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What causes sales?

Just about every business tracks its sales in some way or another.  But not all of them track what causes sales.  Curious, don’t you think?  If we know what causes sales, we can do more of that (whatever “that” is), and our sales will go up.  So why wouldn’t we want to track what causes sales?  For more on this, please continue below.

In some cases, it’s pretty easy to see what causes sales.  A company that relies heavily on telemarketing knows that if a salesperson makes 100 calls, he or she will reach the correct decision-maker 35 times, and of those, 10 will result in an appointment.  Of the 10 appointments, 4 will result in a sale.  So it’s simple.  Calls cause sales.  So if you want more sales, just make more calls.

Another company, in the construction business, consistently wins 16% of all the bids it submits.  Want more sales?  Just submit more bids.

A gourmet restaurant noticed that whenever a newspaper or magazine gave them a favorable review, their reservation calls surged.  So they redirected money from their advertising budget and hired a public relations firm.

But what causes sales is not always so apparent.

Consider a business that advertises heavily in a variety of different mediums but can’t track which mediums are working and which are not.  As a department store mogul once famously said, “I figure only half of my advertising works for me, but I don’t know which half.”

Or worse yet, consider the business that depends on referrals to bring customers to its door.  Typically they will say, “We don’t know.  People just come to us.”  What they should be saying to themselves is, “If we’re a referral business, how can we drive referrals?”  Maybe they should intensify their networking activities, or maybe they try offering an incentive of some kind for past customers to refer new business.

The point is, we can’t drive sales unless we know the root activity that starts the sales ball rolling.  What causes sales is different for every business, and in some cases, where the sales driver is not obvious, it may take some creativity and effort to find it, but it can always be found.  And once you find it, you will have the tool you need to set a sales pace that’s appropriate for your business.

 
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Oh, and another thing (about showing initiative)

Our last posting talked about the oft-heard complaint, “Why doesn’t anyone ever show a little initiative around here?”  In it, we suggested that a company’s culture needs to make it “safe” for people to take some risks, be creative, and “show some initiative.”  We also noted that a company’s values, that collectively make up its culture, should be a framework that guides people in deciding where risks are acceptable and where they are not.  However, even when they’re operating within the company’s value structure, well-meaning people trying to show appropriate initiative can still get themselves into trouble.  So there must a better guidance system than values alone provide.  For some ideas on this, please read below.

I saw an article recently in which the writer likened a high performing company to a winning rowing team . . . eight rowers and a coxswain all perfectly synchronized and coordinated.  In a business setting, this is called “organizational alignment” which means everyone is pulling together, supporting one another, and focusing on the same goal.  So it’s hard to argue with the logic of “organizational alignment.”  I mean, everyone operating in lockstep like a well-oiled machine is going to result in an efficient and effective operation, right?

Yeah, but it doesn’t sound like that’s an atmosphere that would tolerate showing initiative . . . taking a few chances, being creative, going off the reservation a bit.  So how do we balance “organizational alignment” with “showing some initiative?”  Here are some thoughts.

Assuming you have set some broad, strategic corporate goals (as you should), those must remain inviolate.  For instance, if you have set a corporate course for New York, you don’t want someone to “show initiative” by steering for Dallas instead.  This is where the organizational alignment piece fits in.  If we’ve decided we’re going to New York, then all of us have to work together to get us there.  But how we get there is a different matter.  Here’s where there’s room for some creativity, experimentation, and initiative.  We can take the most direct route, or we can take the scenic route.  We can go by plane, train, automobile, or bus.  So let your people know the outcome you expect, but let them have some fun figuring out how accomplish it.

Still a little too free-wheeling for you?  Then set up a vetting process for people to “sell” their creative ideas for getting to New York before implementing them.  This vetting process can be either one-on-one with you or before a group of their peers . . . whatever works best for you and your team.  The important thing is, we want to encourage, not stifle, creative thinking, reasonable risk-taking, and “showing some initiative.”

