Janna's Blog

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Lose a customer and you will spend 6 – 10 times more to replace him than it would have cost you to keep him! Loyal customers represent the lifeblood of business. Is keeping and maintaining loyal customers a high priority for your business? Do you have a well designed ongoing strategy for building an ever increasing number of loyal customers? Is good customer service enough?

Think about this scenario. One business provides average customer service and the other prides itself in its good customer service. However, the first business systematically writes a follow-up letter to its customers inviting them to buy again while the second business, with arguably better customer service, does not. If an individual purchases from both establishments, from where do you think they will most likely make their next purchase?

How does one build loyal customers? – By moving them up the Customer Ladder of Loyalty. Just like a normal ladder, we move up one rung at a time. And, just like a normal ladder, when we step on the first rung we don’t hang around there for a while before doing something. We want to climb up right away or get off the ladder. Conceptually the Customer Ladder of Loyalty looks like this:

Raving Fan

Advocate

Member

Customer

Shopper

Prospect

Suspect

 

 The rungs on the Loyalty Ladder are:
  1. Suspect: potential customers within your target market with whom you have had no contact.
  2. Prospect: Suspects who have made contact with you, or you with them, enabling you to gather contact details for further communication and entering into your database. This provides the owner with a picture of the type of buyers the business is attracting.
  3. Shopper: Someone who has purchased once from you. On average it takes 2.5 purchases for a customer to cover the advertising costs that attracted him to your business. At this point the shoppers’ contact details should be verified to insure the accuracy and completeness of your database entry.
  4. Customer: Someone who has purchased more than once from you. A second purchase is an important step in building a long term relationship. Studies have shown that it is 6 times easier to sell to a customer than to make an initial sale to a suspect.
  5. Member: Someone who has a sense of loyalty and belonging. A frequent buyers club with some unique benefits and/or value will help build that sense of belonging. Usually, members will tell others about your product or service if asked.
  6. Advocate: Someone who sells you to others. They will give referrals or promote you, and they remain a loyal buyer. They are one of your most valuable assets.
  7. Raving Fan: Someone who can’t stop selling for you. They have had such a great experience in doing business with you that they continually promote that Wow experience. Raving fans are created only by consistantly delivering over-the-top customer experiences. They are virtual sales people for you, and more valuable than your sales team, because their message has more credibility.

“Getting to Raving Fan status is the result of putting your customers first and having exceptonal relationships with them from the beginning.” Says ActionCOACH Ikonomou. Remember “Fan” is short for fanatic. The question for your business is: How can my business create a fanatical following from its customers? What businesses come to mind when you think of companies who have created and successfully implemented strategies on a national scale for creating Raving Fans – Starbucks, Apple, and Toyota? Imagine the impact on your business if you continually add Raving Fans to your customer base!

The last issue addressed 3 aspects of your business.  This issue will address 3 additional areas of:  Are you working harder than your business, or is your business working harder than you? There are 6 steps to creating a profitable business that works without you having to be there every day:

  1. Mastery: Of time, money, delivery, and destination
  2. Niche: Mitigating price discounting pressure
  3. Leverage: Systemizing the business
  4. Team: Getting the right people on the bus
  5. Synergy: Able to grow a strong stable enterprise
  6. Massive Results: Multiple streams of income

Each of the six steps builds upon the previous. Here is a high level jet tour of the last 3 of the six steps.

Leverage: creating efficiency = more time for the owner

If you are the typical business owner, you are the hub of a wheel. The spokes are the channels of decision making from all aspects of your business. Get the picture?

In our desire to control our business we have imprisoned ourselves, the owners. Additionally, because we have not implemented written systems to run our business we have become vulnerable to certain key individuals within our organization. These key players are very good at what they do and if they leave the company, the consequences will produce a significant setback for the business.

The answer is to systemize the routine and humanize the exception. Systems should run the business and people should run the systems. The Japanese taught us this hard lesson in the 80s. Systemize your business and you will leverage your capacity as the owner. Until systems run your business, you have a job. You will never be able to extract yourself to work on your business instead of in your business. Lifestyle improvement will remain an unreachable dream.

Team: having the A-Team run your business = structuring for growth

Ask business owners what represents their greatest headache, most will tell you “employees”.  You’ve heard it said: “People are a company’s most valuable asset.” That is not true! The right people in the right positions are a company’s most valuable asset. In the book “Good to Great” Jim Collins writes: “Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people.”

Synergy: a well-oiled business machine = freedom!

This is when 2 + 2 = 5. Too many business owners after experiencing a little success try to expand through duplicating outlets or franchising before they have successfully completed the four previous steps. As they grow, because of insufficient systems and/or the wrong people on their executive team, cracks start to appear in the foundation. So they retreat and go back to when it was only one business location that they can control with their presence. In fact, if the owner carefully built a strong foundation on the four previous steps, the cumulative effect of this smart work will be significant income with time to enjoy it. Congratulations – you now no longer have a job! You are a successful entrepreneur!

