What is YOUR Exit Goal and Process for Creating Value?

Today we have a guest blog from Earl Bell:

Being a business owner/CEO can be addictive and imagining what life will be like when you no longer “run the show” may seem like a distant blur.  However, this is EXACTLY what I’d like to suggest you take a moment and do right now!

Are the majority of your assets are tied up in the company?  If so – a sell transaction will substantially fund your retirement.  Do you know “how much money is needed” to provide financial peace of mind?  Do you know what the company is worth today?  What is the gap – in other words – how much additional value must be created before selling the business to achieve your financial goals? 

Get started by assembling the right leadership team before developing a “process for creating value.”  Great leaders know how to coach employees and inspire them to greatness in support of a company’s mission!  Conversely, ineffective leadership and guidance is like having a rudderless ship…  

So… on to the good stuff - what does a process for creating value look like? 

Well, that’s way too complicated to cover in a blog post, but let me give you a simplified model:

1.    Identify the value gap (for example – let’s pretend you want $5 million more enterprise value or $1.25 million in annual operating earnings.)

2.    Quantify what risk you are willing to take – (such as - expanding geographic territory is OK but acquiring a competitor is not OK.)

3.    Identify what creates value - automate decision making in support of this.  Think “offense” in this area – like building stronger relationships with key customers.

4.    Identify what destroys value – build process to eliminate bad decision making.  Think “defense and risk management” – such as using scientifically proven methods to make the right hires for your organization.

5.    Monitor, measure and reward progress – lead and inspire others – align rewards with achievement.

The point I want to make it this… “defining an exit goal and value creation process improves odds for achieving financial peace of mind.”  I’d suggest action sooner rather than later – the stakes are high!

ABOUT EARL BELL

EARL BELL is the author of, Winning in Baseball and Business, Transforming Little League Principles into Major League Profits for Your Company, which provides a roadmap to success for leaders that desire to build thriving companies in a very competitive 21^stcentury business environment.  Earl believes that “everything you need to know about business, leadership and team building can be learned from Little League baseball.”

Earl coaches and consults with owners, business leaders and their teams, teaching them how to dramatically reduce the time it takes to improve profitability, customer experience, employee engagement and company value, while simultaneously increasing discretionary time and reducing both stress/employee burnout.  He believes the secret to winning in baseball, business and life can be summarized in a simple formula:  Winning = Service + Humility. His motto is that Winning in Business is a Team Sport!

Earl has served in the Chief Financial Officer role for numerous companies throughout North America. His personal passion is youth sports and he has coached 28 teams since 2002.  Earl is a CPA, graduated from SU (Seattle University) with a BA in Accounting and from the MILL (Mercer Island Little League) with a Master’s in Youth Baseball.

3 Tips for More Effectively Setting Marketing Budgets

Today we have a guest blog from Elizabeth Andreini:


One of my favorite quotes comes from Peter Drucker. Considered the father of business consulting, he made an insightful observation:

"Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."

For many CEOs though, marketing somehow seems like a cost, rather than an investment. They come to me seeking benchmarks and comparisons with competitors to know how much they have to spend. What no one wants to hear is the real answer to the question of how much should be spent in marketing, which is “it depends.” Since we are in budgeting and planning season right now, I thought I would give you some practical advice and guidelines to consider.

First, consider the type of business you are in, your target market and how you sell. The size of a marketing budget can vary based on a company’s industry, position in the industry, whether it is selling products, services or both, size, stage of development, the target market, etc. (In general B2B marketing spend is less than that for a B2C focused company.) Most companies allocate between 5 and 12% of revenue for marketing, but it can vary widely depending on a company’s business and marketing objectives. Having said that, if you need a ballpark, start with 8% and adjust from there.

Secondly, make sure your marketing strategy and budget support a clear, focused business strategy (grow market share, expand into new markets, launch new revenue-producing products/services, increase customer retention, etc.). To grow market share you may need to spend more. If you go into new markets, you’ll need to spend more or decrease spending on other initiatives or in other markets. Also, add a budget amount for “unexpected opportunities” which you won’t want to pass up when the time comes – even if you don’t know what it will be!

Lastly, consistently and accurately track the impact of marketing activities to determine what drives revenue (short & long term), customer retention and other metrics. Rank the marketing activities based on expected “bang for the buck” payback. Now build a marketing budget from the ground up. Those activities with the biggest payback go into the budget. Then execute, measure, adjust and repeat!

As the CEO, the questions you should ask about your marketing budget are:

1.    Is our business strategy aligned across the company so initiatives in each department, especially in marketing, support the company’s goals? How does our marketing budget support those goals and the way we sell?

