3 reasons why you could be a bigger deal tomorrow than you are today

1) Thomas Edison once said “There is far more opportunity than there is ability“. Potential always dwarfs performance. Once you recognize this, it allows you to question what you currently may accept as the limit of what you could do, and what is good enough. It’s worth acknowledging where greater potential lies, and perhaps challenge what is causing you not to capitalize on it.

2) Sam Walton, the founder of Walmart, once said “Capital isn’t scarce; vision is”. Vision is bigger than your current market realities. Vision is what creates markets. In the realm of potential markets, what we consider the hard realities of our situations usually fall away. This is where blue ocean strategy comes into play.

3) Donald Trump talks a lot about the idea of consistently and relentlessly investing your time and focus on what you want to achieve. In his book “Think Big and Kick Ass” what was most memorable to me was his approach to almost every question. Always question why not more, and then always move ahead. Instead of watching television for 2 hours a night, why not pursue the things you say you want to accomplish? Not a bad question. Relentlessly push the boundaries of what is possible, and relentlessly move toward your goals.

Performance is usually limited by what we know to be possible, but also by what we’re willing to do in order to develop ourselves to achieve it. There is no reason why you can’t have more of what you want, provided that you’re willing to do what it takes to get it.

Challenge your beliefs about what the potential in a situation is.

Challenge your vision and make sure you’re not short changing yourself right from the start.

Challenge the amount of focus and effort you currently place on doing the things that could change your world.

The surprising economics of customer loyalty

How do the economics of customer loyalty impact your ability to generate profitable and sustainable growth?

There are several ways that these two things interconnect. Stay until the end, this one is really surprising! At the most surface level, buyer economics are at play. Customers with emotive loyalty spend more money with you than customers with passive loyalty or those who are detractors. This isn’t the extent of their impact on growth.

At a level more removed, and perhaps less tangible, you have referral economics. Referral economics are the impacts that customer referrals, both positive and negative, have on your business. What customers say to peers and friends ends up having a huge impact on you as well.

A few years ago, Satmetrix completed a study to determine the impact that word of mouth had on profitability. So while we previously knew that promoters spend more per transaction, and give greater wallet share, this quantified the impact of referral economics. This study was completed across 2 markets, 4 industries and 14 segments.

They discovered that promoters were able to generate almost half a new customer per year based on their positive word of mouth. On the other hand, detractors repelled new customers and business was lost based on their negative referrals. Interestingly enough, while detractors didn’t seek out opportunities for negative referrals as much as promoters did, the (negative) conversion rate was 4-5 times that of the positive conversion rate.

In the example they used, customers in the various categories spent as follows:

Promoters: $1818
Average: $1615
Detractors: $1457

Here’s where it gets interesting:

Because of the referral impact the promoters had, they generate an average of $816 of new business through their referrals. (Referral impact of .505 x overall average spend of $1615 = $816) So 2 promoters would generate one new customer per year.

On the flip side, detractors cost the businesses on average $1352 in new business! (Referral impact of .837 x overall average spend of $1615 = 1352 in lost revenue)

So when you look at the big picture, a highly engaged and loyal customer generates more revenue than they spend. In this example, every promoter was worth over $2600 per year in revenue while the detractors were only worth $105. It would take 25 detractors to create the same revenue as just one promoter!!!

Customers really do have the final word!

* Graphic and research data written and published by http://www.satmetrix.com/

Customer satisfaction means little

Given the low correlation between customer satisfaction and the things you want from your relationship with customers… (wallet share, positive word of mouth, repeat business) a lot of organizations are moving to indicators of loyalty. Aren’t satisfaction and loyalty the same thing? Not really. Related, but totally different.

Jim Rohn once said that “One customer well taken care of could be more valuable than $10,000 worth of advertising.” Do you believe that? I do.

The reason behind it is (at least) threefold:
– Loyal customers provide 80%+ of your positive word of mouth
– Loyal customers spend more with you and give you more of their share of wallet
– Loyal customers are already sold, hence require less marketing and sale efforts
– Loyal customers stick around, hence their lifetime value is much greater
– Loyal customers have relationships with people that trust them more than they trust your advertising

The last one is really powerful. In a day where everyone is inundated with advertising, trust is a valuable commodity. When someone is willing to lend/risk their reputation in support of your brand, that speaks volumes.

Customer satisfaction means little. Customer loyalty means everything.

You have to write it down

A common mistake in leading strategy is the failure to be completely clear about what you’re trying to accomplish. In some instances, it can be as simple as just writing it down. Once enough general discussion has taken place with certain people in certain rooms, it is easy to acquire the sense that everyone understands the desired future state the same way. Writing it down allows you to take a stand, build accountability, and test the subtle assumptions behind what you’re communicating.

So if your visionary idea is to revolutionize your industry in the following way, what are the exact outcomes that you believe drive that success? What things are you purposefully NOT doing in order to get you there. What is your desired market position, and what does you brand NOT stand for?

One of the marks of quality long-term direction is that it isn’t simply word-smithed. It can be described in a hundred different ways. Having said that, you can’t do what you can’t describe to people.

Dream up your vision.

Build your strategy.