To summarize then, we can’t have everyone freelancing whenever and however the mood moves them.  In that environment, we would have chaos and the company would have no cohesive direction.  So we need to set some boundaries, but do it in a way that is not overly confining and still gives people plenty of room to test their wings a little bit.  Do that, and you shouldn’t ever again have to ask yourself, “Why doesn’t anyone ever show a little initiative around here?”

 
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“Why doesn’t anyone ever show a little initiative around here?”

Have you ever said that to yourself?  Well, as it turns out, there is a reason people don’t take on challenges unless you direct them . . . and you’re probably looking at that reason every morning in the mirror.  If you really want people to take a few risks, be creative, and show a little entrepreneurial spirit, you can’t just hope for it or pay lip service to it.  You have to work at it, invest in it, and demonstrate it in highly visible ways.  For some thoughts on how to create an environment where people are willing to “show a little initiative,” please read below.

So why don’t (most) people show more initiative?  Simple.  It’s fear.  Fear of failure.  Fear of punishment if things go wrong.  Fear that the boss will lose faith in me.  Fear that I will lose respect among my peers.  Fear that a bad outcome will bite me in the wallet.  Lots of fears.  All kinds of them.  So when people see a problem or an opportunity, they’ll wait for the boss to tell them what to do because then, if the thing goes south, it’s the boss’s problem, right?

It’s all about leadership and trust.  The CEO has to set the tone, has to make it “safe” to fail once in awhile.  In fact, the message should be, if we’re not stubbing our toes here and there, we’re probably not challenging and pushing ourselves enough.  So rather than treat a failure as something icky like roadkill, let’s celebrate it as a learning experience.  Treat it like a case study.  Here’s what we did, here’s why we did it, here’s what we thought would happen, and here’s what actually happened.  OK, so what did we learn from that?  The CEO must guard against finger pointing and anyone playing the blame game.  Even more than that, he or she must model the behavior.  The CEO may say that mistakes and failures are expected when you’re showing initiative, but no one will believe it until they see the CEO do it.

Keep in mind, we’re not talking mistakes or failures that come from carelessness, laziness, inattention, or ineptitude.  Obviously, we don’t want to celebrate those kinds of problems.  No, we’re talking about well-intentioned people, jumping into foreign situations, and doing their best to get a favorable outcome.

A key to making it “safe” for people to show initiative is to have strong corporate values, the sum of which make up your corporate culture.  Your people have to know and understand those values so they become the framework for them to make decisions and engage in activities without fearing that those decisions and activities will get them in trouble.  In fact, if you’re not confident that you have a set of values in place that are known and understood by everyone, you probably should start there before you push “taking initiative” too hard.  Without a firm grasp of those values to guide them, your people will just be winging it and you will probably get some unwelcome outcomes.

Taking initiative means stepping out of your comfort zone, engaging in problems or opportunities you haven’t engaged in before.  Mistakes and failures will happen along the way.  It’s inevitable.  But it’s on-the-job training and it’s the nature of learning what works and what doesn’t work.  Allowing people to be creative, to take risks, and to take initiatives can be expensive in both time and money, but it’s worth it.  It helps your people grow and develop entrepreneurial instincts so that ultimately, they can help you grow your business.

Is freeing your people to be creative and to take risks a little scary?  Is all this “values” stuff a little foreign to you?  Call me.  We should talk.

 
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“Delivering Happiness”

Zappos, for those of you who haven’t heard of it (I hadn’t), is an online retailer with a reputation for world class customer service.  It started out selling only shoes but has since branched into lots of other stuff as well.  It went from a startup to $1 billion in sales within 10 years.  Anyway, Zappos founder and CEO, Tony Hsieh, has written a book, “Delivering Happiness,” in which he describes how he launched Zappos and how his unflinching focus on customer service evolved.  Below I offer a few highlights from the book, so if you’re interested in some thoughts about how to up your customer service game, please read on.

