with a few notable exceptions: e.g. Google dominates in some markets but is focused on being well-diversified).

As management, it is important for you to decide what is a realistic expectation in terms of how much market share you can reasonably garner for your company. Each incremental share can become expensive to acquire. Many times the only way to gain a larger share is acquisition after you have absorbed a certain amount. When that is done, organic growth becomes difficult without new products and services to bring to that market. Once you have fully served that market, it will become important to find new markets, or continued growth will become elusive or too expensive.

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How Do You Find Your Purpose?

If yours is like many organizations, you and your competitors are trying to serve a similar purpose to your respective clients. That is true if you look only at the surface. It is how you see the challenge of purpose that counts. Most times I find leaders trapped in a box. That box revolves around existing products and services and does not consider the problems and challenges of people they want to serve.

By finding your organization’s unique purpose, you can move with the changing needs of your customers and evolve your products and services. Too often business leaders are trying to force the external world to buy what they want to sell. What they fail to consider is whether what they want to sell is a real need, and whether there is already too much supply solving that need. If the need is already well served or over served, then pumping more supply into the market without identifying and addressing a new critical need for their buyers will surely result in a painful journey for them and their colleagues.

5 Lenses of Purpose

When working with leaders to assist in their strategic planning session, we work on defining purpose. A common challenge is to help the leadership team find and articulate their purpose. You may wonder how purpose is discovered. I believe you can find your purpose by looking through 5 lenses:

  1. Disrupt an Industry – Airbnb changed the lodging industry forever. They made a very cost-effective and easy way for anyone to list their space and to book unique accommodations anywhere in the world. By doing so they made traveling more affordable and accessible for many people.
  2. Uncommon Service – Provide service at a level that goes beyond your competition in a way that is essential to your target customer. The traditional companies I think of are Ritz-Carlton and Nordstrom. In a less traditional sense, think of Amazon, where you know you can go to their website and find almost anything, 24/7, at the lowest possible prices and have it delivered to your doorstep, in many cases the same day as you ordered it. And all of it done with a few keystrokes. Most vendors on their side will allow you send your purchase back for free if you are not satisfied. The challenge with service is that it is like an escalator that is always going down. Once you have delivered something considered extraordinary the first time, it becomes standard the next time. So you have to keep trying to improve your service levels every year to stay on top.
  3. Change the World – We have so many large societal and natural problems that you can address as a for-profit or not-for-profit. I am proud Board Member and Red Jacket Society Member at City Year, where we believe education has the power to help every child reach his or her potential. We recognize that children in high-poverty communities have external obstacles that can interfere with their ability to both get to school and be ready and able to learn. City Year helps with these challenges. On the for-profit side you have entrepreneurial mavericks like Elon Musk, who is trying to prove through Tesla Motors that electric cars could be better than gasoline-powered cars. The impact of such an innovation will have profound impact on issues like global warming and use of natural resources like fossil fuels.
  4. Excellence – There are always ways to change the features of products — increasing their speed, beauty, functionality, etc. No company is going to get it right with every product, but Apple, Samsung, Ikea, Dyson and 3M are companies that have produced products that have really stood out from their competitors in specific categories.
  5. Information and Communication – Technology has caused this category of purpose to explode over the last 10 years. Dominant in this conversation is Google, but you also have to consider Facebook, WeChat, WhatsApp, and the myriad of others that allow people to share information, find anything or anyone, share knowledge, discover and communicate.

I recommend that you look through these five lenses and determine which of the five you are really passionate about. Then ask “what purpose can we serve within that lens” within an industry or across industries that is not being served to the level that you believe it could or should be served. The key is to think big! Consider your purpose to be a pursuit rather than a destination. It will be a mantra that you and your organization will need to constantly improve and perfect.

Head over to our business coaching page or call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Are You a Growth-Oriented or Execution-Oriented CEO?

One question you may want to ask yourself is, “What kind of CEO am I?” My observation over the years is that most CEOs fall into two categories. The first category consists of those that are very growth-oriented, focusing mainly on sales and marketing activities. They find money everywhere. Remember my “Revenue is vanity, profit sanity, and cash is king” motto here. You may be good at growing the top line, but if you are not careful you may find weak net profit margins compared to some of the other top companies in your space. Another potential pitfall is inadequate margin on your revenue, which will cause you to be prone to finding yourself with little cash and to giving up too much equity to others to feed your revenue habit.

The Execution-Oriented CEO

The second type of CEO is very execution-oriented. If this is you, you and your team are masters of your craft. When I go into your businesses I find you are excellent at what you do. You pay close attention to every detail, and can show me tons of metrics as to why you are great. The reason you’ve hired me is that you do not have the revenue to show for it. You spend the majority of your time perfecting processes and creating perfect products and services. It is common for you to get and keep a customer forever. However, your perennial problem is getting more customers. You have little sales and marketing orientation, and if you’re honest you will tell me that you hate selling and think that marketing is a waste of time and money.

Strategy vs. Execution

You can see the real challenge. There is a never-ending conflict between strategy and execution. It is yin versus yang. Strategy is about growth and execution turning revenue into profit efficiently and removing waste. They often bang up against each other, and if you do not hear a lot of conflicting opinions you know you have a problem. Growth without discipline and making choices creates a lot of waste and burns cash. You rarely have one leader that is good at paying attention to both.

I raise the original question, “Are you growth- or execution-oriented?” If you are one or the other, it will be important to go back to your people section and ask this question, “Do I have enough of the right types of the right people on my team to scale the company?” Do you have a tendency to squeeze out the opposite type of person because of your preference?

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Why Purpose Matters?

The day you start your business, you should place “Purpose” at its forefront. This is a critical issue that fails to get enough attention. Many business owners that are asked, “What is the purpose of your business?” will answer “to make money” (or something similar). You might be thinking, “Isn’t that the purpose of being in a for-profit business?” I can confidently say “no.” By serving a purpose well and doing it in a profitable manner, you will “make money.” The greater, the more needed and more desired the purpose you choose to serve, the more money you can make.

If I met you at a party and asked you to tell me about your business, where would you start? Most people tell me about their role, title, function, or product or service. For example, one person might tell me they are the Managing Partner in an accounting firm, or a tax accountant, or an auditor. A CEO might tell me he owns a company that manufactures retail skincare products. However, if that is what they view as their purpose they are in trouble. If you look at the marketplace, there is an oversupply of just about every product and service you can name. Think about it. When was the last time you thought, “There isn’t a tax accountant or auditor to be found anywhere?” When was the last time you heard someone say “I wish I had more choices of skincare products because there are just not enough of them?” It just isn’t going to happen. Because there is oversupply, services and products are available everywhere you go, as well as online and over the phone, and can be delivered in 24 hours.

Now imagine those same people had a different view of what their purpose is. For example, I have an accounting firm client whose purpose is to increase the wealth of the firm’s clients. They have built a set of practice areas in tax, audit, technology, wealth management, etc. For each client they create a team that uses the strengths of each team member to devise the best strategy each year to help maximize their clients’ wealth. While you might point out that every sizable firm has the same practice areas, this firm’s view of what they are doing and why they exist is the difference-maker. My client’s view causes them forge a nontraditional client relationship structure. They build specialized tool kits, hire specialized resources, and act in a way towards their client that has specific intention. I can assure you that not every accounting firm is creating the kind of relationship with their clients that would allow for such positive outcomes to occur and thus they are failing to help their clients reach their fullest potential as a result.

Only after you have established your purpose are you in the position to answer the following questions:

  1. What problem(s) does our business solve for our client?
  2. What should our business do to achieve that purpose
  3. What types of clients do we want to have, and what will our relationships look like?

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Are You Targeting the Right Market Segment?

The predictability and consistency of your revenue growth rate are important measures of the health of your business. A key to driving your growth is targeting the right market segment. Positioning your company in a growth industry, market segment, or sector is crucial to the continued success of your company. In order to have future growth, regardless of how you are doing this quarter or year, there must be a market out in front of you that your products/services are focused on and that is growing.

Why Should You Care Which Market Segment You Choose?

When you are in a growth market running the business is much easier in many ways. Here are a few reasons for you to want to be in a growth market:

  • Employees – It is easier to attract, keep and grow the right employees.
  • Customer Acquisition – It is easier to be a winner in a growing market than in one that is declining or stagnant. All boats rise with the tide.
  • Capital – It is easier to attract and lower your cost of capital.
  • Margins – There is a better chance of earning larger profit margins.
  • Operations – Predictable revenue allows you generate cash and to plan and invest properly in the support structure of your business to properly serve your.
  • Shareholders – Higher returns on investment for shareholders.
  • Valuation – Buyers pay more for businesses that are in growth markets.

How Do You Find Your Market Segment?

By focusing time on a specific customer segment you can become the dominant player in that segment. A segment is a group of customers with common characteristics that influence how they make decisions. In every industry you can group potential customers into many possible segments.

Your leadership team must examine the marketplace and cluster people and organizations into groups, separating them based on common needs, behaviors, or other attributes so that they can be better served. Once you have isolated different groupings, you can look for ways they may be underserved today in terms of products and/or services. You do this by asking questions such as:

  • Do they deserve a distinct offering? How well do the current offerings meet their distinct desires and needs?
  • Are they reached through different channels? How well do the current channels work for this grouping?
  • Does this unique set of people or organizations require different types of relationships?
  • How does profitability differ, and could it differ for each grouping? What would need to change to change the game?
  • How much would each grouping be willing to pay for different aspects of the offer?

How Do You Know You’re In A Growth Market?

Failure to identify segments destroys time allocation in your business. I find that this is more obvious when your company is small and time constraints are more serious. In most cases, we consider whether or not a prospect can afford to do business with us, rather than the likelihood of their doing business with us.

However, you know you are in growth market when the following signals are apparent:

  • You can consistently grow at least 20% per year. More would be preferable.
  • Acquiring new customers seems to be easy, and your current quarter compared to the same quarter in the previous year is either the same or growing. Any quarter that shows a dip is a warning sign that an adjustment may be needed.
  • Profit margins appear to be holding steady with volume increase. There are obvious exceptions to this rule as you hit different steps in expansion.
  • You are finding more and more competition in your space. This is why you have to move swiftly and grow quickly when you find a hot market.
  • You can find news media, analysts, and industry experts talking about the trends you are taking advantage of. Follow them for signs in trend shifts.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

7 Levels of Recurring Revenue

The most successful companies put tremendous emphasis on having recurring revenue streams. Are you looking at recurring revenue in the right way? Which type of recurring revenue drives increases your business valuation the most ? The higher the level of recurring revenue, the more predictable your revenue stream becomes. The more predictable your revenue stream, the better you scale your operations. The higher the level and greater the volume, the higher you valuation goes. Every company should be constantly asking “How can we strengthen our recurring revenue position?”

Not all recurring revenue is equal. Think of it as pyramid-shaped. The higher up the pyramid you move, the more valuable your company becomes. Think of the pyramid as a way to first increase consistency and predictability, then business scalability, and ultimately market-share dominance, where customers find switching providers more costly or problematic.

Level 1 – Basic Repeat Customers

At this level you have customers that like doing business with you and come back to you repeatedly even though there is no contractual obligation to do so. A good example is a supermarket or gas station. The problem with level one is the barriers and switching costs are usually limited. So, while having repeat customers is far better than not having them, your revenue stream remains risky because you can’t count on your customers sticking with you. Many firms in this mode have built loyalty programs or personally branded products in an attempt to create stronger brand preference and make their offers “stickier”.

