A group of college kids volunteered for an interesting psychological experiment. They were told to walk into a room where a bathtub was overflowing with water and clean up that water as quickly as they could. Immediately, most students went straight for a mop, bucket and towels. Only one in five thought to turn off the water first.

Amazingly, I’ve seen business owners do the equivalent of this very thing. They ask me to help them turn their struggling companies around, so I go in prepared to do an in-depth analysis of their business situation.

“Don’t waste your time on all that stuff,” one owner told me, “I know what the problem is. We just need more money in sales.” So I took his company from $100,000 to $150,000 per month in sales in just four months, but that did not solve the problem. The owner was still struggling and nearly bankrupt. He called me again.

“I’ll come back, but only if we start over at Step One,” I said. It turned out he was solving the wrong problem. After we proceeded through all the steps we realized he was mispricing his product and losing three cents on every dollar he brought in.

To solve the right problem, you must identify the cause of that problem. In the case of the college experiment, the obvious problem was the water on the floor. That was the problem that 80% of the student participants tried to solve. However, the immediate cause of the problem was the water continuing to run from the bathtub faucet. Other contributing causes were the length of time the water had been running, the rate at which the water had been running, and the size of the tub.

Nearly all the problems you encounter in business have multiple contributing causes and one primary cause, the latter of which needs to be addressed immediately.

How do you identify the primary cause of a problem? Sometimes you have to ask the right questions, sometimes you need to use work flowcharts, and sometimes you need to measure.

How do you prevent problems? By using the same tools listed above, with an emphasis on measuring (water flows at five gallons per minute and the tub holds 50 gallons…we cannot let the water run for more than ten minutes).

Knowing how to solve the right problem is essential in business. However, predicting and avoiding problems is what allows you to achieve bliss.

Whether you are self-employed as the sole owner of a small business or the manager of a larger organization, there will always be occasions when you are faced with difficulties. When these situations arise, Create Business Bliss is ready to help.

Watch new “Business Guide” videos! From Steve Lawson

You may think you keep your customers happy, but there is a 52% chance they would disagree with you.

A CRM Guru survey questioned thousands of customers and hundreds of businesses. Of the respondents who said they had stopped using a product or service, 74 percent blamed customer service as a major factor in their decision.

Managers, however, believed customer service issues were a factor only 22 percent of the time. This survey shows that a large perception gap exists among managers, who are completely out of sync with customers.

Even when presented with the data, some managers insisted that their service couldn’t be the problem. The issues that caused their customers to defect, they said, were due to circumstances beyond the managers’ control. Maybe that’s partly because only about four percent of consumers who experience poor customer service will let a manager know—the rest just take their business elsewhere.

According to CRM Guru Founder/CEO Bob Thompson, “Creating a differentiated customer experience is critical to stand out in today’s competitive global market. Over the past 10 years, we’ve consistently found in our research that the customer’s experience drives loyalty as much as the functional value of the purchased product/service.”

In his book The Loyalty Effect, loyalty guru Frederick Reichheld says customer loyalty is a powerful profit generator because loyal customers tend to spend more, refer others and cost less to serve.

“Most people leave a company because they feel they’re not treated well,” according to Arthur Hughes, author of The Customer Loyalty Solution. “They feel that, for some reason, they have been ignored or not treated properly. Management usually thinks the reason for leaving is price, and of course, that’s true in some cases. But it’s usually because they feel that they’ve been neglected or somehow abused,” Hughes said.

Consumers don’t have to suffer poor treatment to jump ship, however. Even providing average service can cost you. The battle for customers in today’s economy is fierce, and the competition is constantly trying to lure them away from you. Average isn’t good enough anymore; you have to be exceptional.

On a rating scale, customer service falls broadly into these categories:

5: The Raving Fan. These customers love, love, love how you’ve treated them. They tell their friends. They are how you get referrals—the only way.

4: The Satisfied Customer. These people like your service just fine. They won’t give referrals, just repeat business.

3: The Indifferent Customer. You haven’t done anything to offend them, but neither have you impressed them. Any little thing can sway them either way.

2: The Unhappy Customer. Most businesses know that disgruntled customers are all too eager to share their negative experiences with everyone they know. You lose their business and possibly other people’s too.

1: The “Lawyer Up” Customer. These people believe that you made a promise, but didn’t keep your word (or your contract.) There are plenty of lawyers making a living on that belief.

Only one of these, the Raving Fan, gives referrals. Customer service is not a game of numbers, like marketing, according to MERCHANTAdvisors Services. Simply having a huge customer base will not guarantee ongoing business success if customer loyalty is not a priority.

“Keeping even just 10 customers happy will ensure that they will be repeat customers, and even better, will tell all their friends and family. Chances are they will stick with such a company through thick and thin,” they said.