2.    If we spent more could we significantly increase our market awareness or grow our customer base and market share? Can we afford or are we willing to make that investment now, and what are the implications or tradeoffs?

3.    Do we have reliable (and consistently used) tracking systems in place to know whether we are spending our limited marketing dollars on the right things? How do we know our marketing dollars are being invested in the most productive way?

Additional Resources

One free resource about marketing budgets is an annual report summarizing an August survey of CMOs available at www.cmosurvey.org/results/. The survey results are broken out based on industry and company size. (Note: Marketing budgets as a percentage of revenue have been rising steadily since February 2011 according to the August 2012 survey of CMOs. www.cmosurvey.org/blog/marketing-spend-on-the-rise-%E2%80%93-three-trends-worth-watching/)

If you are interested in reading some more articles about the marketing during recessions, here are some links:

www.hbswk.hbs.edu/item/5878.html

www.mckinseyquarterly.com/Learning_to_love_recessions_1197

www.newyorker.com/talk/financial/2009/04/20/090420ta_talk_surowiecki

www.oregonstate.edu/ua/ncs/archives/2009/mar/advertising-during-recession-may-yield-increased-earnings-later

ELIZABETH ANDREINI

As the President of Accelerate Marketing, LLC, Elizabeth Andreini, is the “secret weapon” CEOs turn to at key growth points when they need to transform marketing and product management to grow their customer base, increase revenue & scale their business. In addition to providing experienced executive insight and guidance, Elizabeth often works as an interim CMO or VP to provide the hands-on leadership needed to rearchitect marketing and product management and improve execution from the inside.

Elizabeth Andreini, founder & president of Accelerate Marketing, LLC 

Accelerate Marketing, LLC

206-769-3420 or elizabeth@accelerate-marketing.com

www.accelerate-marketing.com

Twitter: @acceler8mkting

LinkedIn: www.linkedin.com/in/elizabethandreini

Why Listening to Your Customers Isn’t Always a Good Idea

Today we have a guest blog from Elizabeth Andreini:

Sounds counterintuitive, doesn’t it? You should always listen to your customers, right? Actually not always…

Many companies have a group of customers that are informally contacted for feedback when considering development of new products or to validate changes to their marketing approach. Other companies have customer advisory boards deliberately composed of a diverse set of customers to solicit feedback in a more structured manner and reconcile conflicting views and priorities. When developing add-on or complementary products and services, focusing solely on existing customers may be appropriate. But don’t make the mistake of confusing needs of your existing customers with the needs of the market. 

Customers have an inherently biased perspective of your company and its product offerings. Existing customers are accustomed to the current product’s capabilities and give feedback in the context of that experience. Feedback from existing customers tends to be more evolutionary than revolutionary, and focuses on incremental improvements based on their familiarity with the current offering in existing markets. Existing customers are much less effective at identifying new product offerings and new potential markets. If the voice of the customer overwhelms that of the market, you run the risk of being TOO tailored to one section of the market (your existing customers). Companies need to keep their eyes on the whole market or new offerings won’t sell as well as expected limiting revenue growth potential.

I once worked at a software company where our flagship customer was collaborating with us on the next version of our main software product. Just as we were about to move into a key phase of development, we shared detailed development plans with a very large prospect. That prospect had a different set of needs and priorities for the next product version. After further research, it turned out that the customer’s needs were not only different but incompatible with much of the market we were moving into. The company almost made a mistake that would have cost us a number of prospective customers and delayed us expanding our market share. It was a tough situation that could have been avoided by making sure that we better understood the voice of the market as well as the needs of our current customers upfront.

So, while listening to your customers is very important, don’t fall into the trap of assuming customers’ needs are similar to the needs of the whole market. A customer isn’t fully representative of the market. Invest time in an ongoing basis to really listen and understand the voice of the entire market. And remember, customers are not always right.

ELIZABETH ANDREINI 

As the President of Accelerate Marketing, LLC, Elizabeth Andreini, is the “secret weapon” CEOs turn to at key growth points when they need to transform marketing and product management and grow it to the next level critical for revenue and profitability. In addition to providing experienced executive insight and guidance, Elizabeth often comes in as an interim CMO or VP to provide the hands-on leadership needed to rearchitect marketing and product management and improve execution from the inside.