In Hsieh’s view, it all starts with core values.  Strong core values beget a great culture, and a great culture begets a great company.  So Hsieh spent a lot of time, working with employees, to distill Zappos’ core values.  Here they are:

1)     Deliver WOW Through Service
2)     Embrace and Drive Change
3)     Create Fun and a Little Weirdness
4)     Be Adventurous, Creative, and Open-Minded
5)     Pursue Growth and Learning
6)     Build Open and Honest Relationships with Communication
7)     Build a Positive Team and Family Spirit
8)     Do More with Less
9)     Be Passionate and Determined
10)     Be Humble

The key is, these aren’t just nice words to hang on the Zappos conference room wall.  Hsieh works relentlessly to build these core values into everything Zappos does.  They drive how Zappos hires, fires, and interacts with both customers and suppliers.  For example, new employees at Zappos go through an extensive initial training period, much of which is devoted to indoctrinating new employees into the company’s core values.  At the conclusion of the training, for any new employee who can’t embrace the company’s core values, Zappos will offer that employee a check for $2,000 to quit.

Zappos maintains a fulltime call center even though very few calls result in a sale.  Furthermore, they don’t measure call times.  They want their people to stay on the line as long as it takes to give the customer a WOW experience.  They don’t use scripts so that their people treat each call as a unique customer service opportunity.  And most interesting, they don’t ask their call center people to upsell.

Zappos makes customer service the responsibility of everyone, not just that of one department.  And costs associated with customer service are “investments in building a customer service brand,” not expenses to be minimized.

Each year, Zappos publishes its “culture book” which is a collection of stories, submitted by employees, about how the core values of the company’s culture have impacted their work and their lives.  Each employee gets a copy.

There’s more.  Much more.  But if you want it, you’re going to have to read the book.  Hopefully, I’ve whetted your appetite to do just that.  A word of caution, however.  The first part of the book is about Tony Hsieh’s early life, his pre-Zappos business adventures, and coming of age in San Francisco.  But be patient, it does set the stage for his later ideas about values, culture, and customer service.

Almost all of us in business talk about good customer service, but in Delivering Happiness, you’ll learn about a company that does much more than talk the talk . . . they eat, sleep, and breathe customer service, and take it to a whole new level.

 
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Meetings, Bloody Meetings

Meetings get a bad rap.  And in many cases, they should!  When they’re boring, pointless, poorly orchestrated, and a waste of everyone’s time, they should get a bad rap.  But when they’re done right, meetings can (and should) be vital tools for debate, problem solving, communication, and coordination.  If you believe meetings at your place are not as vibrant and productive as they should be, please read below.

Let’s start with agendas.  Use them, and publish them in advance of the meeting so the people attending can prepare and be ready for whatever the meeting is intended to accomplish.  I know, I know . . . pain in the butt, but use them.  An agenda sets a tone for the meeting that says we’re here to do something specific.  An agenda also helps the group stay focused, on task, and on schedule.

Start meetings on time.  As the saying goes, “The only trouble with being on time is that there’s never anyone there to appreciate it.”  Don’t let it be that way.  Demand that everyone arrive 5 minutes early so they can get idle chit chat out of the way and the meeting can start promptly on schedule.  Explain that wandering into a meeting five or ten minutes late is disrespectful to everyone else’s time.

Encourage everyone to be open, honest, and candid, and to express viewpoints that may not be popular or in keeping with the majority viewpoint.  Diversity of thought is essential when you’re trying to deal with important, often tough, issues.  As General George Patton once observed, “If everyone is thinking alike, someone’s not thinking.”  So a ground rule for all your meetings should be, we disagree without being disagreeable.  We want to be civil and respectful of one another’s thoughts, and be able to leave the meeting with no hard feelings.  Do this and you’ll have lively, vibrant discussion.

You should have a specific amount of time allotted for each agenda item, and work to manage to those times.  One of the complaints we often hear about meetings is that they drone on and on with no clue as to when they’ll end.  Don’t let that happen.  Keep your discussion focused on the topic at hand and don’t allow the group to go down every rabbit hole that comes along.  Don’t let any single individual dominate the conversation and don’t allow lurkers . . . everyone must participate.  But at the same time, encourage everyone to be succinct and efficient with their words when it’s their turn to speak.

In general, at the conclusion of the meeting, each item on your agenda should have a specific action associated with it, someone charged with taking that action, and a deadline.