“Get your facts first and then you can distort them as you please.” –Mark Twain

Business Success Kit – Video

“If I’d wanted to make $25,000 a year I could have just worked at a design shop 40 hours a week,” a client recently told me. Instead, he’s working almost double those hours running his printing company and netting the same amount. “I’m in the black, so I guess that’s ‘success,’ but not the kind of success I’d hoped for,” he said.

In business we use two formulas. The first one, which I’ve discussed in my last two newsletters, is the formula for turning successful strategies into actions to generate success. The second formula is empirical and consists of five parts: Prospects, Rate of Conversion, Occurrences (i.e., number of visits per customer), Amount (dollar spent per visit), Margin (percent of transaction that is profit). All five of them multiplied together will tell you your profit. Also, the first three (P*R*O) equals the number of transactions in a time period (i.e. year), and the last two (A*M) lets you know how much profit you make per transaction. We can say:

PRO*AM=Profit

For example, let’s say Claire’s Custom Clothing has 2,500 prospects throughout the year. Conversion is how many of those prospects Claire can turn into customers, which ends up being 20 percent. Claire’s customers make an average number of ten visits to her store in one year. They spend an average of $20 per visit, making Claire’s profit margin 25 percent—an annual profit of $25,000.

Let’s see what occurs when we improve each number in the formula by just 10 percent: Claire now has 2,750 prospects. Her conversion rate becomes 22 percent; her customers average 11 visits per year to her store and spend a mean of $22. Claire’s profit margin increases to 27.5 percent and her annual profit rises to $40,262.72

Now increase each number by 20 percent and watch what happens. Claire has 3,000 prospects with a conversion rate of 24 percent. Each customer averages 12 visits a year and $24 per visit. Claire’s profit margin grows to 30 percent, and her annual profit swells to $62,208.

The problem I see with so many businesses is that they become obsessed with prospects and overlook the other four numbers, yet the key for success is to use all five. Start with the last example showing a $62,208 profit.

Without changing anything else, assume we increase the average sale a few dollars more to $30 per visit (Would you like some earrings with that?) The profit increases to $77,760. Sometimes making what appear to be small changes can have dramatic results.

Prospects are indeed the most difficult and expensive to increase because it takes so much time and money to get in front of prospects. Business owners feel added pressure because they have to compete with every other business on the planet for the attention of the potential consumer

Did you know it takes eight times as much energy and capital to get a new client as it does to keep a client? That’s the reason restaurants constantly entice customers with “exciting” new menus and specials in the hope of increasing their number of visits. And it’s why your waiter or waitress will always suggest an appetizer and dessert—those extra few dollars per visit drive up that profit margin. Numbers don’t lie: getting a customer who comes once a month to come twice and you double your profits.

There are numerous strategies that can help improve proficiency in each of these five areas. The strategies will vary depending on your type of industry and the size of your business. For more information on how to make your business soar contact us at Create Business Bliss.

When you’re in the market for a new house, to whom do you turn for assistance? Most
likely, you seek a realtor who comes highly recommended or someone whose services
have been helpful to you in the past. That’s because people buy from those they like
and trust. In last month’s article I explained the importance of establishing new contacts
through marketing. Now I will focus on how to “build the bridge” to making a sale.
Let’s work backwards. Before you get a sale, you must build your likeability and
establish trust. I am not going to tell you how to make yourself likeable (if necessary,
read “How to Win Friends and Influence People” by Dale Carnegie), but I will share the
best ways to build trust. Follow the rules you learned in Kindergarten:
1) Play nice: don’t name-call or badmouth anyone in the presence of others
2) Clean up: present yourself well
3) Share: give away ideas
4) Listen: determine prospects’ needs
5) Tell the truth: do everything you say you’ll do (i.e., if you say you’ll call
a prospect at 10 a.m. on Tuesday, you had better do it unless you’re lying in
a hospital bed. If you tell them you’ll send them a brochure on topic x, send it
within 48 hours.)
I cannot emphasize enough how crucial the latter is in building trust. Yet I see many
business people who don’t seem to grasp its significance. This may help: one wealthy
client of mine chooses all his professional relationships based on whether or not they
showed up on time to the first meeting, whether or not they presented themselves
professionally and whether or not they did what they said they would within one week of
that meeting.
Let’s work another step backwards. To continually provide value, you must maintain
regular contact with your prospects. How can you possibly maintain contact with every
client each month?
1) Newsletters certainly help because you can make sure every contact gets one
and they provide information that:
> Establishes you as an expert (credibility)
> Shows you have been successful (trust)
> Portrays some of your “humanness” (likeability)
2) Social Media can help, because it gives you an opportunity to show
your “humanness” and likeability. It also connects you to a broad group of people
simultaneously.
3) Do you have a guaranteed system for follow-ups? Each time you have contact
with a prospect you should be entering that date into your system, along with the action
required as a result of that contact. Then, make sure you DO IT when the time comes!
Let’s move another step backwards. To maintain contact you must have some basic
information on your prospects. If you do not have a name, phone number and email,
here’s a news flash: you don’t have a prospect. That’s because you cannot maintain or
follow up with someone unless you have this information.
How do you collect data on a potential customer or prospect? What additional data
specific to your industry or position is essential to improve your ability to follow up?
Make sure you collect that info, too.
We have worked our way backwards from making the sale to gathering the information
you need. Making the sale is actually the easy part! If your prospect likes you, trusts
you, has a need for your product or service and understands how your company
benefits him, then you’ve done all of the work discussed above—and probably already