Elizabeth Andreini, founder & president of Accelerate Marketing, LLC 

Accelerate Marketing, LLC

206-769-3420 or elizabeth@accelerate-marketing.com

www.accelerate-marketing.com

Twitter: @acceler8mkting

LinkedIn: www.linkedin.com/in/elizabethandreini

Why Listening to Your Customers Isn't Always a Good Idea

Today we have a guest blog from Elizabeth Andreini:

Sounds counterintuitive, doesn’t it? You should always listen to your customers, right? Actually not always…

Many companies have a group of customers that are informally contacted for feedback when considering development of new products or to validate changes to their marketing approach. Other companies have customer advisory boards deliberately composed of a diverse set of customers to solicit feedback in a more structured manner and reconcile conflicting views and priorities. 

When developing add-on or complementary products and services, focusing solely on existing customers may be appropriate. But don’t make the mistake of confusing needs of your existing customers with the needs of the market. 

Customers have an inherently biased perspective of your company and its product offerings. Existing customers are accustomed to the current product’s capabilities and give feedback in the context of that experience. Feedback from existing customers tends to be more evolutionary than revolutionary, and focuses on incremental improvements based on their familiarity with the current offering in existing markets. Existing customers are much less effective at identifying new product offerings and new potential markets. If the voice of the customer overwhelms that of the market, you run the risk of being TOO tailored to one section of the market (your existing customers). Companies need to keep their eyes on the whole market or new offerings won’t sell as well as expected limiting revenue growth potential.

I once worked at a software company where our flagship customer was collaborating with us on the next version of our main software product. Just as we were about to move into a key phase of development, we shared detailed development plans with a very large prospect. That prospect had a different set of needs and priorities for the next product version. After further research, it turned out that the customer’s needs were not only different but incompatible with much of the market we were moving into. The company almost made a mistake that would have cost us a number of prospective customers and delayed us expanding our market share. It was a tough situation that could have been avoided by making sure that we better understood the voice of the market as well as the needs of our current customers upfront.

So, while listening to your customers is very important, don’t fall into the trap of assuming customers’ needs are similar to the needs of the whole market. A customer isn’t fully representative of the market. Invest time in an ongoing basis to really listen and understand the voice of the entire market. And remember, customers are not always right.

ELIZABETH ANDREINI

As the President of Accelerate Marketing, LLC, Elizabeth Andreini, is the “secret weapon” CEOs turn to at key growth points when they need to transform marketing and product management and grow it to the next level critical for revenue and profitability. In addition to providing experienced executive insight and guidance, Elizabeth often comes in as an interim CMO or VP to provide the hands-on leadership needed to rearchitect marketing and product management and improve execution from the inside.

Elizabeth Andreini, founder & president of Accelerate Marketing, LLC 

Accelerate Marketing, LLC

206-769-3420 or elizabeth@accelerate-marketing.com

www.accelerate-marketing.com

Twitter: @acceler8mkting

LinkedIn: www.linkedin.com/in/elizabethandreini

Managing Social Media: Not Just a Waste of Time - Why It Really Matters for your Brand

Today we have a guest blog from Elizabeth Andreini:

The precipitous rise of social media and its idol worship status in the press has led CEOs and other executives to wonder whether social media really justifies the investment of time and corporate resources to support it. After all who really cares that in the last 30 days the number one topic trending on Twitter was “Happy Easter”?! (Yes, that was the top trending topic as I was writing this blog.)

But what gets lost in all the frenzy about social media is that this is just another means of communication. Social media content is just information and opinions shared online with others, in many cases people they don’t know and have never met. Online opinions and social media statements about your brand probably already exist today. Comments can be made about your company, its products/services and your customer service by current, prospective and former customers, and even employees (and former employees) at any time. This information is your corporate “digital brand tattoo” that influences what everyone believes about you and your products.

The Word of Mouth Marketing Association (www.womma.org) will tell you that consumers’ purchase decisions are driven by:

• 54% Word of Mouth
•  47 % information from a Web site
•  42% email sent by a friend
•  31% online review

Online reviews can be positive, raving about a great product and brand they love, or negative, blasting poor customer service. Regardless of the perspective, almost half (49%) of Americans believe online “word of mouth” or reviewer information to be highly credible, and are increasingly searching for and using that information when making purchase decisions. While 66% of individuals’ brand-related conversations are “mostly positive,” 8% of individuals’ brand-related conversations are “mostly negative.” Can you afford to ignore this online information and not manage what is being shared about your brand?

(Research source: http://womma.org/word/2011/10/16/infographic-the-word-and-the-world-of-customers/)

Learn what is being said in social media by setting up online alerts for your company and product names to track when they appear. If a negative comment appears step in, fix the problem and placate the negative opinion (potentially getting an updated positive response) or at least do damage control before it spreads and hurts your brand. Then when you are ready expand your efforts across online forums and social media sites such as Facebook, YouTube, LinkedIn, and Yelp among others to proactively engage with your customers. You’ll increase your number of online fans and the word will get out. See you online!