So in summary, to have effective, productive meetings:

–    Always publish an agenda prior to the meeting.
–    Start on time, close on time.
–    Encourage lively, but civil debate, and diversity of thought.
–    Keep discussions focused, contain blabber mouths, draw out wallflowers.
–    Leave the meeting with action steps for each agenda item.

If you’re already doing all these things and your meetings are still a waste of time, call me.  We should talk.

 
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Accountability: the Secret Sauce of Business

Accountability is at the heart of every well-managed organization.  It is essential to implementing plans, installing changes, or rolling out new ideas.  Without it, things become chaotic . . . deadlines are missed or ignored, and results are below expectations.  If accountability is an issue for your organization, if you don’t have a good system in place to hold everyone accountable for what they’re charged to do, please read below.

Accountability, if it’s to be harnessed well, needs to be in your corporate culture, in your company’s DNA.  Everyone in your organization needs to embrace the notion that around here, we honor our commitments . . . our word is our bond.  When any one of us says we’re going to do something, we’re going to do it.  We’re going to do it on time and we’re going to do it according to expectations.  Every time.  And it needs to be pervasive throughout the organization and beyond.  Honoring our commitments is an absolute whether it’s a commitment a subordinate makes to a superior, a superior to a subordinate, commitments from one employee to another, commitments to customers, or commitments to vendors.

Accountability is not a naturally-occurring phenomenon.  So if you want it in your culture, you’re going to have to put it there and nurture it.  How?  It starts with you and other leaders in your organization.  You have to model the behavior you want.  You have to talk about it with everyone.  You should congratulate people when they exhibit the behavior you want and confront them when they fall short.  When you bring on a new employee, explain how we feel about accountability and commitments around here.

This accountability stuff can work pretty well throughout your organization except for the guy at the very top (that would be you).  Who holds you accountable?  Who holds your feet to the fire to honor your commitments?  Yet it’s essential for you to set the example.  After all, if the boss doesn’t honor his or her commitments, why should anyone else?  The best way to do it, if you’re disciplined enough, is to be very public about your commitments and just as public with your outcomes.  Give your direct reports permission to hold you accountable.  When you stub your toe from time to time, acknowledge it, don’t hide it or make excuses.  Or, if you don’t like that approach, find a trusted advisor outside of your organization who will hold you accountable to achieve the goals you set for yourself.  Either way, you must build accountability for yourself into the system.

Obviously, this all takes some effort, but the payoff makes it more than worthwhile.  It’s great for job satisfaction.  After all, wouldn’t you want to work at a place where promises made are promises kept?  It also frees your high achievers to do even more, and ultimately, causes your low performers to self-select out.  And best of all, implementation of plans, goals, and new ideas becomes more effective, efficient, and predictable.  Not a bad payoff, if you ask me.

If accountability will be sort of a new concept at your place and you’re not sure where to start building it into your organization, call me.  We should talk.

 
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Motivation: toss the carrot and stick

Motivation is a part of leadership, isn’t it?  It’s providing something that makes followers want to go where the leader is trying to lead them.  Traditionally, business has relied heavily on carrot-and-stick motivational tools . . . reward and punishment.  And the carrots (the rewards) usually are money in the form of bonuses or commissions, or have monetary value such as paid time off, tickets to the theater, or dinner for two.  It’s a simple, straight-forward system.  If you do this, we’ll give you that.  However, in many business situations, the carrot-and-stick system fails to provide the motivation it was intended to provide.  In fact, the carrot-and-stick system can sometimes be de-motivating, completely defeating the purpose it was intended to serve.  For more on this, please read below.

Dan Pink is a best-selling author and speaker who describes a wide range of human behaviors in the workplace.  In discussing what motivates people, he talks about studies at leading business schools, funded by the Federal Reserve Bank, showing conclusively that the carrot-and-stick system of motivation works just fine when applied to situations that don’t require much thought, creativity, or problem-solving ability.  However, as soon as a situation requires some cognitive skills, carrots do not motivate low performers at all, and they in fact de-motivate high performers.  Repeated experiments in different cultural and economic settings brought the same results.  So this is not some anomaly . . . it’s the real deal in human behavior.  But how can this be?