Level 2 – Network Effect

What this means is that the more someone uses the company’s product or service, the more each individual customer gets out of the experience. This “network effect” creates a barrier to that customer leaving, namely, the perception that no other network is as good. Automobile Association of America (AAA) Membership or AARP are good examples. You may consider joining other networks, but for anyone who is already a member, it makes no sense to switch because their membership bases are so large that their value streams have pay their members back in multiples. With that said, the cost of switching is still low, and while you can differentiate who is in your network, everyone has access to multiple networks that can provide similar benefits.

Level 3 – Capital Investment with Consumables

In this case a customer has made an investment in a product, and now they need to keep buying consumables to support their investment. The longest standing product and stickiest product in this category is the copier. Later followers to take advantage of this strategy have been desktop printers and coffee machines. However, these later examples failed to really be as sticky because the price point to buy new ones at the consumer level is not high enough to prevent someone from jumping ship. And when it comes to coffeemakers, if they like your coffee, you still get to provide the consumables, just in a different machine. Consumables are usually a high-profit recurring revenue item.

Level 4 – Capital Investments – Subscriptions

Customers make a sizable investment in capital equipment and then pay subscriptions to use the equipment. In this case, they usually do not buy the equipment. They lease the equipment due to the significant expense for the equipment, software, maintenance, and upgrades required. Great examples are WestLawNext or Bloomberg which are staples in the legal and investment communities, respectively.

Level 5 – Sequenced Product Purchases or Service Subscriptions

The idea behind this approach is to create recurring income by encouraging your customers to consistently upgrade to new product and service offerings. Consider the example of Google Drive. It starts out as free. As you begin to use it more and more to store your data, you must pay to upgrade for more storage. Next thing you know, you are using Google Photos, and they have captured another revenue opportunity. Even if the company can convert just a fraction of its customers over to the premium service, it can create an extremely valuable recurring revenue stream. This revenue stream tends to be stickier because your customer prefers (knows how to use) your product, and the cost of switching in terms of time, effort, and costs outweighs the simplicity of staying with the current vendor.

Level 6 – Good-Until-Canceled Revenue

The best examples are bank accounts and credit cards. What makes this model powerful is when it’s based on an “opt-out” model where the customer has to terminate your relationship with them. For instance, I hate my bank. They send me a new credit card almost every 4 months because of their so-called “fraud protection” department’s suspicions. So every 4 months I have to change every recurring payment to come from the new account number. It is a nightmare! Plus, they send policy changes every 6 months, usually raising fees and reducing benefits. But do we change providers? No!, because of the trouble and loss of credit history. How often do people cancel their credit cards or close a bank account? Credit cards or bank accounts are an extremely powerful way of keeping customers over the long haul.

Level 7 – Longer-Term Contracts

The longer the contract the better! Think about the contract you signed when you got your new cell phone. I do not know about you, but I feel like when I signed on with Verizon I married the mob! Not only did you agree to pay a certain amount of money each month depending on the plan you select, you usually agree to keep paying for two years. If you are like me, each family member starts at a different time, so to get out gets prohibitively expensive, becomes a family debate, possible new phones get involved, and tons of time dealing with it. I just got chills thinking about it. This is an extremely valuable model because you can predict with a higher level of certainty what your recurring revenues will be both in the short-term, as well as over the longer term.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Is There a Difference Between Innovation and Disruption?

The Technology Leader Awards Committee of the Greater Miami Chamber, of which I am the recurring chair, met the other night. We were establishing the categories for this year’s awards when a great question arose. Is there a difference between innovation and disruption? It stimulated a spirited discussion among the committee members, and I realized that it’s a very important discussion to have when considering the strategy for your business. While we used the terms disruption and innovation in the context of technology, they can be looked at in broader constructs such as your business model. While one could argue that there is a difference between the two, my position is that disruption is a higher form of innovation. The reason is that all disruptors are innovations, but not all innovations are disruptors. The more disruptive the innovation, the higher the stakes and the value you can create in your business.

What Is Innovation?

In simple terms, innovation is just finding a new way of doing something. If you are running a business, it is developing ways to provide a product or service better, faster or cheaper. It is about improving every process with fewer defects, requiring less labor, increasing throughput, etc. It is about changing the usefulness of a product or service. From an even more important standpoint, it is about creating new demand and fulfilling a need that no one else is currently fulfilling. For example, our phones now go everywhere, serve as computers, calendars, watches, and many other things. It is about changing your online experience so that now you can order many products and get them delivered same day. Innovation is about seeing possibilities that others cannot see and making them happen.

Sustaining Innovation versus Disruptive Innovation

When we were discussing categories in my committee, we should not have been asking if there is a difference between innovation or disruption. The real question is “what is the difference between sustaining technologies and disruptive technologies?” While both are innovative, there is a huge difference and advantage to having both.

Sustaining technology improves a product or service in ways that the market does not expect, typically changing designs to address different consumer sets or by allowing a lowering of prices in more mature markets. A disruptive innovation helps create a new market or value chain and eventually disrupts an existing market. Disruption is much more substantial than sustaining innovation because it changes how we think, behave, do business, learn, and go about our day-to-day. Harvard Business School professor and disruption guru, Clayton Christensen, says that a disruption displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative.

Not All Disruption is Created Equal

The innovators’ dilemma is that not all innovation is created equal. There has been much innovation that has turned out to be worthless. In 2010, Time Magazine published a list of The 50 Worst Inventions Of All Time, here are few of my favorites:

  • The Segway – Give inventor Dean Kamen this: he’s a master of buzz. A closely guarded secret that was supposed to change the world upon its release in 2001, the Segway never brought about its promised revolution in transportation. Though the technology is pretty cool — very expensive gyroscopes make the thing nearly impossible to tip over (though George W. Bush found a way) — the Segway’s sales far underperformed vs. Kamen’s predictions. It lives on as the vehicle of choice for mall cops and lazy tourists, but the Segway’s best contribution might be as the vehicle of choice for failed.
  • New Coke – Marketers should have known — don’t mess with consumers’ sentimental attachment to a product. Especially when it’s 99-year-old Coca-Cola. The “newer, sweeter” version, introduced April 23, 1985, succeeded in blind taste tests but flopped in the real world. Phone calls, letters and rants from Coke die-hards flooded in and just three months after its debut, New Coke was removed, and the word Classic was added to all Coke cans and bottles to assure consumers they were getting their first love.
  • Airbnb – When disruption goes your way it can be enormous, such as the Airbnb.com story. Airbnb.com has changed the landscape for people that need a place to stay around the world. Airbnb is a website for people to list, find, and rent lodging. It has over 1,500,000 listings in 34,000 cities and 190 countries. Founded in August 2008 and headquartered in San Francisco, California, the company is privately owned and operated and booked more rooms than Hilton last year.
    Airbnb figured out how to enter the vacation rental marketplace without owning any rooms. Unlike traditional hotels, Airbnb scales up not by scaling inventory but by increasing the hosts and travelers and matching them with each other. It has no need for all of those employees and is not held accountable for the customer service problems you find in hotels, such as waiting in long lines for check-in. Its model runs on a marketplace platform where it enables transactions between hosts and travelers, all online. This is definitely an innovation you can categorize as disruption.

Value of Disruption

In today’s fast-paced world, disruption seems to be short-lived. It is critical that you do not go bankrupt trying to create your innovative idea and that you have plenty of capital behind you to take advantage of your position once you have the opportunity. Speed is also essential. Take the Airbnb example. Given that that the primary key to their success was a website to match hosts and travelers, scaling up quickly to have the largest inventory on a global basis with a lot of traveler traffic to their website was essential. Moving early and fast allowed them to build their brand and presence with no marketing budget. They built their entire empire through social media. The value of their innovation and how they approached is the exception and is what all disruptors should seek to accomplish.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Difference Between Strategy and Tactics

Do you know the difference between strategy and tactics? Most leaders who think they are talking about strategy are really stuck in tactics. Many times it is hard to see the difference. A business owner called me today because he read “Mastering the Rockefeller Habits 2.0 Scaling Up” by Verne Harnish and was honest in admitting he was confused. When you think you are developing a strategy for your business, could you be confusing it with tactics?

Two Strategic Questions Every CEO Must Answer

Strategy is the plan of action to achieve a major or overall aim. While strategy can be used in many contexts, I recommend that you and your executive team be able to clarify your strategy from two vantage points.

  1. What is the critical strategy you will use to turn your business in to a cash-producing machine?
  2. What is the unusual strategy that you will use to cause customers to choose you over your competition without violating strategy number 1?

I recommend that each of these questions be distilled down to a one-sentence answer. The simpler you can keep your answer, the more likely it is that everyone in your organization can understand and execute on it. A good strategy clarifies the dos and don’ts. For example, a story Gazelles coaches use to help illustrate this point is IKEA. Their strategy could be described in the phrase “flat pack furniture”. They have chosen to ignore the desires of customers to have multiple, easy-to-access locations at which to shop, and IKEA also does not assemble or install their products unless you purchase those services at an additional cost. It is up to the customer to drive distances to get to their locations, complete the transport of the goods, assemble and install them. In exchange for these trade-offs, they have a significant price advantage over their competitors in the residential and small office furniture industry.

Tactics Are the How of Strategy

Tactics are the steps you take to achieve your strategy. The blessing (or curse) of the entrepreneur is that they are problem solvers. They get things done! However, many times they are not getting the “right” things done. Do you find that when you are having strategic discussions, you and your team very quickly jump to problem-solving? Too often this need for activity causes organizations to have to do 2 and 3 times the work required to achieve the desired outcome. Leaders will be proud of the outcome and not realize they unnecessarily worked everyone to death; including themselves.

So the challenge is to know which tactics matter and to focus them on the right problems, and that is why Strategy is so important. The Pareto principle (also known as the 80–20 rule, states that, for many events, roughly 80% of the effects come from 20% of the causes. Your job as a leader is to determine which 20 percent of the activities (tactics), when given the most attention, will have the 80% impact. This includes identifying those things you must “stop” doing.

Many companies achieve their numbers and not their plans. We can maximize your team’s business strategy. Contact us for a free consultation to learn how Business Coaching can help your organization, or check out the testimonials page for stories from other leaders and organizations we have helped.

Are You Ignoring a Bad Business Strategy?

Are you ignoring a bad business strategy? Your business strategy is a determining factor in whether your sales “will” or “will not” grow faster than your competition’s. Does your business have an “unusual offering” that is critical in the buying decision of your target customer or not? Most businesses either have an “unusual offering” that their prospects don’t know about, or they don’t have one and are not facing it. Key components to a successful business strategy and your ability to grow sales are how well you understand your core customer, that you have an unusual offer for this customer, and that your strategy focuses on being best in the world at delivering that offer.

Great Sales People Cannot Erase a Bad Strategy

Are you evaluating how to grow your sales in the right way? When sales are not growing, it is usually the result of a bad business strategy. Most companies fail to recognize and address inadequate sales growth as a strategy issue. First sales management and the salespeople are blamed. This can go on for years. Salespeople come and go with no change in result! Next someone will decide it is a marketing problem. “We just need to do a better job of getting our name out there, learn to better leverage the internet to get leads, and everything will turn around.” When that fails, the economy becomes the culprit —too much competition, and so on. In most situations, the real dilemma is that leaders continue to ignore the fact that what they are offering the market is inadequate, and the marketplace has spoken.

Is a Bad Strategy Causing High Turnover?