ELIZABETH ANDREINI

As the President of Accelerate Marketing, LLC, Elizabeth Andreini, is the “secret weapon” CEOs turn to at key growth points when they need to transform marketing and product management and grow it to the next level critical for revenue and profitability. In addition to providing experienced executive insight and guidance, Elizabeth often comes in as an interim CMO or VP to provide the hands-on leadership needed to rearchitect marketing and product management and improve execution from the inside.

Elizabeth Andreini, founder & president of Accelerate Marketing, LLC 

Accelerate Marketing, LLC

206-769-3420 or elizabeth@accelerate-marketing.com

www.accelerate-marketing.com

Twitter: @acceler8mkting

LinkedIn: www.linkedin.com/in/elizabethandreini

Managing Social Media: Not Just a Waste of Time- Why It Really Matters for your Brand

Today we have a guest blog from Elizabeth Andreini:

The precipitous rise of social media and its idol worship status in the press has led CEOs and other executives to wonder whether social media really justifies the investment of time and corporate resources to support it. After all who really cares that in the last 30 days the number one topic trending on Twitter was “Happy Easter”?! (Yes, that was the top trending topic as I was writing this blog.)

But what gets lost in all the frenzy about social media is that this is just another means of communication. Social media content is just information and opinions shared online with others, in many cases people they don’t know and have never met. Online opinions and social media statements about your brand probably already exist today. Comments can be made about your company, its products/services and your customer service by current, prospective and former customers, and even employees (and former employees) at any time. This information is your corporate “digital brand tattoo” that influences what everyone believes about you and your products.

The Word of Mouth Marketing Association (www.womma.org) will tell you that consumers’ purchase decisions are driven by:

•  54% Word of Mouth
•  47 % information from a Web site
•  42% email sent by a friend
•  31% online review

Online reviews can be positive, raving about a great product and brand they love, or negative, blasting poor customer service. Regardless of the perspective, almost half (49%) of Americans believe online “word of mouth” or reviewer information to be highly credible, and are increasingly searching for and using that information when making purchase decisions. While 66% of individuals’ brand-related conversations are “mostly positive,” 8% of individuals’ brand-related conversations are “mostly negative.” Can you afford to ignore this online information and not manage what is being shared about your brand?

(Research source: http://womma.org/word/2011/10/16/infographic-the-word-and-the-world-of-customers/)

Learn what is being said in social media by setting up online alerts for your company and product names to track when they appear. If a negative comment appears step in, fix the problem and placate the negative opinion (potentially getting an updated positive response) or at least do damage control before it spreads and hurts your brand. Then when you are ready expand your efforts across online forums and social media sites such as Facebook, YouTube, LinkedIn, and Yelp among others to proactively engage with your customers. You’ll increase your number of online fans and the word will get out. See you online!

ELIZABETH ANDREINI

As the President of Accelerate Marketing, LLC, Elizabeth Andreini, is the “secret weapon” CEOs turn to at key growth points when they need to transform marketing and product management and grow it to the next level critical for revenue and profitability. In addition to providing experienced executive insight and guidance, Elizabeth often comes in as an interim CMO or VP to provide the hands-on leadership needed to rearchitect marketing and product management and improve execution from the inside.

Elizabeth Andreini, founder & president of Accelerate Marketing, LLC 

Accelerate Marketing, LLC

206-769-3420 or elizabeth@accelerate-marketing.com

www.accelerate-marketing.com

Twitter: @acceler8mkting

LinkedIn: www.linkedin.com/in/elizabethandreini

Unblurring the Line Between Marketing & Sales

Today we have a guest blog from Elizabeth Andreini:

Recently I was talking with a CEO who wanted to increase his sales and grow revenue to expand his business. The CEO wasn’t sure whether he should focus additional resources on the Marketing or Sales departments, wanting to allocate his limited budget wherever the company would get the biggest “bang for its buck.”

Because marketing and sales are so intertwined during the customer acquisition process the line where one stops and the other starts isn’t always clear. One question to help answer the “sales or marketing” question above is:

Do you need to do a better job generating awareness or interest in your company and its products/services to find more (or better) prospects OR do you need more help closing the prospects you have or closing those interested prospects faster? 

The former is Marketing, the latter Sales.

Marketing works in a one-to-many manner with the whole target market with a longer term focus. Marketing broadcasts key messages and benefits about the company and the products/services being sold to create awareness and interest from the entire market to identify prospective customers.  These leads” get handed off from Marketing to Sales for the individual interactions required to turn them into customers.