Researchers concluded that in highly structured situations with specific, predictable outcomes, carrots narrow the focus of the participants on a specific path to be followed, and that’s a good thing.  However, when creativity or decision-making is required . . . perhaps the path is not very well marked or maybe there are forks in the road . . . we don’t want the participants to be narrowly focused.  On the contrary, we want them to think broadly about all the options, all the variables, and try to mold them into the best possible outcome.  In those situations, carrots don’t work.

So what does work when cognitive skills are needed?

First, according to Pink, you need to take money off the table.  Pay people enough so they’re not worried about money and can focus on their work.  Usually, that means paying them what other people in the company are paid who do comparable work.  Then feed their desire for:

•    Automony.  Give them some freedom to exercise their creativity.  Don’t micro-manage them.
•    Challenge.  Challenges improve their skills.  Improved skills lead to mastery.
•    Significance.  Let them know their work is significant and their contribution is important.

So the main take away here is, when you’re trying to motivate people to do creative, innovative work, think of ways to feed their human needs . . . and keep the carrots in the fridge.

Dan Pink has two terrific videos on this subject.  If you would like to view them, please use the links below.

 
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Culture, smulture . . . who needs it?

Brand and culture.  Two sides of the same coin.  Your brand is the outside world’s perception of who you are.  The only question is, is that perception the one you have intentionally put in place and nurtured, or is it the one your market has bestowed on you by default.  Likewise, your culture is how your organization sees itself.  How do we behave around here?  What do we tolerate and what do we not tolerate?  Again, your organization does have a culture.  It’s only a question of whether it is there by design or by default.  Unfortunately, for many small business owners, “culture” is a touchy-feely thing that has no direct impact on the bottom line.  So it gets relegated to HR, or worse, gets ignored entirely.  To learn why your company’s culture deserves your attention and how it will help your long-term growth and success, please read below.

Is this you?  “I have a business to run here . . . no time to sit around singing Kumbayah and worrying about sissy stuff like our ‘culture.’”

Try telling that to the United States Marines: the strong, the proud, the few.  The Marines arguably have the strongest culture of any organization on the planet.  Once a Marine, always a Marine.  If you’re a Marine, you may have retired from active duty 50 years ago, but you’re still a Marine.  It’s part of your DNA.  It’s the reason Marines operate with such cohesion and determination.  Failure is not an option.  Difficult missions are done every day, impossible missions take a little longer, but they get done too.

Or try telling that to Ritz Carlton Hotels.  Ritz has a legendary reputation for world-class customer service . . . a culture of customer service that has been carefully nurtured and covers every desk clerk, bellman, and housekeeper.  Ditto Nordstrom’s.  Do you think they would have painstakingly created that culture of customer service if they didn’t believe it has a huge impact on their bottom line?  Apple has a culture of creativity, of being the guys who are the first out with the next whiz-bang, gotta-have-it technology.

Think about it and you’ll come up with many more companies who have risen to great success driven by a strong, vibrant culture.  So this is definitely not “sissy stuff” that is undeserving of your attention.   It is, in fact, the stuff success is made of.  It’s what gives your company focus and allows you to outperform your competition.  When you get this right, you get:

•    A better track record of hiring and retaining the right people.
•    Customers who are better served, and therefore, more loyal.
•    More consistency setting and achieving goals.
•    A more focused, cohesive, team-oriented workforce.

So what defines the culture of your organization?  If you can’t answer that question, then what should be the culture of your organization?  What behaviors and attitudes do your people need to hold in common to propel you to the top of your market?  If you need help to figure that out, or if you need help figuring out how to indoctrinate your organization in the culture you want, call me.  We should talk.