Are you experiencing constant turnover in your sales force, followed by leadership complaining about how the salespeople keep failing? A bad business strategy results in sending good salespeople out to get slaughtered. In my experience, when you have a good strategy, even a bad salesperson can sell your product or service. When you have a good strategy salespeople line up at your door to work for you. Too often leaders are hoping and praying that hiring great salespeople will magically make a bad strategy disappear. So the real question is “what is the ‘unusual offering’ that the sales force can offer that will attract the customer segment you’ve defined as your prime target?” What is that offering that will get prospects to recognize you and say, “It is about time someone understands my needs. What forms of payment do you accept?”

What is an “Unusual Offering”?

“Unusual offering” is most commonly referred to as a “unique value proposition” — how you differentiate your product and services from those offered by your competition. I’ve chosen the word “unusual” instead of “unique” for a reason. While the difference between “unusual” and “unique” is subtle, I find the standard for “unusual” is much more achievable for most businesses. Unique offerings are very difficult to create and almost impossible to sustain for very long. However, the best businesses have mastered consistency in unusual offerings. For example, everyone in the fast food industry knows they are supposed to deliver consistent quality in food, fast, and yet they don’t. McDonald’s has a better track record in terms of moving customers through lines than other fast food restaurants. When it comes to customer service Nordstrom has been able to set themselves apart from competitors who claim high-quality service as their differentiator.

Why Your “Unusual Offering” Needs to Change

It is important to understand that your unusual offering needs to change over time with the market. For example, FedEx used to focus its business differentiator on when you “positively have to have it tomorrow at 10:00.” This is no longer a business differentiator because all of the competition caught up, and now customers expect that level of service. Even the post office can consistently deliver on that promise.

In my next article I will discuss how to develop your unusual offering. If you want help with fixing a bad business, strategy please contact us for a free consultation to learn how Business Coaching can help your organization, or check out the testimonials page for stories from other leaders we have coached.

Business Strategy Based on Knowledge Instead of Belief

Is your business strategy based on knowledge instead of belief? If you are like most entrepreneurs, you are not collecting enough external data when making your business decisions – and it will cost you millions over your lifetime. It may even cost you your business.

“Why?” you might ask. The answer is that too often we make decisions based on “belief” instead of “knowledge.” There is a very important distinction between knowledge vs. belief.

Knowledge vs. Belief

Knowledge is indisputable “fact”. Belief is your opinion about what result any given course of action will produce, and much of what you believe about your business many times is wrong.

Are you acting on facts that are no longer valid, or on beliefs that you have held for a long period of time despite contrary evidence all around? In my experience as a business coach, you probably are. Worse, when people present you with facts, you may be doing everything you can to hold onto your erroneous beliefs by finding any random inconclusive data to support them.

Communicating With External Sources

I spend more than 100 days per year conducting planning sessions. I watch leaders make decisions without collecting data from customers, prospects, or past customers. Even when they have collected data, they are not looking at and analyzing that data. Many times they are looking only for data that supports their existing opinions. Often the data they collect does not help them with their decisions because there isn’t enough, or what they have is anecdotal or too generic.

Are you collecting information on a weekly basis about people that have chosen not to do business with you, people that are customers, and people that you want to have as customers to really analyze why you lost customers? You will notice I chose “people” and not businesses, clients, customers, or any other word. You do business with people. They have needs, wants, problems, concerns, opinions, challenges, biases, etc.

The world is constantly changing, so these factors are always shifting, thus causing the need to continually collect the information to keep your offering competitive and relevant. Failure to do so results in business strategy based on “belief” instead of “knowledge.”

Start Improving Your Business Strategy With Customers

The obvious place to start is with your customers. You are probably thinking, “I know my customers” because you do business with them every day. It is a common mistake to confuse a system for collecting information with daily exchanges. Without a systematic process you will fail!

In your daily exchanges, you are concerned with delivering your product or service, and the customer is focused on receiving it. At best, you get anecdotal information and only focus on problems and challenges. During daily exchanges, your front-line staff is not thinking about the company’s business strategy or worrying about what data you need for making future business decisions. In many cases, a staff member who receives what could be useful information may filter it or not report it at all.

Collecting Unfiltered Information From Your Customers

Collecting unfiltered information from your customers should be a priority for every company. This is usually easier than you think, and the only reason it has not happened is that you have not made it a key priority. Benefits you can expect:

  1. Identify reasons to charge existing customers more for existing products and services.
  2. Identify new products and services to offer.
  3. Increase retention of customers that you did not know were at risk.
  4. Turn existing customers into a referral engine.
  5. Strategize based on knowledge instead of belief.

Customer Feedback

A great historical example of how this can work for you is when IBM had its top 200 managers talk to 5 customers and employees every week and review the information every Friday. This was an incredibly simple way to collect live market data weekly and then share it with key leaders in IBM. It helped increase sales, overcome customer roadblocks, and also added energy to the teams.

Questions to Ask Customers

We recommend you and each leader on the leadership team have at least one conversation each week with a key customer. We have found these four questions will provide you will a wealth of information:

  1. How are you doing?
  2. What’s going on in your industry?
  3. What do you hear about our competition?
  4. How are we doing?
  5. (Bonus Question… when appropriate) Do you know of anyone else that would like to be as happy as you are?

Need help improving your business strategy?

We can maximize your team’s business strategy. Contact us for a FREE consultation to learn how Business Coaching can help your organization.

Action Plans Lead to Success

Business Action Plan

Have you ever wondered why many business plans fail? Do you find that your organizations fail to achieve the key priorities in your business plan?  You are not alone! Most leaders, if they are honest, will admit that their business planning process is failing. Do you create an annual business plan and find that your team fails to follow through? Do you achieve your financial goals, but still fail to achieve the key initiatives? If you do, this is a major issue for your business and a solid action plan is part of the solution.

Failing to Elevate Your Business

As a business coach, I find many business owners and leaders asking me, “What is the harm in failing to achieve your annual initiatives if you achieved your revenue and profit targets?” If you have well-developed key initiatives, they will address the most critical weaknesses, problems and challenges facing your business. By achieving financial targets without addressing these issues, you have essentially failed to elevate your business to a higher level. In other words, you have unintentionally compromised future growth for the present. If you look at your annual initiatives, you often will find that as you address them, they have minimal effect on current year numbers but can have significant impact on future numbers.

Action Plans Will Keep You On Track

After conducting well over a thousand business planning sessions and reviewing results with leadership teams, a common thread between successes and failures revolves around the action plan. I have found there has been a 90% failure rate in achieving a priority for companies without an action plan versus a 75% success rate for companies with one. In the cases where there was an action plan but failure to complete the initiative, businesses made substantial progress on the priority.

Business Action Plans for Success

The following are reasons why business action plans are critical to your success. They:

  • Create a framework for accountability
  • Clarify responsibility
  • Help identify obstacles to success
  • Crystalize and align agreement around the path to getting things done
  • Provide deadlines
  • Foster commitment
  • Develop mechanisms to warn you when you are off course

How Committed Are You to Your Business Plan?

Is your business plan a decision but not a commitment? Most leaders will agree that they always get done what they are committed to. On a daily and weekly basis you deal with pressing issues, and you stay committed to addressing them. In my experience as a business coach, I do not see that same level of commitment to business plans. I believe the main obstacle is immediate versus long-term gratification. We can feel the immediate gratification of solving a pressing issue but can’t with working hard to address a long-term problem. However, by addressing the long-term problem, your benefits become much greater.

Consider a Business Coach

With the business coaching services offered at Activate Group, we can maximize your team’s success. Contact us for a free consultation to learn how Business Coaching can help your organization.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Key Components of a Business Plan

As a business coach, one of my essential roles is to assist my clients in determining what the key components of their business plan should be. My experience is that many companies do a poor job of creating their business plans, costing them serious growth in revenue and profits. If you are like most leaders I’ve worked with, your annual business planning process may be broken. Often I find that leaders spend too much time focusing their attention on goals rather than on the components of their plan that will cause them to achieve those goals.

Two indications that you have a problem with your current business plan:

  1. You do not find the need to visit your business plan weekly, monthly and quarterly with your executive team to make sure you are following your plan.
  2. You are not consistently hitting your revenue and profit numbers on a monthly basis.

The Importance of a Business Plan

The main reason to create a business plan is to find the simplest path for your company to produce maximum results. A good plan creates focus, sets priorities, causes alignment throughout your organization, and provides a means for accountability. As a facilitator of hundreds of monthly, quarterly, and annual planning sessions, I have found that most organizations fall well short of achieving these objectives.

Lack of prioritization is, by far, the most common issue I see causing companies not to reach consistent performance. While most leaders like to blame external conditions, it is usually an internal shortcoming. The leadership team fails to say “no” often enough, chooses to chase fires rather than identify and address their real issues, and thus makes their organization work twice as hard to produce less.

The 8 Components of a Business Plan

In order to accomplish focus, prioritization, alignment, and accountability, your business plan must have the following components:

1. Core Values and Purpose

Tell everyone how they must operate (core values) and why you exist (purpose).

2. Sales Strategy

Clarify how you will make money.

3. Competitor Differentiation

Distinguish how you will be different from your competition.

4. Goals and Objectives

Be specific and measurable in terms of goals so everyone knows what success looks like on a monthly basis for the company.

5. Annual Priorites

Identify the 3 to 5 absolutely essential annual priorities – these are the very difficult changes that need to be made in terms of products and services, systems and process, and people so that you can accomplish the above.

6. Company Priorities

Identify the 3 to 5 quarterly company priorities that will drive the annual priorities.

8. Leadership Priorities

Identify the 3 to 5 quarterly personal priorities for every leader that aligns with the company priorities and functional priorities.

7. Action Plan

Create very specific action plans to make the priorities happen.

8. Accountability

Establish a measurement system so that everyone can be held accountable.

Improve Your Business Planning Process

With the business coaching services offered at Activate Group, we can maximize your team’s success and simplify your organizational processes. Contact us for a free consultation to learn how we can help your organization, or check out the testimonials page for stories from other leaders we have coached.

Helping Your Small Business Grow – Aligning Your Business Strategy

As a business coach to many companies in South Florida (Miami, Fort Lauderdale, Palm Beach) as well as across the U.S. and Canada, I spend a lot of time helping small and medium businesses address sales growth-rate issues. The lack of focus on this area is surprising. Ironically, when one talks to the leaders of these companies, they insist they have done all they can. In my experience, there’s been more talk than action, particularly in the business-to-business arena.

In most situations when I sit down with a business coaching client, I find the real dilemma is that they continue the same sales and marketing strategies that failed in the previous year, hoping that things will magically get better for them. The changes they had made were minor and did not get to the root of their problem.

When Competition is Growing Faster

When I work with a client that is not growing faster than their competition, the issue is most likely to be a strategic one. The preponderance of companies who employ Activate Group’s services are operating without a business strategy. In my last article, I discussed the importance of having an “unusual offering” for existing and potential clients. An unusual offering is essentially your company strategy. This article discusses business strategy alignment and how to properly implement your strategy.

Business Strategy Alignment:

Is Your Strategy Different From What’s Happening in Your Company?

Many CEOs have a strategy in their heads that is very different from what is actually happening in their companies. While there may be a few customer case studies that demonstrate the CEO’s vision in practice, the common customer experience is that what is presented to them fails to meet the definition of an “unusual offering.” The main reason for this disconnect is the CEO’s failure to be able to simply articulate the business strategy and communicate it effectively to his/her team. As a result, the strategy is a dream in their heads rather than their business reality.