Write it down.

Communicate and test it.

Drive clarity, and then drive alignment.

The relationship or the transaction

One of the operational challenges of implementing a client facing strategy is to ensure that all front line policy supports either the transactional or relational focus you’re working to implement.

If you’re focused on delivering purely best price, you want a fair set of customer policies that ranges into the more rigid side of things. While customers don’t always like it, they understand that a price based relationship comes with these kinds of dynamics. If you’re a customer intimate organization, you’re not going to get very far if your policies are too rigid and are perceived as tipping the scales in the interest of your profitability for the individual transaction rather than a longer term interest. If you want to build customer loyalty, sometimes you have to be prepared to give up a dollar today to make two tomorrow. On the other hand, if you sell snake oil, it’s all about what you can make in the moment.

People can sense whether your priority is the relationship or the individual transaction. What are some of the things you can do to demonstrate an interest in long-term relationship with customers?
• Go the extra mile
• Anticipate a need
• Spend more time than you need to
• Let the customer win in the moment when they’re frustrated with you
• Bend a rule
• Invest time and money in the customer that you aren’t required or expected to
• Give them your absolute best every time
• Don’t give your best customers what they initially asked for without challenging it, give them what they need

Doing something without expecting an immediate return shows that you’re not completely inwardly and selfishly focused. It shows that you plan to be around for a while. This is a fertile ground for loyalty.

What stories are your customers telling about you?

WWSD (What would Steve do?)

We all trudge on under the assumptions of what can and can’t be done in our market, given the “realities”, what we see competitors and peers do, competitive forces and limitations. This can both allow you to manage what you believe to be true about your environment and also limit you from expanding beyond it. When you have the assumption that you are only ever likely to increase performance by X% per year, it’s highly unlikely that you’ll go beyond that. Your beliefs and assumptions are often your greatest limiting factor.

Have you thought about whether you’re asking yourself the wrong question? Perhaps you should be trying to determine how to change your market, create a new one, and double-triple-quadruple your sales instead?

Keep in mind that not everything you believe to be true about your market is absolutely true. Similar to how surface tension in water allows a puddle to expand and grow but limits and controls the expansion to a shape, leaders are often uncomfortable with trying things totally new to stable industries, and jutting out on their own. Trying something revolutionary creates risk and we manage this by maintaining proximity to the pack.

Sometimes it’s easier to see potential when you imagine someone else leading. So sit back and think about what your leadership hero would do in your situation. Is it likely that they would make the same moves you would or something significantly more bold?

How did Michael Dell become the youngest CEO of a Fortune 500 company that he started out of his dorm room?
How does Donald Trump do the (crazy) things he does?
How did Steve Job change the world?

It wasn’t by growing at 5% per year.

Step back and start to think about what it would take to double, triple or exponentially grow your business. Set fear aside and talk about what it would take. Even if you don’t end up changing the world, you’ll probably uncover some bigger growth ideas that have the potential for greater impact than what you currently have planned.

Ask yourself: What would Steve do?

More projects than money?

How do you handle the prioritization of projects when your organization has more projects than money?

There are many interesting dynamics that come into play when you’re tasked with prioritizing a laundry list of corporate projects, ensuring that the right ones go ahead but knowing that not all of them can proceed. Again, in a healthy environment, this is just business as usual. You don’t want to throw money at every idea that comes forward, only the best ones.

This gets difficult when there are multiple competing priorities that are all important. You have to say no to something that you know is important and pressing in order that something else that is of more relative importance can go ahead. The dynamics of short-term pressing vs. long-term strategic also play into this. Also, how do you ensure that leaders don’t just root for the projects stemming from their subordinates?

Organizations approach this in multiple ways. In general, the more robust your strategy and project management systems are, the better positioned you are. Some use a process wherein business units essentially compete for the dollars, in others there is a scoring method. There is no one right answer, each approach needs to fit the culture and industry. However it is worth considering a methodology where a clear set of criteria is agreed to ahead of time. This usually results in greater objectivity and results in more equal participation by decision makers.

You need to come to agreement on what the scoring categories are, and the relative importance of each before you can come to a mutually satisfactory decision.

Some of those categories could include:

• Long-term strategic value
• Positive impact to the client experience
• Mandatory compliance related
• Alleviates significant operational risk
• Creates significant internal efficiencies
• Positive impact to the culture of the organization
• Significant profit opportunity

As you proceed, be certain that you:
1) Base the budget on the strategy, not the other way around.
2) Maintain a mutually agreed upon, transparent criteria
3) Make sure the framework around your process is robust enough to ensure projects are being managed at appropriate levels

Great questions

With most things related to organizational improvement, the answers to your biggest problems are usually less complicated than you initially think. When there is a lack of clarity, it usually speaks more to your perspective and understanding than the problem. Because of this, you need to surround yourself with people who know how to ask great questions. This includes questions that that challenge your existing beliefs and perspective.

It is a fact that not all of your beliefs are true in the absolute sense. These beliefs are true to you today, hence they tint your view of the world accordingly. When we believe something, we subconsciously look for information that supports that belief, hence we stay sane. This is partly why people resist change to the degree that they do. When new information conflicts with what you believe, it isn’t always easy to process. In the interest of relentless organizational improvement and corporate performance, constancy and stability then become a problem. Something has to be interjected into that equation that sparks change.