made the sale before even asking. Skipping any of those key components, however,
will negatively impact your ability to convert prospects to customers and clients.
Use a system and leverage technology to ensure you are building your likeability and
trust with as little effort on your part as possible. Let us know how we can help.

I’m surprised at the number of people I meet who think marketing and sales are one
in the same. But they can’t be lumped together, just as a used car salesperson and a
car mechanic can’t be. Although the two professions are interrelated, their goals are
distinctly separate.

In the world of small business, marketing is putting your name in front of people who
previously did not know who you were or what you did. Selling is converting those
prospects into customers.

In this issue I will discuss the role that marketing plays in a successful business
operation. Next month I will explain the importance of “selling smart.”

When putting a successful marketing plan together, the first question you need to ask
yourself is, “How many prospects do I need?”

A financial advisor may make $20,000 per client. He decides one per month is enough.

A restaurant may need 200 new customers a month. Each would market in very
different ways.

Assume your business only needs ten clients a month to hit your goals. If your closing
ratio is 20% you will need 50 new prospects each month. That number determines how
you market.

The key to successful marketing is this: having a professionally developed system that
will consistently generate as many prospects as you need on a monthly basis. I wish I
had the space here to explain the details of that system, but it comprises more factors
than you could ever imagine. I will, however, give you a few examples:

• Number One: Referrals from Clients
Are you getting as many of these as you should be? This is some of the least
expensive marketing you can ever do.

• Number Two: Referrals from Strategic Relationships
These are business connections that have contact with the type of customers you want
to meet. Think of:

* An orthodontist who puts braces on teenagers. He would benefit by having a good
relationship with a dentist who treats teens and identifies those who need braces.

* A professional sports medicine doctor would do well to form a strategic relationship
with a sports team manager...one of the first to know of an injury.

* A printer who hears of a new graphic designer in town specializing in brochures and
logos would be smart to make a business connection right away.

The key for you is to find other professionals who are talking to your ideal clients.

• Number Three: Networking
Most businesses would define effective networking as finding new clients. That may
sound right, but it isn’t. What you should be doing is working to find groups of clients, or
a stream of clients, instead of networking to get a single client.

• 4. Number Four: Social Media
Internet sites such as Facebook and Linkedin can be a bridge between prospecting and
sales by strengthening your relationship with contacts.

Imagine a list of every human you’ve ever met. Those are your prospects. Social
media with a proper plan enables you to convert people who barely know you into
people who know you well enough to talk to about your business. You may not make
a sale on social media, but you may convert contacts you barely know into prospects
who want to meet with you.

• 1. WHAT actions need to be performed?

These should be based off your strategy.  For example, if your strategy is to write a book, your action is to create an outline for the book.

• 2. WHEN does the action need to be performed?

Writing a book can easily take 2-5 years, so you need to create a timeline for how many chapters you will write each quarter and regularly review your progress in order to stay on track.

• 3. WHO will do the action?

If you’re a one-person shop, most people assume you do the action yourself.  However, you may be better off delegating it to an expert in that area.  When you have employees, you have to determine if you will outsource or do it in-house.  If you do it in house, which employee is best qualified to perform that action?  Essentially, you want to delefage to the least expensive person who can do it right.  If you cannot afford to have it done right, when can you afford to have it done again?

• 4. HOW is it documented so someone else can do it?

This is a systems question, and why the two strategies working in concert is important.  What if Fred has been doing the action, but either gets hit by a bus or gets fired?  Someone needs to be able to walk in and smoothly pick up where Fred left off.  That can only be done if Fred has kept specific, precise documentation of everything he did and everything left to be done.

• 5. HOW is it monitored and reviewed, and by whom?