State Your Strategy in Simple Terms

In order to help your small business grow, you must be able to state your strategy in simple terms so that all of your employees and customers can understand it. “Simple” is the most important term here. If you cannot simply describe how you are going to be different from your competition, then your team cannot achieve your business goals. If your team does not know where you are headed, they will never get there. If they cannot restate your business strategy, it will not happen.

Aligning Leadership With Your Strategy

We have found that implementing the business operating system that is derived from the Four Decisions Program™ (formerly known as the “Mastering the Rockefeller Habits Workshop”) has helped thousands of executives with business strategy alignment. After recognizing the challenges of communicating strategy to the team, there have been two new additions to the workshop tools to help leadership succeed: the 7 Strata Worksheet and the 4D Vision Worksheet. These tools are instrumental in making sure that the entire leadership is in alignment on what the company strategy is, and how to communicate it to the team.

Turn Your Strategy Into Action

The most important steps to turning your business strategy into action are repetition and alignment of activities. First, like anything else you want done, you need to repeat yourself a lot. The best leaders in the world pick only a few messages each year and repeat them constantly until there is no doubt that everyone has “gotten” them. They know their message has gotten through when everyone on the team is acting in accordance with the message. If there are any stragglers, then the message needs more repetition.

Aligning Your Business Strategy

The second critical issue related to strategy is aligning your business strategy. I cannot tell you how often I hear what a great strategy a company has only to find that it does not really exist. For example, one of my clients has a great idea for what the company strategy should be. This person has been preaching that strategy for years. However, when you look at the company client base, a majority of their clients have not purchased any services related to that strategy. As a result, growth has suffered.

What to Do Once Your Business Strategy is Decided

Once you have decided upon a business strategy, every department and function needs to look at their activities and ask these and similar questions:

  • What needs to be done to align our activities with the company strategy?
  • If you were being audited, would someone who compared your stated strategy to your company operations call you a fraud?
  • Are we doing anything that is contrary to our business strategy?
  • Does any part of customer service need to change?
  • Does our structure properly support our strategy?
  • Do we have the right people in place to deliver on our strategy?
  • Are you measuring activities to confirm that you are delivering on your strategy?
  • Are salespeople approaching potential customers that will appreciate this strategy?
  • Do our proposals extenuate our strategy?
  • Are the marketing messages right?

Get Help With Strategic Alignment

As an executive coach and business coach, I can provide you with practical business solutions to accelerate your business growth. To learn how to improve your growth potential, contact Activate Group, Inc. at 305.722.7213.

Helping Small Businesses Grow – Choosing Your Customer Segments

Customer Segmentation & Growth

Are you spending enough time focusing on how to help your company address sales growth? The lack of adequate attention small businesses spend in this area is surprising. Ironically, when one talks to the leaders of companies, they insist they have done all they can. In my experience, there has been more talk than action, particularly in the business-to-business arena, where most of the companies are very good at delivering their products and services.

When I try to help small businesses grow, they seem much more comfortable at perfecting their craft than they are at addressing the fact that they continually miss their growth objectives. This article will focus on how properly choosing customer segments can help accelerate your business growth rate.

Are You Perfecting The Same Strategies That Have Not Worked?

When helping small businesses with their growth issues, often I find the real dilemma is that they continue the same sales and marketing strategies that failed in the previous year, hoping that things will magically get better for them. The changes they had made were minor and did not get to the root of their problem.

Before we examine the real issues, let me mention that the order in which you address these issues is critical. For example, I see some companies experiencing constant turnover in their sales force, followed by leadership complaining about how the salespeople keep failing. However, the most common reason for this kind of turnover is failed strategy. A bad business strategy results in sending good salespeople out to get slaughtered. In my experience, when you have a good strategy, even a bad salesperson can sell your product or service.

Choose Your Customer Focus

Narrower Segmentation is Better

The first principle every small business owner must master to help their business grow faster is “Choosing Your Customer Focus.” Actually, this is something that every business — small, medium and large — must master. The narrower you can make your customer focus, the better. It is also counter intuitive to the typical entrepreneur, who naturally wants to serve everyone and anyone. The goal is more customers, and focus is not usually the topic of discussion. In small businesses, focus is especially hard to consider when revenue may be hard to come by, and you may be losing money on a daily basis.

However, there are three factors that I think can help you understand the principle of choosing your customer focus:

  1. Time is limited
  2. Cash does not grow on trees
  3. Not all customers are created equal

What is a Segment?

A segment is a group of customers with common characteristics that influence how they make decisions.

By focusing time on a specific customer segment, you can become the dominant player in that segment. In every industry, you can group potential customers into many possible segments. For example – whether or not they can afford your product or service; if they will have interest in your product or service; where they might go to buy your product or service; and so on.

Failure to identify segments destroys time allocation in your business. I find that this is more obvious when your company is small and time constraints are more serious. In most cases, we consider whether or not a prospect can afford to do business with us, rather than the likelihood of their doing business with us.

Each Customer Segment Requires Its Own Set of Resources and Attention

Each customer segment you target requires you to spend time to gain their attention. Time spent in front of one segment takes time away from another. In most instances, to properly dominate a segment, you need the ability to market and sell to different people in different ways in different places, and all of those people have different expectations and needs. This takes time which is finite. By not focusing on a specific customer segment, businesses harm their growth instead of improving it.

In order to grow your small business, you need to know that cash does not grow on trees, that having cash gives you options, and that you need to use your cash wisely. Going after too many customer segments is not using your cash wisely. You need to understand each segment and where they are most likely to buy your product or service.

While you may envision a customer segment as attractive, it becomes much less appealing if you do not have the cash to take the journey. Unfortunately, most business owners do not realize this until it is too late. They throw their cash in lots of directions hoping something will stick, and then they run out of cash or have to settle for a lesser path because they did not have enough foresight.

Each Customer Segment is Not Created Equal

Lastly, each customer segment is not created equal. I believe that the harder it is to master a segment, the more valuable it is. The lower the barrier to entry, the more competition you will have and the less profit you will make. The higher the barrier to entry, the harder it is to acquire the customers, more difficult their challenges, and the better your ability to master those challenges, the better the opportunity for dominance and profit. Your job is to find this customer segment and to make it easier for your company to dominate by focusing on it.

Let us help YOU take your career to the next level. Take the next step and contact us to learn more about how Business Coaching can help you.

Wanting More – Is it A Trap?

Fool’s Choice

There seems to be a trap that many of us “Type A” people fall into, and I was having another typical “Type A” conversation yesterday with one of my coaching clients. My client is highly successful and has used goals to drive himself his entire life. Whenever he achieved his goal he raised the bar and kept raising it. In general, this has worked very well for my client. He is the CEO of a prominent organization, makes 7 figures, is in great shape, lives in a great community, has a wonderful wife and child, and for all outward appearances life is great. However, he struggles with the challenge of the “Type A” fool’s choice. In his mind, if he does not keep seeking something new, he will wither away and die. There is nothing in between.

Is It Time For a Career Change?

Our discussion started because he had been in his role for 10 years. He was frustrated because that was the longest he had been in any job. For him, he had done everything there was to do in this organization. In his mind, he had his regular rhythm, and this was no longer new. So he started seeking new challenges without really considering the “why. “ This is where I think the “fool’s choice” set in. I say this because he started looking for a CEO position elsewhere when life was actually really good for him where he was.

Without going into too much detail about my client, here is what he learned from his experience and what you should think about before you maybe make a decision because you think you need a change when you really don’t. He should have come up with these questions before he went out looking for a position. He had several opportunities offered, which he turned down, wasting a lot of people’s time, including his own.

Questions to Consider Before a Career Change

Here are typical questions we should ask ourselves before we seek a new venture. In addition, you have to challenge yourself not only on the answer to the questions but also on the real odds that the desired outcome will occur.

  • Are you trying to change your risk scenario? – Do you have any guarantees in your employment? Is your performance in question? Is the health of your industry in question? Is there a business model problem?
  • Is there a financial reason to change? What is the likelihood that a change will dramatically change your lifestyle, your retirement plans, your ability to leave a legacy, etc.
  • What are the implications for your family? If you make this change what impact will there be on your ability to spend time with family and friends? For how long? Are you willing to make these sacrifices, and for how long? Is your spouse or significant other on board?
  • Are you trying to change your lifestyle? Will you have more or less business travel? Will you be able to exercise more or less? Will you have more or less time for vacations and fun? Will work more or less?
  • Do you want to have more of an impact? How will you make a difference to community, industry, economy, etc?
  • Are you trying to reduce your stress? Self explanatory.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive and business coach can help you run a more effective business and become a more effective leader.

Your Return on Luck: The Key Strategic Insight

Hunkering down in year-end strategic planning sessions, you and your team are probably thinking hard about what’s next for the economy and how that will affect your business.

Slow down. You should really be laser focused on maximizing what Jim Collins, in his book Great by Choice, calls your “return on luck” – what I consider one of the most important business concepts ever articulated.

As Collins points out, great companies don’t have better luck than other companies. Sometimes, they get a bum deal. After all, they’re subject to the same economic forces as any other companies competing within the same regions.

But what differentiates the great companies is their attention to maximizing their return on luck. They look for opportunities in whatever hand they’ve been dealt—and then find ways to grow from the situation exponentially.

This point often comes into my mind when I am talking with growth-company CEOs. The standouts among them—the folks I consider the next Steve Jobs or Michael Dell—don’t view their companies as victims of economic uncertainty or market forces. No matter what the economy does, they will find opportunity in it.

They think like one of my mentors, who made a fortune in commercial real estate. He invested in an empty, commercial high-rise in Houston during the depths of a severe recession—and turned it into a thriving storage facility at a time when no one could find ways to rent out commercial properties in that market. That smart move enabled him to ride out the recession and, once it was over, make a bundle when he sold the building.

Rapid changes in the global economy can shake up your company’s current situation at any time, so we all need to be prepared to maximize our return on whatever lucky, and unlucky, breaks we face. Once you and your entire leadership team start consciously thinking about doing so, every day, you will be surprised by how much power you can unleash by simply asking this question.

Your year-end strategic planning sessions are an ideal place to do this. When you’re thinking about your goals for 2013, it’s important to take a look back at your luck in 2012.  Ask yourself and your team: Where did we maximize our return on luck? And where did we fail to do this? This will give you some ideas on what to continue doing – and lead you to untapped opportunities to act upon.

Then look at the situations you’re facing currently. Where are you experiencing good luck—and bad luck? How can you make the most of your current fate, and turn the situation to your advantage? By incorporating your ideas into your plans for the year, you will find it easier to execute them rapidly.

But strategy sessions will only get you so far. Execution is key when it comes to maximizing your return on luck, as I’ve seen time and time again with fast-growth companies. You’ve got to be ready to act on your ideas for maximizing your luck all the time, or you will miss out on valuable opportunities.

To execute your ideas successfully, however, you need to create the right environment. I came across some great ideas for doing so in a recent post by Sardek Love, president and founder of Infinity Consulting and Training Solutions, on his Think2Success Now! Blog.

Love, also a fan of Great by Choice, suggests building a “luck network.” By bringing more successful people into your professional network—perhaps by taking a leadership role in an industry organization or through social media—you can add to the pool of opportunities available to you, he explains.

Perhaps Love’s most valuable piece of advice is to create a “luck investment account.” Often, it takes capital to invest in new ideas. If you don’t have any cash on hand, you’ll miss out, which ties to one of the other findings in Great by Choice – the winners had multitudes more cash reserves than the comparable companies – and thus had enough staying power to weather the bad luck and capitalize on the good luck.