 
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Stop Making Those Decisions

In a 1995 article by A.E. Carlisle entitled simply, “MacGregor,” Carlisle tells the story of the title character who is a plant manager with a remarkable management style.  At the core of MacGregor’s style is his refusal to make any operating decisions.  Sounds a little odd, doesn’t it?  Yet his plant (even though it’s the oldest with the oldest equipment) turns out more product at a lower cost than any of his company’s other plants.  And when other plant manager jobs open, MacGregor’s managers are usually tapped to fill them.  So by refusing to make operating decisions, his plant and his people are the envy of the company?  How’s that work?  To learn how, please continue reading below.

To be clear, MacGregor does make decisions, but only the long-term, strategic ones.  Making daily operational decisions he believes is the responsibility of his managers . . . that, in his view, is what they were hired to do, and he’s not going to do their jobs for them.  So, when a manager says, “I’ve got a problem . . ., “  MacGregor offers a curt reply.  “Good!  Let me know how you decide to handle it.”

And what if one of his managers is poised to make a bad decision that will cost the company money?  He lets him or her go ahead with the bad decision assuming the cost to the company will not be catastrophic and that it will not materially affect the plant’s overall numbers.  We learn by doing, we learn by our mistakes, and MacGregor wants his plant to be a learning place where new thinking and experimentation are encouraged.

Even when a mistake is too significant to be allowed to go forward, MacGregor doesn’t take over the decision.  He will suggest that the manager involved take the problem to one or several of the other managers for their help and input, and then report back their conclusions and recommendations.

Note that MacGregor doesn’t take himself entirely out of the loop.  He does want to know what decisions are being made and how they are being implemented, but he keeps himself in an oversight position, not a hands-on position.

One other interesting wrinkle to MacGregor’s management system.  At their weekly management meetings, each manager reports his or her financial and production targets for the week with the action steps they intend to take to correct any shortfalls.  They also (and this is the interesting part) report on decisions they have made during the week and are required to give credit to other managers who may have helped them.   That gives credit where credit is due, fosters team spirit and cooperation, and also gives MacGregor a peek at leadership on his team . . . who does everyone else run to when they’ve got a problem to solve.

So what does MacGregor’s “no decision” management style do for him?
•    It frees up his time to work on high level, strategic activities.
•    It teaches self-reliance, responsibility, and accountability to his managers.
•    It promotes good communication between his managers and himself, but also amongst the managers themselves.
•    It infuses the company’s culture with team spirit and cooperation.
Not bad for a simple little exercise in leadership.

The MacGregor article really is a good one . . . it’s well-written, an easy read, and offers lots of good leadership tips.  You can read it in its entirety at:

http://www.cs.unc.edu/~quigg/fall08/MacGregor.pdf

 
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“Wealth continually grows from multiplying existing resources using existing technologies.” -Pilzer’s Law

Paul Pilzer is an American economist and best-selling author who promotes the notion that economic progress and wealth are driven by technology.  New technologies will continue to feed economic growth, but in Pilzer’s view, a lot of growth can come from properly utilizing the technologies we’ve already got.

Most technologies used in small business are vastly underutilized, particularly where software is concerned.  We tend to learn what we need to learn in order to accomplish a certain task.  We don’t look any further to see what else the program might do for us.  Then, when we are faced with a new task, we whip out our trusty software manual and figure out how to do that.  So we tend to use our technologies in small bites without understanding their full potential.

How might you improve efficiency and productivity if you more fully utilized the technologies you’ve already got?  How might you use those technologies to better serve your customers?

Here’s a thought.  Let’s say you’re using some very common software products like Word, Excel, PowerPoint, Outlook, ACT!, and QuickBooks.  In your Accounting Department, even if you have only a single bookkeeper, challenge him or her to find one new thing in QuickBooks each month . . . a new tool, utility, or capability that would benefit the company and/or your customers.  Find someone in the Sales Department who likes techie stuff and challenge him or her to do the same with ACT!  And so on with all the technologies the company uses.  Obviously, when something new is discovered, it needs to be taught and passed along to the other users of that technology.

The technologies we have available to us today are so powerful and so versatile that they can help drive a business forward more quickly and more sure-footedly than ever before. Pilzer teaches us that these technologies are resources we should not ignore . . . that we should embrace them and use them to their fullest potential.

 
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