Again, a systems question.  Someone has to make sure Fred is carrying out the action plan, completing it on time, and implementing it to fulfill the business strategy.  Suppose Fred’s job was to build a house in 90 days.  Maybe he did that, but he actually put together a dog house.  He thinks he did the job in a timely manner because progress and expectations were never monitored.
Consider your current business strategy.  If it isn’t getting you where you want to be, you know who to call.  After a little analysis of your business, I can help you develop a strategy to generate the results you’ve been hoping for.  Then, answer the five questions above and you’ll have a successful action plan to help you create your business bliss!

The first two things I look at are their business strategy and action plan, crucial elements that must not only be in place but must function in concert to be effective.

A business may have the best action plan on the planet; its sales team can be warriors in the field.  But if there’s no strategy for where the company is headed, those efforts will eventually prove fruitless.

This month we focus on the importance of strategy in growing a healthy business; in Part Two  we emphasize the role that action plays in that process.

A strategy is a well-thought-out plan.  It asks, “What do I expect my business to do?”  “How do I intend to accomplish this?”  “Who will I enlist to help me achieve this goal?”  “When do I plan to see results?”  “From where will I obtain additional support?”

This may sound somewhat elementary until I share my personal learning story.  If only I had used an action plan!

By the time I was 25 years old I was pulling down a six-figure income and my future seemed unlimited.  Mine was a “success out of the box” story, and it happens to many people in business. I  seized an opportunity and ran with it.

There was no time for an action plan–the action was happening right then!  Money poured in and instead of realizing I had gotten lucky, I thought I was a business genius…until I noticed the money wasn’t flowing any more.

I had plenty of action going, swinging away with my eyes closed.  Imagine hitting at a pinata: do it enough times and eventually you’re bound to get lucky and hit your target.  But as long as you’re hitting blind, you’ll never be consistently lucky.  The same holds true in business.  If you don’t develop a strategy, you can’t expect to be consistently successful.

As a business school grad I should have known better, but there I was, wondering where the megabucks had gone.

Knowing that “those who ignore history are doomed to repeat it,” I spent  some time figuring out how I had achieved success initially, and how to maintain it consistently.

Over the years I’ve read hundreds of books on business.  In each one I found a few little nuggets of wisdom that I tested on the company I was building, incorporating the ones that worked and discarding those that didn’t.  Eventually, I created a uniquely crafted system which has exceeded my expectations.

One thing I’ve learned is that having a business degree does not guarantee business success. There are, however, measurable,time-tested key strategies that do.  Heading that list is the business strategy.  Where do you expect your company to be in three to five years?  That is the question that should be driving all of your decisions.

“But I can’t afford to change (x,y,z)!” a business owner will tell me.

“Really?  How has doing it the old way worked out for you so far?”

When you’re looking at the big picture, sometimes you can’t afford not to change things.  It may take a little creative intervention from the outside to find the resources for change, but remember:  to be successful, you must be committed to your strategy (which is fueled by your vision–see story in the left column), and your strategy is what drives your decisions.

The difference between companies that thrive and those that scrape by or fail is this: outstanding businesses incorporate all the key strategies into an optimally functioning system that produces stellar results.  We will be discussing those strategies in these newsletters throughout the coming year.

Professor Lakshman-Madurasinghe, author of Organizational Behaviour, said the
number one trait of Fortune 500 companies is vision.

Where do you see your business six months from now? A year from now? Five years
from now?

Neil Snyder wrote in Business Horizons, “A vision is not a dream; it is a reality that has
not yet come into existence.”

We achieve what we most strongly believe. Virgil, Ancient Rome’s greatest poet and
author of the Aeneid, said “Possunt quia posse videntur,” or, “They can do it because
they believe they can do it.”

Harvard professor William James wrote that “The greatest discovery of the 19th century
was not in the realm of the physical sciences, but the power of the…mind.”

A powerful force for turning your vision into reality is through visualization, a self-
improvement tool that dates back to Aristotle and Hippocrates.

Star athletes, professional speakers and famous actors such as Michael Jordan, Mark
McGwire, Oprah Winfrey, Stephen Covey, Billy Joel, Jack Niklaus, Jack Canfield, Sean
Penn and Jim Carey commonly use visualization to rehearse before their big events.
They see, feel and experience an event before they actually do it.

Dr. Charles Garfield, president of the Performance-Science Institute in Berkeley,
California, was a computer analyst for NASA’s Apollo 11 moon landing project in 1967.

Surrounded by high achievers, Garfield began to take note of the shared personal and
professional qualities that had caused them to make what he termed “quantum leaps” in
performance and productivity.

Garfield’s experience at NASA motivated him to begin a 16-year research study into the
traits of highly successful people from many professions.

He published those findings in his book Peak Performance (1984), which revealed
that vrtually all world-class athletes and other peak performers are visualizers.