The time to start tucking money into your account, of course, is long before you find yourself with a great idea to pursue.  Once you get in the mindset of maximizing your return on luck—whether it’s good luck or bad luck—you’ll be surprised by how quickly you can grow your company.

Add Process Excellence to Art of Selling

Standards and processes permeate nearly every functional area in business, from accounting, finance and operations to IT, human resources and now, even marketing, and for good  reason. Processes and standards enable management to control the controllable so they can focus attention and resources on the more difficult issues that can stagnate sales and revenue and disappoint shareholders. Standards and processes drive predictability, consistency and efficiency, and when properly integrated across the organization, radically improve sales performance.

Despite the tremendous benefits that standards and processes can deliver, sales organizations have been much slower than other disciplines to move down this path. Imagine how much better sales managers could manage if they had consistent, objective criteria to evaluate the status of opportunities and accounts in each sales rep’s funnel. Or, imagine how much more efficiently account teams could collaborate on large deals if they used a common language. And how much better a CEO would sleep at night if he knew his sales force had a consistent, professional approach to interacting with customers! An improvement in these factors helps drive revenue predictability, reduces costs associated with obtaining sales and increases sales force productivity—all critical business objectives.

Our research clearly shows that “Winning Sales Organizations” take a much more scientific approach to selling and sales management than others. While there will always be a certain art to selling, it’s an increasingly sophisticated business world. “Winning Sales Organizations” prove that establishing standards and defining processes create a significant competitive advantage. However, the transition from “art” to “science” is not easy. It requires a sound foundation,strong commitment and precise coordination for widespread cultural adoption.

That’s the challenge!!


Louis Partenza is a sales and business consultant and partner of Activate Group Inc, based in Miami, Florida. Activate Group brings science to the art of selling. We help you develop the strategy, implement a practical process and build sales skills to rise to the top of your game, hit your numbers and make quota. We help sales organizations drive revenue, predictability, operational efficiency and superior performance. Learn more about how we can help.

How to Help the Salespeople Win

Early Autumn should be the time of the year when executives begin to worry about next year’s performance and to contemplate changes that can improve their chances of success. Many put this off until it’s closer to year-end and should have been thinking about this much sooner. The easiest target is usually the sales organization, and many companies decide that they just need to “upgrade their sales force with real rainmakers.” It sounds pretty easy and compelling. Just go recruit some great salespeople, and suddenly things will be growing again. Forget the product issues and discounted pricing problems. Customer service is overrated anyway. Marketing has generated virtually no interest, and the sales model is all wrong.

Just hire some great salespeople and growth will return. Not likely. Even sales superstars will not succeed in an environment that can’t support them.

The  truth is that when it comes to driving sustainable sales force effectiveness, there is a lot of heavy lifting that needs to happen in order for the rainmakers to make rain:

  • Company-wide understanding of why your customers do business with you. What is it they value? What makes you different and unique? How do they incorporate you into their overall strategic objectives? Do the other areas of the business understand these things, and are they in alignment with the views of the sales force?
  • Disciplined processes for how the sales force finds new opportunities, develops them, turns them into customers, and then manages these important new clients moving forward. This can’t be left to chance or to the individual whims of each and every salesperson. In fact, until the company decides on what they want a successful sales call to actually look and feel like, it is really impossible to figure out if a new sales hot shot would even be the right person for the job.
  • Clear definition of the role of sales management. What is their role in development? What is the value of leadership skills? Do they understand how to execute the company strategy?
  • Territory planning, incentive systems, technology enablement, and alignment with marketing.

Top salespeople perform best when they have a strong infrastructure to support them. All of the above items are components of a successful company’s selling system, and they are all interdependent on each other. Tweak one area, and it will affect all of the other areas. So, while I continue to hear about the necessity to muscle-build sales organizations, I want to continue to urge executives to build a strong foundation that helps the rainmakers win. Driving consistent performance in a sales organization is a lot more complicated than just hiring new salespeople.


Louis Partenza is a sales and business consultant and partner of Activate Group Inc, based in Miami, Florida. Activate Group brings science to the art of selling. We help you develop the strategy, implement a practical process and build sales skills to rise to the top of your game, hit your numbers and make quota. We help sales organizations drive revenue, predictability, operational efficiency and superior performance. Learn more about how we can help.

Recruiting Talent: Unusual Yet Effective Approaches

When Dietmar Petutschnig needs to find great engineers for his manufacturing company, ISD Limited in Whangarei, New Zealand, he heads to the docks. ISD is focused on innovation in the agricultural sector. One pursuit, for instance, is turning effluent from dairy firms into drinkable water. Recruiting people who fit into the company’s culture is crucial to its R&D efforts–yet that’s not so easy, given the country’s remote location. “How do you find engineers when all of the engineers want to leave the country?” asks Petutschnig, who acquired ISD in 2010 through Minerva Reef Fund, a venture fund he started with a partner.

Know the values that matter in your culture

His answer is to show up at coastal ports in late October and early November, when sailors navigating the globe tend to take shelter here from Caribbean storms.  The incoming vessels are full of people who have been successful enough in a previous business career to afford to buy sturdy enough craft to cross the ocean. Moreover, folks drawn to long-distance sailing tend to be mechanically inclined, since there’s no one to phone for repairs. “In the ocean, you have to fix things for yourself,” he says. And they’re resourceful and tough. “These are people who have made it across very challenging circumstances,” he says. They’re not easily rattled, he says, if a company hits a bump. People with this set of qualities have tended to thrive at ISD.

Not all growth companies face the same geographic challenges to recruiting as ISD does. But even those based in engineering hotbeds like Silicon Valley or the Boston tech corridor face competition from around the world for talent. And Petutschnig’s innovative methods carry lessons for every company, whether you’re located in dairy country or a big city. (I’ll get to another example of really creative recruiting by the tech firm Atlassian later in the column).

Tap informal networks for talent

One crucial part of what ISD does is show up in the right place at the right time. In some cities, that might mean hanging out at a particular Meetup where the tech talent tends to gravitate. At Petutschnig’s previous firm, Nunet AG—a tech company that serves broadcasters that got acquired in 2006—that would have been a practical approach. But at ISD, he, instead, keeps in touch with other sailors, whom he considers his “recruiting agents,” to find out when new arrivals are coming in–and shows up at the waterfront, ready to strike up a conversation.

“Docks are very social platforms,” says Petutschnig, who owns a 44-foot catamaran and sailed here with his wife, Suzanne DuBose, from the U.S. on a trip from 2008 to 2009. “You tend to know of people before they even come. Someone will meet them and say they’re coming next year.”

Ease into long-term work relationships

If Petutschnig hits it off with a new arrival, he’ll offer coffee or a drink to continue the conversation “You find out about their dreams, where they’re at,” he says. Then he might throw out the possibility of staying in New Zealand for a while by working at ISD. Sometimes, the right candidates will get interested. “They’ll postpone their day of departure from next season to a few seasons down the road,” he says.  And with three-month trial periods of employment typical in New Zealand, both ISD and the candidates know they will have a chance to try out the arrangement before it becomes a permanent one.

So far, ISD has hired four candidates this way: a director (who’s Petutschnig’s business partner) and three engineers. That’s brought the total headcount to 20 people.  “Our goal is to be a $10 million-revenue company in the next three years,” says Petutschnig. With innovative hiring practices like this, he’s on his way.

Don’t wait for candidates to come to you

Another company that’s gotten really creative about getting the right people on the bus—literally—is software firm Atlassian, which has offices in Sydney, Australia, and San Francisco. It’s more than doubled its head count to 550 over the past two years. A few months ago, it launched its “Europe, we’re coming to steal your geeks” recruitment roadshow, traveling around European cities in a bus to find 15 developers in 15 days. “We had a unique opportunity with the European economy not going as well,” says Joris Luijke, vice president of human resources/talent. Atlassian’s bus tour—a great idea for a company known for doing unusual and creative things—picked up interested candidates, where company representatives offered them a beer and told them about life in Australia. The company publicized its day-by-day progress on Twitter. Attracting press coverage everywhere from Spanish TV to the Wall Street Journal, Atlassian got 1,000-plus applications—and found 15 great developers willing to move to Australia.

A couple of crucial takeaways: Atlassian realized that recruiting is, as Luijke puts it, “a numbers game” and made efforts to generate enough buzz about its hunt to attract a large pool of talent. And once it found amazing people, Atlassian didn’t waste time. It offered them a job on the spot. “We cherry picked the best of the best,” says Luijke. That’s how creative—and aggressive—you have to be in today’s economy to snag tech talent, before your competitors do.

Call Howard Shore for a FREE consultation at 305.722.7213 to see how an executive business coach can help you run a more effective business or become a more effective leader.

Driving Change to Achieve Growth

I am regularly faced with the challenges of trying to be an ambassador of strategy, people and process improvement. They are the same challenges that CEOs encounter when they try to make changes that will reshape and transform their companies so they can better compete in the marketplace.

On the surface, there are two issues that typically need to be addressed:

  • Fear – Employees/leaders do not fully understand all aspects of proposed new programs. It is natural and common for employees to look for factors in the new programs that violate their old belief systems. Rather than seek to understand, they will want to be understood. While their belief systems served them well in the past they typically failed to recognize the sometimes-hidden, long-term consequences of their beliefs.
  • Flexibility – Typically management tries to overcome “fear” by being too forceful and rigid when introducing and implementing new concepts, programs, and processes to their organization.

As a CEO, I have found that anything transformational has to be driven by the CEO.  The CEO is the person that must balance the need for inclusion in decision-making while making the decisions and driving implementation of the desired change. While aspects of implementation can be delegated, it is the CEO that establishes vision and ensures that everyone stays the course. The speed at which complete buy-in occurs is the result of each individual’s past experience and the biases they bring to new situations. For many, there is a “wait and see” attitude that causes them not to accept change until after they have experienced the results. The dilemma here is that many will never experience the results of positive change because they refused to welcome the change in the first place.

Imagine that you decide that you want everyone in your company to embrace a healthy lifestyle.  This means that everyone must eat the appropriate amount of the “right” foods and exercise daily.  Well, the people that are already eat healthy and exercise regularly will think this is a great idea. The ones that love rich foods, overeat, indulge in sweets, and/or hate exercise will think it is a horrible idea. This is despite the fact that everyone knows it is in their best interests to be healthy. The real reason is that people are comfortable with their existing routines (even when it is not in their best interests). In a way, their current bad habits are bringing them short-term pleasure (e.g. enjoy desserts and rich food) and ignore the long-term consequence of bad health.

I shared this with you because my experience in implementing programs like “Four Decisions ProgramTM” is the equivalent of asking everyone to become healthy.  In the beginning it is uncomfortable because it causes people to sacrifice short-term pleasure for long-term benefits they cannot visualize or experience now.  However, as the CEO, you can recognize that the elements in the “Four Decisions ProgramTM” program have already been proven by thousands of companies and executives.  All the elements are well-documented and have been written about by some of the most renowned business thought leaders of our time.

As an executive leadership coach and founder of Activate Group Inc., based in Miami, Florida, we work with companies to deliver transformational management and business coaching to executive leadership. To learn more please contact Howard at 305.722.7213 or email him at shoreh@activategroupinc.com.

The Key to Implementing Strategic Change

Strategic Change

You embark down a strategic planning process, bring in a consultant, discuss the matter with your senior management team and talk to other executives in whom you usually confide. Everyone comes to the same conclusion: the strategy that provided you with past success will not work in the future. So you decide on a new strategy. It requires new core competencies, significant financial investment, and may require a change in leadership.