Sales is the personalized one-on-one interaction required to build a relationship, understand the unique requirements a specific prospect has, and communicate the benefits and value gained by becoming a customer. (Sales also interacts with existing customers to buy more products or services.) Sales has a near term goal to close a deal or get a specific contract signed.

Marketing should be done in coordination and consultation with the specialized knowledge sales, customer service, product development and others have. And Sales should rely on the expertise Marketing has to create the sales tools needed to communicate key messages and get customers interested enough to ask for more information and engage sales directly. Regardless of your answer, both groups need to work together for you to really get the most “bang for your buck” and the best marketing and sales for your company.

ELIZABETH ANDREINI:

As the President of Accelerate Marketing, LLC, Elizabeth Andreini, is the “secret weapon” CEOs turn to at key growth points when they need to transform marketing and product management and grow it to the next level critical for revenue and profitability. In addition to providing experienced executive insight and guidance, Elizabeth often comes in as an interim CMO or VP to provide the hands-on leadership needed to rearchitect marketing and product management and improve execution from the inside.

Elizabeth Andreini, founder & president of Accelerate Marketing, LLC. 

Accelerate Marketing, LLC

206-769-3420 or elizabeth@accelerate-marketing.com

www.accelerate-marketing.com

Twitter: @acceler8mkting

LinkedIn: www.linkedin.com/in/elizabethandreini

Know Where Value is Being Created and Destroyed

Today we have a guest blog from Earl Bell:

Building value in companies should be by design, and not chance.  Owners can and should use dashboard reports that measure, monitor, encourage and reward teams to do more things that add value and do fewer things that detract from value.

My friend Chris owns a restaurant and he wanted to develop a dashboard indicator for “customer experience and advocacy.”  The way he looked at things – customer experience fell into three buckets – let’s use the 80/20 principle to illustrate:

• 80% - “satisfied customers” resulting from employees “doing their job sufficiently.
•  10% - “disgruntled customers” who will not return and will tell their friends and others about how the service was awful.  Social media sites like Yelp amplify the problem.
•   10% - “advocate customers” were thrilled with the experience and will tell their friends and others - using Yelp and other sites to amplify their exuberance.

The observation Chris made was that disgruntled customers detracted from value while advocate customers enhanced value.  The annual goal was to decrease disgruntled customers closer to 0% and to increase advocate customers to 20%.  The solution was to develop and broadly share a customer experience index “CEI” to track and reward progress.

Every person in the restaurant was brought into a meeting to talk about how customer experience translates to profitability, job security and how they, the team and the restaurant are perceived by the most important stakeholder – the customer.   Everyone agreed that a full restaurant and bar translated to more income – especially tips – and that the working environment was a lot more fun when the place was packed!

Open conversation about what worked extremely well and what needed to change took place without blame or threat.  In fact, a little bit of team building happened and the employees were appreciative that they were included in the conversation and had a chance to talk about specific changes in behaviors that would improve the CEI.

By building agreement on what and how the dashboard would be developed and used, total buy-in took place that resulted six months later in nearly no disgruntled customers, 14% advocate customers and a 23% increase in revenues.  Chris was thrilled with the outcome and developed a short-term bonus program tied to dashboard results for the Client Satisfaction Index and revenue – to further incentivize his team.

So my challenge to you is to think about YOUR business and customers - and develop dashboard indicators appropriate to drive MORE value creating activities.  While doing this, include your team in the process and get their buy-in.  The results may surprise you!

ABOUT EARL BELL

 EARL BELL is the author of, Winning in Baseball and Business, Transforming Little League Principles into Major League Profits for Your Company, which provides a roadmap to success for leaders that desire to build thriving companies in a very competitive 21^stcentury business environment.  Earl believes that “everything you need to know about business, leadership and team building can be learned from Little League baseball.”

Earl coaches and consults with owners, business leaders and their teams, teaching them how to dramatically reduce the time it takes to improve profitability, customer experience, employee engagement and company value, while simultaneously increasing discretionary time and reducing both stress/employee burnout.  He believes the secret to winning in baseball, business and life can be summarized in a simple formula:  Winning = Service + Humility. His motto is that Winning in Business is a Team Sport!

Earl has served in the Chief Financial Officer role for numerous companies throughout North America. His personal passion is youth sports and he has coached 28 teams since 2002.  Earl is a CPA, graduated from SU (Seattle University) with a BA in Accounting and from the MILL (Mercer Island Little League) with a Master’s in Youth Baseball.