Cognitive dissonance refers to a temporary state of holding two or more conflicting ideas or beliefs. When this occurs, the subconscious goes into overdrive to resolve the conflict. Say for example that you believe your performance with customers is stable at a satisfactory value of X. If nothing comes along to challenge that belief, no adaptation occurs and nothing changes. If data suddenly emerges that suggests your performance is a less satisfactory value of Y, which conflict with X, how do you handle it?

Be open to the idea that:

– No measurement tool is perfect, hence your data is not infallible
– You currently hold beliefs that aren’t absolutely true
– Sometimes a better perspective is the thing that would allow you to see a stronger option or solution

Surround yourself with people you trust, who also ask great questions.
Create an environment where they are encouraged to do so.
Give outlier perspectives from those you trust a full shake.

Reading minds: Understanding your body language – Part 4

There is a whole encyclopedia of body language to learn, this is just the last part of a 4 part primer series.

Hands: The hands are a major insight into communication. We covered open/honest and dominant/closed with which direction the palms are facing already. One that is interesting to note is that when a person is done communicating, they often literally put the hands away. When the hands go into the pockets, it usually indicates “I’m done talking” or “I don’t have much interest in starting a conversation either.”

Pointing the feet: When a person is engaged in a conversation, their feet usually point in the direction of their interest. When people are done talking and they want to go, their feet will often be the first clue. When the feet shift to point somewhere else, that usually means the person wants to leave. Our feet point start walking away before the rest of us does.

Making yourself bigger / smaller: When we make ourselves bigger, such as by using hands on hips, it is to indicate that you are dominant, ready for assertive action. You’re not backing down, you’re a threat. When we make ourselves smaller by drawing our arms in, cocking the head and shrugging, it is to demonstrate compliance and that we are not a threat.

Mirroring: Mirroring someone else’s body in a subtle way subconsciously lets them know that you’re like them. Because we like ourselves, this causes us to like the person doing this more too. It results in a sense of familiarity. I recommend doing this only gradually, and not exactly!

When you feel the most confident, superior or arrogant, you open your vitals up because you’re indicating you don’t perceive any threats. The opposite is true as well. Getting a few of these basics under your belt will provide you with a new channel of insight into what is happening around you. And when you’re aware of what you’re broadcasting to the world, you have a chance to control the messaging.

Reading minds: Understanding your body language – Part 3

Now that we’re into part three, you’re probably becoming quite a bit more aware of your own body language, and that of the people around you. Strap in, we’ll cover some more. It’s good to cover the theory of all this, but being effective in reading it is a matter of practice. When you’re facilitating a meeting, this isn’t the only thing you’re doing, so it often gets overlooked.

Deceit: Lying goes against what the body naturally wants to do. Body language is generated subconsciously, so when people try to control it such as in the case of lying, there are usually clues that they can’t mask. The body simply tenses up when people lie. Movement in general gets more rigid, they sometimes avoid eye contact (the eyes don’t want to lie – although this can be cultural), the mouth goes dry (hence people lick their lips more frequently), they will be more likely to touch their ears and nose more, and sometimes the head will shake as if to say “no” in a subtle way even as a person is lying with a verbal “yes”. Dry mouth can indicate simply being nervous, so look for clusters. Researchers have even found that using a high speed camera uncovered even more facial gestures than an experienced body language researcher could notice in the moment which looked like wincing or frowning while the person was lying. The body and mind simply don’t want to lie!

Confidence: With men, a common dominant gesture is to show the groin when seated (open legs). It literally says “I don’t feel threatened,” I am confident. Open body language demonstrates confidence.

Control / Dominance: Dominance gestures are interesting. We know that open hands invites trust and openness. Hands facing down is a power / control gesture. A well-known palm-down gesture was used in Germany in WWII and was meant to assert a sense of dominance. You can put together combinations from there. Finger pointing, palm down, looking over the glasses and down the nose all produce the same effect; they’re not meant to make you feel comfortable! Looking down the nose and bringing the forehead down slightly helps to protect the throat, another vital area.

Hand-shakes: I’ll close with a truly interesting one. How a person approaches a handshake indicates sentiment of being open/submissive or whether they want to assert dominance. Again, this comes back to palms up / palms down. If a person approaches with palms down, it’s less likely they want to be on equal footing with you, that means they want to be in a position of control. If they come in for a shake palms up, they are showing you they have nothing to hide and it shows openness. As expected, a handshake that occurs vertically shows equal footing.

Not in every published photo, but many leaders make efforts to position themselves with a counterpart to their left for photo ops involving a handshake. When you reach for the handshake, the person reaching to the right pretty much has to open their hand up making them look submissive. In the following photo, George W. is right where he wants to be… on top.

I hope you’re starting to see how literal our body language is, as though it were ingrained into people during countless years where physical protection often determined whether you became old or not. We physically protect ourselves based on how we’re feeling and the sense of threat or dominance we sense.

Perhaps a part 4 to wrap up a few last interesting points…