This strategic change scenario is not unusual and should be one to which the owners and all employees are willing to commit. What is uncommon is a company’s success in implementing it. Unfortunately, the typical outcome is that change does not occur, and the company clings to its stale strategy.

Making a Commitment to Change

Change requires commitment. Making a decision does not equal commitment to that decision. We all know that change is much easier to talk about than it is to execute. When a new strategy is introduced, the team seems to understand the reasons and is excited about a bold new future. Then reality kicks in. Inevitably, problems arise. Big problems. Little problems. Ultimately, when these problems occur, we are more willing to rethink the decision rather than address the problems.

As a strategic development coach, I have seen companies take years to come to consensus on a new strategy only to break their commitment a few months later.

Reasons Why Strategic Change Fails

The following are some of the common reasons why strategic change fails to occur:

1. Overconfidence

Executive leadership overestimates their readiness to take the team forward.

2. False consensus

Executive management fails to gain consensus among the leadership team. Everyone gives the nod and then maintains status quo.

3. Shortsighted shortcuts

Relying inappropriately on “rules of thumb,” implicitly trusting the most readily available information, or anchoring too much on “facts” that support preconceived notions.

4. Shooting from the hip

The plan to execute does not take into consideration all of the obstacles to success and/or all the necessary steps to achieve the desired outcomes.

5. Poor communication

The mistaken belief that a group of smart people presented with exactly the same information will draw the same conclusions.

6. Staffing

Inability to embrace and support new people, or lack of understanding of the behaviors, skills and values required of each position to take the company forward.

7. Fooling yourself with feedback

Failing to interpret the evidence from outcomes for what it really says, either because you are protecting your ego or because you are tricked by hindsight.

The bottom line is that change is hard and requires focus, a detailed and disciplined process, people development, and mental toughness. However, the most important key to your change initiative is your commitment to your decision.

Improve Your Business Strategy

Howard Shore is a strategic development coach who works with companies that need leadership development and strategic business coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic development coaching to businesses across the country. To learn more about coaching through AGI, please contact us or give us a call at 305.722.7213 .

3 Strategic Tools to Monitor Your Industry

Whether you need to monitor your competitors, stay on top of industry trends, or keep tabs on your own online reputation, keeping up to date is easy if you know where and how to look. We live in a 24-hour news cycle world that changes at the speed of light. And while keeping up with the Kardashians is not essential to your business (or your life), keeping up with your competitors and industry is!

To stay competitive and smart you need to know about things as they happen—this is the way it is and it’s not going to change anytime soon. The good news is that even though the Internet is a place of information overload and unreliable sources, it also offers some great strategic planning and monitoring tools that are completely free and easy to access.

If you set up a feed reader (like Google Reader or Feed Demon) and add a few good RSS feeds, you can check in on industry news instantly once or twice a day just as easily as checking your email inbox.

If you have never used a feed reader or RSS feeds, it’s time you learned…seriously. Start with the simple step-by-step guide on RSS feeds and feed readers from CNET.
Some great places to grab RSS news feeds on your competitors, industry and yourself:

Alltop

This news aggregator site pulls in news and commentary, and sorts it by industry and keyword. Let’s say you are a leadership development coach (like me!) and want to keep tabs on the most influential blogs and news sources on the topic of leadership. You would go to their leadership news feed, copy the URL and add it to your feed reader. Then you will get up-to-date news on that topic right in your reader dashboard, without having to scour tons of websites and blogs.

Google News Alerts

Keep track of industry, brand and product news the moment it happens through Google—Yahoo also if you want to be extra diligent. Setting up a news alert is easy. Just go to Google News (from Google.com, click on “News” in the upper left) and do a search. Search for your company name, your competitors’ names, product/service or industry trade organization names. Once the search results page appears you can copy the URL into your feed reader or scroll to the bottom and click on “set up an alert” to have the results sent to your email inbox automatically daily, weekly or as it happens. Or you could click on “Add section to my Google News page” to add the news to your own custom Google homepage you create through your Google/Gmail account (this is a good alternative to setting up a feed reader).

LinkedIn Groups

There are tens of thousands of groups on LinkedIn, and if you haven’t joined any of them you are missing out. LinkedIn Groups can be one of the best sources for industry news, and the best part is there’s usually almost no “fluff” or useless banter going on in the groups. Most are closely monitored and moderated to make sure the info is useful and current and not overrun with SPAM! It takes a little time to find the best groups for your industry, and you may end up leaving a few after viewing some discussions—some groups might not be the right industry segment and some might be too focused on career networking. But once you find the three to five groups that are central to your industry, you can set your email preferences so you receive news and discussion updates daily or weekly.

It goes without saying that you should also subscribe to RSS feeds from industry and competitor websites and blogs.

Once you have the reader set up (it takes just a few minutes) and have your feeds loaded in, staying on top of essential business news and trends is as easy as scanning the headlines in your reader.

Howard Shore is a leadership development coach who works with companies that need leadership development and strategic business coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic planning tools and management coaching to businesses across the country. To learn more about leadership development coaching through AGI, please visit activategroupinc.com, contact Howard at (305) 722-7216 or email him.

Customer Service Points You Have to Get Right

A few weeks ago, JD Power released its list of 2012 Customer Service Champions. I found it interesting that there were three airlines on the list. You don’t usually think of the airline industry as customer-focused. Yet three airline companies managed to impress JD Power with their fanatical attention to customer service—so much so that they made it onto this list of just 50 companies that are “champions” of service.

I am not surprised that the three companies are Southwest, Virgin America and JetBlue. These airlines have used customer service as differentiators for some time, each in their own unique way. Their customer service is finely honed and crafted especially for their core customer, which is why they all have such impressive brand loyalty.

The important thing to note is that great customer service is not a one-size-fits-all strategy. The customer service experience is drastically different between all three airlines, and that is by design. The loyal Southwest customer is drastically different from the loyal Virgin America customer. These customers expect different things and demand different experiences, and you could never interchange them. In all likelihood, a loyal Virgin customer would hate the experience of flying with Southwest.

Think like these customer service champions and design your customer service experience around the preferences and demands of your core customer.

Define Customer Service “Moments of Truths”

When I work with a company as a strategic planning consultant, one of the most important company functions we examine is customer service. When we evaluate their service processes, we identify their “Moments of Truths”. These are essentially their most crucial customer touch points—the times and places in their new business acquisition, servicing and retention processes that are so impactful to the customer that if they don’t get them all right, it could cost them that piece of business.

Every company and industry has three to five service “Moments of Truth.” How you touch your customer at these points defines your service experience. Let’s look at the restaurant industry as an example. Every restaurant must meet a certain standard in four key areas: Service, Price, Food Quality and Cleanliness. These are the four Moments of Truths for a 5-star restaurant or a fast food joint. However, how these two very different businesses deliver on these touch points is highly important for their core customers.

The 5-star restaurant customer expects extremely attentive and formal service, gourmet food and impeccable cleanliness, and for that they are willing to pay a premium price. The fast food customer still expects cleanliness, but service should be quick and casual at a low price. Both restaurants can be customer service superstars, but they must understand their core customers and design the service experience around them.

What are the Moments of Truth in your customer service experience? Define them and define the ways that you will use them to differentiate your company in the marketplace.

Howard Shore is a strategic planning consultant and business coach who works with companies that need customer service strategy and coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic planning and management coaching to businesses across the country. To learn more about strategic planning consulting through AGI, please visit activategroupinc.com, contact Howard at (305) 722-7216 or email him.

9 Questions Every Business Model Should Answer

One of the most important strategic planning tools every company must have is a well-written business plan with a winning operational model. Well-constructed operational models answer nine key questions with a resounding ‘yes.’ Some small companies mistakenly think that only large companies need to address these operational questions. The companies that decide to put this off until they become bigger are among the 50 percent that fail within the first five years.

Questions That Determine If Your Company is Under-Performing

If you can’t answer these questions with a strong ‘yes’, your organization is probably under-performing in the areas of sales growth, customer service, employee satisfaction, innovation and profitability:

  • Does your management team willingly participating in the annual planning processes?
  • Does your organization regularly achieve all or most of the financial and non-financial goals in your plans?
  • Does everyone in your organization know the plan goals and how they will contribute to them?
  • Do the actions in your organization regularly resemble the plans?
  • Do you receive regular input from all levels of the company and use it to develop your plans?
  • Do you get regular input from your customers (not just complaints) and use it to develop your plans?
  • Do you know what trends are going on in your industry? Who your competitors are, what your competitors are doing, and what your opportunities and threats are? (SWOT analysis)
  • Have you identified specific market segments to focus on?
  • Do you know what capabilities, management systems, people, and other resources you must have in place now and for the future, and by when?

If your answers to these questions are a definitive ‘yes’, you have a successful business plan. If not, you know exactly where to start improving your model and planning process.

Howard Shore is an executive leadership coach who works with companies that need leadership development and business management coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic planning tools and management coaching to businesses across the country. To learn more about business strategy development through AGI, please visit activategroupinc.com, contact Howard at (305) 722-7216 or email him.

6 Essential Business Strategy Tools

Writing a business strategy can be daunting for anyone, even a seasoned business strategy consultant like yours truly. There are so many formats and so much information you could include, and you always end up questioning whether you’ve included too much or not enough. Admittedly, I have used multiple formats and metrics, and my style has evolved over the years, but today I can say there are six strategic planning communication “tools” that must be included in your plan.

1. Business Purpose. State the sole mission, or purpose of the company…in one word. I know, I know. This is a huge challenge, but it is an exercise that forces company leadership to get specific, visionary and inspired. It has amazing effects on the theme of the business strategy and unites the entire team behind one concept or idea. This one-word purpose will not change every year. Like the mission statement, it should only be revisited every 5 to 10 years, if it is written well.

2. One-sentence Strategy. What are you trying to achieve in the business right now, in one sentence? Like the “purpose” exercise, this exercise will help you get to the core of what your business aims to do, and communicate it in a concise and memorable way.

3. Brand Promise. What kind of relationship do you want to have with your customers? What problem do you want to solve for them? How will you make their lives better? This is what you want to describe in your brand promise, which will begin something like this: To be the best____ by _______. Or like this: To enhance our customers’ _______by _________.

4. Main Target Audience. Please don’t tell me “anyone is a customer”. Even if anyone could use your product it doesn’t mean they are the primary decision-makers. You need to identify one main target audience. You must do this in order to strategize which decision-maker pain points you will address, and how you will market and sell to them. In this regard, all audiences are certainly not created equal.

5. “Big Hairy Audacious Goal”. Business leadership is not for the faint of heart. It commands us to be bold and set our sights high for the future. What is the ultimate destination for your company? What does your Mount Everest summit look like? State it in a way that is inspiring—if Denzel Washington were describing it in the climax of a film, what would he say?

6. X Factor. What truly makes your product or service different? Be ruthlessly honest. What is the one thing you do that none of your competitors can claim?

When was the last time you revisited your business strategy? Does it include any of these tools?

Howard Shore is an executive leadership coach who works with companies that need leadership development and business management coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic planning tools and management coaching to businesses across the country. To learn more about strategic planning and development through AGI, please visit activategroupinc.com, contact Howard at (305) 722-7216 or email him.

How Business Strategy Impacts the Sales Force

If you are like most successful companies, you have a strategic planning session with your leadership team on a quarterly. However, what most companies fail to connect is how their business strategy impacts the sales force. Very little usually changes in the day to day activities of the sales team after most strategy sessions. What may seem like two completely separate and somewhat disconnected functions are actually highly synergistic. In the most successful companies, they work together, one feeding the other.

Everything grows from strategy—you should know this already. If you don’t, you need to understand this quickly: without an overall strategy for your company that includes defined goals and success metrics, you are only scratching the surface of your potential. And your sales team—your whole team—is operating without a clear vision of where they should be going and how they will know when they get there.

If I asked your sales team what the company brand promises are, or what makes your company different, or how you add value to your customers, would their answers match yours? Would there be consensus across your sales team? If not, why? Most likely your business doesn’t have a clear strategy. If it does have a strategy, you may not have translated this strategy to the sales mindset. And you really, really need to. If your team cannot explain why someone should buy from you over the competition it’s a sign that you lack a good strategy.

The sales function is the lifeblood of your company. If your strategy does not translate to a language that your salespeople can understand and implement, your lifeblood is severely anemic. Every week you should be asking the question, “How should business strategy impact the sales force?”

Here are some example of strategic goals and how those goals could be translated into a sale development plan:

Strategic Goal :

Take 10% market share away from the competitor

Sales Translation:

Develop guerilla sales campaign to  sell away from competitor

Strategic Goal :

Launch new product/service into niche  market

Sales Translation:

Create lead generation plan for niche

Strategic Goal :

Increase revenue by $1M by re-engaging dormant clients

Sales Translation:

Assign dormant clients to sales reps and create a “revive” plan

How have you tied your strategic plan back to your sales force plan? How do you know your salespeople are working towards the same goals?

Call Howard Shore for a FREE consultation at (877) 692-6211 to see how Miami’s top business coach can help you run a more effective business or become a more effective leader.

4 Tools for Building a Sales Culture

Dave Kurlan wrote an article a while back about 10 Rules for Building a Sales Culture —a highly recommended read from the best in sales force development. I’ve worked with him for years and he is always dead-on in his advice for building a company in which business development is the central pre-occupation. Frankly, this is the kind of culture every company should strive to become.

In addition to his golden rules of building a sales culture, I’d like to add what I believe are the 4 strategic planning tools necessary to build a sales culture.

1. Published Company Goals

The goals of the company should be published in more places than just the annual business plan. Specific and measurable goals should be provide for the sales team and each producer. Without hitting people over the head with it every day, company leadership should use any opportunity to remind people of the overall goals and highlight when anyone has done their part to contribute to these goals through an employee recognition program.

2. Position Profiles
We recommend detailed job descriptions for every position, which include key experience, skill sets and, most importantly, success metrics. Before a new employee is even made an offer, they should understand exactly how their new position impacts the bottom line and how they can contribute to it by meeting their individual goals. Having this clear blueprint for how they impact new business development will set them working in the right direction and contributing to sales—directly and indirectly.

3. Individual and Company Evaluations
A culture of sales is born from a culture that is obsessed with measurement and evaluation. Everyone from the top down should receive an evaluation, at least annually but quarterly is best. The company as a whole should be evaluated and the results published to all employees. When a goal or milestone is not met, everyone will be affected and want to work that much harder to hit the goal next time. Be careful to set realistic goals that are challenging but still attainable.

4. Focused Training and Development Programs

Reinforce the company goals by giving your people the tools they need to support the sales effort. Touching on subjects like how to ask for referrals, how to reconnect with “dormant” clients, and how to ensure customer satisfaction are great training topics that can help people think and act on supporting sales. In addition, each department or discipline should have a specialized training and development track that teaches how sales support translates to their work area.

Are you seeing sales support from all corners of your company? What is your biggest challenge in getting people on board with a sales culture?

Howard Shore is an executive leadership coach who works with companies that need sales force development and business management coaching. Based in Miami, Florida, Howard’s firm, Activate Group, Inc. provides strategic planning tools and coaching to businesses across the country. To learn more about sales force development through AGI, please visit activategroupinc.com, contact Howard at (305) 722-7216 or email him.

How Your Inefficiency Gives Your Competitors a Pricing Advantage

Could your competition have a cost structure that gives their business strategy a competitive edge over you? If you are operating inefficiently the pricing you offer customers will reflect it. There are three main areas where inefficiency could be directly hampering your ability offer competitive pricing.

New technology. Are you still doing things manually that you could do more efficiently through technology? If not, you are passing the extra labor costs on to your clients. Your competitors know that and are capitalizing on it.

High labor costs. Are you using any proven systems to evaluate employee performance or are you allowing non-performers to keep their jobs for life? If you used a system like Topgrading you would ensure more “A” players on your team and would be able to get more done with fewer people. Leaner and meaner companies can charge less and compete on price.

Process Failure. Inefficient processes and communications systems coupled with redundancy, unnecessary meetings, ill-timed reviews, and other workflow issues significantly increase cost to each position. Usually this inefficiency is passed on to the client.

These three factors can easily add 40-50% to your overhead costs. Your competitors are paying close attention and address these issues. Then they go to market offering the same services at 40% less and create larger profits and market share.

Have you looked at your competitors’ pricing lately? Are you beating them? If not, it could be because they are beating you with a better business strategy.

Howard Shore is a business growth expert who provides business strategy and consultation services. To learn more about how an executive coach, management consultant, leadership training, or business coach can help your team with employee engagement, please visit his website at activategroupinc.com or contact Howard Shore at (305) 722-7216 or email him

How do you find your “Blue Ocean”?

More importantly, what is a Blue Ocean? That is the main focus of our upcoming strategic planning workshop called Keys to Forming an Awesome Strategy Workshop on Feb. 2. In it, we examine some of the principles from the book Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne. In order to teach students how to build a business strategy that works, we look at how to dissect the various differentiating aspects of a service or product and create a refreshed strategic model around it.

Think about the different dimensions of your business. What decisions can you make about your product or service that will help you break boundaries? What choices do you have in terms of positioning your company in the marketplace?

This workshop gives you the model you need to reposition and strategize for exponential growth and success using some of the tactics of Blue Ocean Strategy, Good to Great (by Jim Collins), and our years of business strategy consultation experience.

This strategic planning workshop will help you answer:

  • What is the purpose of your business in one word?
  • What is your one-sentence strategy?
  • What is your brand promise?
  • What is your one main target audience?
  • What is your “big hairy audacious goal?”
  • What can you be great at?
  • What is your “X Factor?”
  • What is your ‘Profit per X’?
  • How does culture affect your business strategy and success?
  • How do you attract and hire the best talent?

Hurry! Spots are for our strategic planning working are limited so REGISTER TODAY.

Howard Shore is a business growth expert who works with companies that want to maximize their growth potential. To learn more about how an executive coach, management consultant, leadership training, or business coach can help your team, please visit his website at activategroupinc.com or contact Howard Shore at (305) 722-7216 or email him.

Achieving Your Sales Plan

As a CEO, if it is your goal to achieve your sales plan and make your sales plan more predictable and easier to achieve, then here are 12 questions you need to ask yourself:

1. Who are the ideal customers that you want a lot more of?

This is not to suggest that one turn away other profitable customers, but if you target a lot more of the “ideal” clients, you can maximize your happiness and profit.

2. What is it that you can do for these special clients better than anyone else that would make them choose you over the competition?

You’d better have a compelling reason to explain to a potential customer why they should choose you over the competition. If you don’t, you are setting your salespeople up for failure.

3. How many clients/transactions do you need next year to achieve your plan?

Of that number, how many do you already have that you believe signed up for 2012, how many do you expect to lose in 2012, and how many new ones do you have to get to achieve your plan?

4. What is your tactical plan to achieve your goal?

For example, what is the number of phone calls to be made, number of customer visits, number of advertisements to be placed, number of tradeshows you must participate in, how many meetings must be attended, proposals presented, referrals given, free products given away, etc. to generate the number of clients/transactions you want.

5. How many salespeople and other employees do you need to generate the volume you want?

Are they already employed by you? If not, how long will it take you to hire the “right” employees, and how much growth will it cost you in the interim?

6. Do your current employees produce at the right level of productivity based on the last 90 days?

If not, what makes you think they are going to do it in the next 90 days? What are you going to do to help them change the trajectory, and what will you do if they don’t?

7. Do you have enough of the right products and services to support the demand you are looking to serve?

If not, how will that be solved?

8. How are your competitors going to respond to your moves in the marketplace?

What changes are they making? Will their changes affect your growth?

9. What is your marketing strategy to generate leads for your sales force?

Have you given it enough time to know if it works or not?

10. Do you have the right compensation programs to motivate your sales force properly?

How do you know?

11. Does your organizational atmosphere cause or allow too many distractions for salespeople?

How do you know?

12. Do you adequately hold people accountable, and is line of sight to goals clear enough?

Do your indicators make you aware that your individual salespeople need coaching, and where and in what parts of the sales process do they need that coaching?

If you need help achieving your sales plan, let us know.

Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Paying Too Much Attention on Price Competition?

People often spend more time figuring out how to build their fantasy football teams, plan their vacations, and handle other various unimportant matters than they spend on building their business strategy. While strategic planning is more difficult and is likely to result in some mistakes, not putting the proper time into strategy is inexcusable. Business strategy should be revisited at least quarterly in every business. Most companies do not make the time and it costs them millions in future revenue and profits they’ll never see.

Too many companies make a lot of changes to the business only to find that those changes had little impact on its ability to increase market share, or worse yet, caused market share to decline. It is also common to go into companies and find only a small percentage of their clients/consumers showing loyalty. The predominant discussions among their salespeople revolve around price. Many business owners mistakenly believe there is nothing that can be done to change client/consumer focus on price.

A big part of building a strategy that helps avoid price competition is having the ability to segment the potential client/consumer base and target ownership of specific segments. The more segments you want to own, the higher your cost structure. The key to segmentation is not looking at market segments by customer size, geography, industry group, or other traditional demographics, but to look at them by need or want that your company best serves. Here are some examples:

  • Are they the type of customer that only looks for the lowest price no matter what?
  • Are you in the hospitality business and are they looking to be pampered?
  • Are you in the fitness business? Are your target customers the ones whose doctors have told them that they will die before 40 if they do not trim 40 pounds?
  • Are you in transportation, freight forwarding, and logistics industry and your clients are always squeezing you for the lowest price? Could you charge them more and still save them a lot of money if you helped them solve the inefficiencies in their logistics functions?

When developing your strategy, you must understand the potential marketplace at least 3 years out and project how you think your industry is changing in terms of products, customers, technology, delivering products and services, sophistication of employees, and other pertinent matters. Once you’ve considered these factors, you need to segment the different types of clients you have and which segments you want to own. Then build your strategy to own them. Just take the time to build a winning strategy. The results will be considerably more rewarding then winning in fantasy football.

Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Is It the Economy or Your Business Model?

The economy is a topic on a lot of people’s minds these days, and if the average citizen is concerned, of course you as a business owner and leader would be concerned too. You may be downright nervous, but if you have a solid business model and have not compromised in the areas of creativity and innovation, then there is light at the end of the tunnel.

Large companies are confident in making executive transitions in these shaky economic times because they haven’t lost sight of their original ideas. These companies are confident in the business model that was the inspiration for starting a business in the first place, and regardless of what’s happening in the news, they stick with the plan. According to a Bloomberg.com article by Thomas Black, U.S. companies are hiring new chief executive officers this year at the quickest pace since 2005. Mr. Black also mentions a study by the search firm Crist/Kolder Associates that shows turnover is running at a 13% rate this year (according to a study of 669 large companies). Leadership transitions are not usually done while the economy is in such a slump. Does this show confidence in the future of economic growth or in their business model and strategy?

What these changes do show is that you can’t believe everything you read, hear, or see. Stop blaming the economy for your lack of growth. Unrealized growth is not the result of a bad economy, more than likely it’s the result of a bad or outdated business model. It doesn’t matter how good or bad the economy is, all companies want and need growth. Most new companies start as an innovative new idea for a product or service-and your company is no different. Your company’s original creativity is what put you in business, so I find it ironic that lack of innovation and creativity may be the very thing preventing it from growing. Innovation keeps you relevant. If your company’s strategic planning is not focused on innovation, it cannot grow in a sustainable way-in this economy or any other. Companies like Apple and Google have grown into veritable empires by creating a corporate culture of creativity and innovation and translating their internal wellspring of ideas into successful growth strategies.

Stop focusing on the woeful tales of the economy and start focusing on your business model. If you have a solid business model and continue with the creativity and innovation that launched your business in the first place, you should be able to weather any economic storm.

Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

The Journey of Business Planning

Planning is the journey that you take your management team through to balance near-term performances with long- term goals. Your goal is to maximize your long-term returns on investment in your business while meeting short-term financial needs. In our experience, we see many leaders focusing their planning process on creating numbers (budgeting) that will yield the profits they want to see at the end of the year. Amazingly they will go through phenomenal amounts of detail to get precisely to the wrong numbers. They are wrong numbers because the reality is they have no idea how they will achieve these numbers, which is the point of planning in the first place. In these companies, it is not uncommon to hear one of two things at the end of the year: 1) They achieve profits in some unexpected way, such as the pricing was extraordinarily good (not sustainable), or 2) They missed their numbers and offer lots of excuses that have nothing to do with poor leadership. There are many companies that go through the annual rituals of strategic planning, business planning, and budgeting, and completely miss the value of these very important business processes.

Many small organizations mistakenly think that answering the following questions apply only to large companies and that they can wait to become larger to take these very important steps.  The companies that wait to implement these steps are among the 50% that fail in the first 5 years. If you don’t answer with a strong yes to any of the following questions, your organization is probably under-performing in the areas of sales growth, customer service, employee satisfaction, innovation, and profitability:

  • Does your management team look forward to participating in your annual planning processes?
  • Does your organization regularly achieve all or most of the financial and non-financial goals set forth in your plans?
  • Does everyone in your organization know specifically what the goals are in your plans and how they will contribute to achieve them?
  • Do the actions in your organization regularly resemble the plans?
  • Do you get regular input from all levels of your organization and use that information to develop your plans?
  • Do you know what trends are going on in your industry, who your competitors are, what your competitors are doing, and what your opportunity and threats are?
  • Do you get regular input from your customers (not just complaints) and use that information to develop your plans?
  • Do you have specific market segments you are focusing on?
  • Do you know what capabilities, management systems, people, and other resources you must have in place now, for the future, and by when?

Make sure your answers to these questions are a definitive “yes” if your business plan is to succeed. Contact us to learn more on how we can help your business grow.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Top 5 Keys to Success

The difference between success and failure in business can really be broken down into five key factors. Some business owners are lucky to have the right product at the right time, however, most find that if they do not do these five things they will either fail, or worse yet, discover that they would have earned a better living by getting a job. According to the Small Business Association, 1/3 of all businesses will close their doors after 2 years, and 60% will do so after 5 years. If you have passed the 5 year mark and you are not concerned about those statistics, you might find it interesting to note that according to the National Federation of Independent Business, only 39% of all businesses are profitable, 30% break even, and the rest lose money over their LIFETIME.  Don’t be discouraged! The good news (yes, there’s good news!) is that turning a profit and staying in business is much simpler than these statistics would indicate. If you want your business to succeed, then make sure you have these top five keys to success in place:

  • Have, Communicate and Drive Your Vision/Purpose
  • Strategy
  • Financial Planning and Review at Least Monthly
  • Establish and Communicate All Company Goals
  • Commit to Goals

Are these part of your business habits?

Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Decisions By Consensus Can Kill Your Growth

I recently met with the CEO of a multi-divisional business to discuss an issue that was critical to the firm’s future. The company’s number one strategic goal is to drive its growth rate to a never-before-achieved level over the next 3 years. I presented a solution that would almost ensure that he would achieve that goal. CEOs of smaller companies would have asked me where to sign on the spot. He decided that he wanted to get consensus from his division heads before making the commitment. This is exactly the type of “decision-making” that has been killing growth potential in his company all along.

To add a little more background to this, the company’s human resource department conducted an extensive search that took almost 9 months before selecting our firm. We did some pilot work to determine whether our assessments would help improve the talent they bring to the company. While going through the process they learned that it could also be use to analyze the existing talent so they asked us to analyze a small sample of their sales force. Based on this analysis we learned there appears to be a number of hidden weaknesses among their sales managers and sales representatives. These weaknesses were probably costing them a lot of growth because of lost opportunities and slower sales cycles. However, since the sample was not representative of the whole organization it was our recommendation that they do a complete analysis before drawing a final conclusion. Common sense would say, “Let’s take a closer look at this, and quickly, to know for sure.” The price tag to do it was insignificant to the company, and we had over 20 years of research to validate the success rate of our process. Yet here we were, not moving ahead.

The real issue here is when and how to use consensus decision-making. An effective leader knows when and how to engage the others on the leadership team in making a decision. You engage other leaders when they are the appropriate people to give you input to make a proper decision. However, there are times when a leader has to decide alone and rally the troops around the decision after it has been made. Let’s take the situation I’ve described. This is not an appropriate matter for a consensus decision. The company has already decided it needs to grow in a way that it has never done before. It knows it will require tools, strategies and methods that are new if it wants new outcomes.

Furthermore, the division heads have not been engaged throughout the discovery process. The CEO might be able to use 15 minutes at the management meeting to present the proposal. He himself needed 2 hours with me for us to discuss and go over it, and we probably needed more time than that to talk about it. Prior to our meeting, there was a year of research that yielded insight already proven to be useful and profound. However, without the rest of the data they will never know if there is truly a gaping hole in their sales organization. Why would one allow one’s subordinates to say no?

Imagine you are a division president and someone presents this new idea for which they want you to spend your money. You already have vendors and assessments you prefer. You are a strong leader and think you know how to achieve your sales plan without spending that money. Worse, what is being suggested might require significant change in “your” company! It would require you to agree to having your people assessed by someone not of your choosing. You might learn some things about those people that were hidden blind spots. It could mean that you might be encouraged to fire some people that have not been performing but are well-liked and have been trying hard. Some of these people have been with the company for a long time.

The new proposal means that management will have to change the way in which they manage people because they really have not been doing their jobs as well as they should. It means that culture will have to be more accountable; that is not comfortable. It means that employees will have to do things differently, and they will complain. That is not comfortable.  It also means that the company will have to invest money on assessments, recruiting, processes, systems, and training and will have to wait a while to see results.

Or, you could just say no and keep doing what you’ve been doing. What do you think most division presidents would choose?

I said at the beginning of this article that the consensus decision process in this company is killing growth. My firm was selected after extensive research to help this company achieve its goal. We have been working with them for over a year. So far, everything I have brought to the table has had a decision process that looks like the above. We have lost a year of implementation to trying to gain consensus.

For example, we established that their bar for hiring salespeople should be higher. They were going to use our assessments to help hire top-performing salespeople. So far, in filling 5 positions, our assessments have recommended against 4 of the people they hired anyways. Just think of the growth opportunities that lurk in this company if they moved away from consensus.

Howard Shore is a business growth expert that works with companies and people that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Customer Retention Speaks Volumes About Your Business

Too many companies are under the misguided notion that replacing large percentages of their customers every year is a norm that they must expect. In fact, substantial client turnover is one leading indicator that there are hidden problems in your business.

One of the strongest signs of a good business model is customer loyalty. The true test of how well you run your company is the percentage of customers who continually come back for more of your products or services. In today’s Internet-savvy economy, the complexity of competition has made customer retention infinitely more challenging.

In many businesses, you can see patterns. One company I worked for was great at getting new clients. They had a lot of hype in their marketing about how they were different and would add more value to their products and services than their competitors. Thus, they were able to charge premium prices. But you could see that every 2 to 3 years, their big clients would start slipping away to the competition. The message was clear: they were not delivering on their promises, so their existing customers were not willing to pay the premium prices based on hype.

A company I am working with right now was seeing a constant churn in their client base. As quickly as they brought in new clients, the old ones would start slipping away. Then they would have to go back to the old customers to reacquire them.  What we learned was that they had the wrong type of employees and processes in their customer support department. The department was set up to take and process orders. What was needed was people that knew how to farm and build accounts as inside salespeople. The customer base was under constant siege from competitors, and if someone from my client’s firm was not calling them regularly to tuck them in, the competition was taking them away. In addition, processes needed to be built so that customers could feel and see the difference between doing business with my client versus the other company. By making some minor tweaks and one personnel change to set the example, customer retention is way up, and each account is growing steadily.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.

Think Before You Communicate

So often verbal communications do not work out the way people want. They cause a completely different outcome from their intended purpose. The challenge is not just the words one uses. It is the tone and body language of the delivery. Research tells us that words make up only 7% of the communication we receive. Body language accounts for 55%, and tone 38%. Meanwhile, people spend the majority of their time thinking about the words they want to use. I would suggest that not enough thought is given to timing and method of delivery.

The more prominent a person’s role in an organization and community, the more important it is for them to be a master communicator. Their prominence results in their communications touching and impacting larger audiences of people. For example, let’s look at Dan Gilbert, owner of the Cleveland Cavaliers. His comments after LeBron James announced his decision to go to the Miami Heat will have a profound impact on his organization and his community. In case you missed it, he denounced the player who won MVP in the league for the last 2 seasons and carried his team to the playoffs for the last few seasons, making statements publicly that included the following:

  • Heartless and callous
  • Shocking disloyal
  • Shameful display of selfishness
  • Cowardly betrayal

Mr. Gilbert then went on “to personally guarantee that the Cleveland Cavaliers will win an NBA championship before the self-titled former “King” wins one. You can take it to the bank.”

The consequences of these remarks served little purpose other than to embarrass Dan Gilbert and his organization and to hurt his community. It put the team in a position where LeBron might never consider returning to play in his home town, Cleveland, regardless of what trades they made. Gilbert violated the rule of “never burning bridges.” Had the Miami Heat or Alonzo Mourning done something so foolish back when he had health issues, Alonzo might not have returned to play a critical role in helping the Heat win the NBA title. There are many cases where players have returned to a former team later in their careers and played crucial roles.

In addition, the people in the city also should have thought before they burned their LeBron jerseys. All of these people acted in a shockingly disloyal and selfish manner toward a player who brought them incredible baskeball for the last 6 years and donated a lot of time and money in their community. Many stars continue to support their home towns after leaving for another team. Now these shortsighted people are alienating him. What are the chances that he will want to continue to give back to this community? What purpose is their communication serving?

The lesson here is that one must think before communicating. I would bet that many communications would never happen because they serve no useful purpose. They are often just an outlet for some to free their anger; as above. In the process they hurt themselves and others. There are only two proper purposes for communication: 1) to transfer information, and 2) to encourage others to behave or act a certain way. You know you achieve that goal when the information has been transferred properly or the other people are behaving or acting the way you desired. If this is not the case, you failed in your communications. If your purpose with communication is to hurt someone or to cause anger, it usually acts as a boomerang.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at 305.722.7213 or shoreh@activategroupinc.com.