 Massive Results: diversification through multiplication or acquisition

As a result of what you have learned by taking your business through this process, coupled with the time and money to leverage, you can create multiple steams of income and wealth by multiplying your business concept or acquiring other businesses and taking them through the six steps. Or, you can retire with a lifestyle that is the envy of most.

Janna Hoiberg is a local business owner and business coach with 25+ years of business experience. Forward your business questions to: 719-358-6936 or email to jannahoiberg@actioncoach.com  

Are you working harder than your business, or is your business working harder than you? If you are working harder than your business, you are among the many self-employed who have succeeded in purchasing a job for themselves! Do you aspire to be an entrepreneur? Then you must figure a way to create a business that works harder than you, so that you can use your spare time to launch other business endeavors or to enjoy the lifestyle that typifies the successful entrepreneur; time with family and time for personal leisure pursuits. So how does one get their business to work harder? Follow these 6 steps to creating a profitable business that works without you having to be there every day:

  1. Mastery: Of time, money, delivery, and destination
  2. Niche: Mitigating price discounting pressure
  3. Leverage: Systemizing the business
  4. Team: Getting the right people on the bus
  5. Synergy: Able to grow a strong stable enterprise
  6. Massive Results: Multiple streams of income

Each of the six steps builds upon the previous. Here is a high level jet tour of three of the first six steps.  The last 3 steps will be covered in the next issue.

Mastery: from chaos to order

Time is our most valuable asset. We can regain lost income, but can never regain lost time. There are four activity categories into which we can invest or waste our time:

  1. Not urgent, not important (time wasters used for escape)
  2. Urgent, not important (day stealers that scream for our attention)
  3. Urgent, important (must be handled right away)
  4. Not urgent, important (strategic issues that will determine our success)

1 and 2 are time wasters for the business owner. 3 and 4 are the difference between working in your business and working on your business. 4 is working in what I call the Zone and should represent 80% of your time. Working in the Zone will prevent many of the urgent/important from occurring.

 

Do you know where your business is financially? What is your breakeven? How about your cash flow – can you predict it? What is your profit position – how accurate and real-time is your information? Is your most valuable tangible asset (your business) increasing or decreasing in value? Is your business consistently delivering your value proposition to the marketplace in such a way as to not just satisfy your customers, but create many raving fans? This is called the WOW factor. And finally, are your business goals aligned with your personal goals so that when your business is working harder than you, you are living your desired lifestyle?

  

Niche: effectively marketing your USP = predictable cash flow

Discounting your prices in the face of competition is devastating to your bottom line. Let’s, for example, assume that your gross profit margin is 40%. If you discount your prices by 10%, your sales must increase by 33% to maintain the same gross profit dollars! How does one avoid such damaging action? By creatively crafting your marketing around your USP (Unique Selling Proposition)! Done correctly, this will carve a niche in the marketplace that you alone occupy, thus insulating your business from the discounting frenzy produced by a market crowded with competitors.

 

Look for Part 2 and the balance of the six steps coming in the next issue.

The pinnacle of business accomplishment is Level 5 Entrepreneur! It is at this level where mega wealth is created and with mega wealth comes the opportunity to do mega good.

Rung Level of Entrepreneur Ladder

Entrepreneur:      5

Investor:            4

            Owner:               3            

Manager:           2

Self Employed:    1

Employee:          0

 

To operate as a true Level 5 Entrepreneur, we must gain a thorough understanding of corporate structure as a Level 4 Investor - how to structure businesses so that everything works to our advantage.

Advancing to Level 5 Entrepreneur

At Level 5 we are, once again, on a steep learning curve. Don’t let that scare you. If we stop learning we die. To ascend to the level of Entrepreneur, you must succeed with enough business deals at Level 4 to be considered a master. People will then want to invest with you. At that point you will be investing with other people’s money, which will lead you to the last level - that of Entrepreneur.

Big stakes excitement

Level 5 is the most exciting. This is where the true capitalist operates. It is at this level where you make money by raising capital. You are using other people’s money to build paper assets like stocks, franchises, licenses and royalties.

Think of it this way - true entrepreneurs use other people’s money to make money. The larger your reputation for successful entrepreneurship, the larger will be your pool of eager investors. One way to market your skills is to write books on how to succeed in business. This builds your reputation so that when you take companies public, you have a large number of investors jumping on board. This should be part of your strategy.

How did Bill Gates do it?

Consider this: What does Bill Gates, one of the world’s richest men, sell?  Does he sell computer software, information, solutions, or systems? In reality, what Bill Gates sells to create his wealth are shares in Microsoft. Level 5 Entrepreneurs build businesses they can take public. This allows them to quickly gain a massive amount of wealth.

You must be a visionary

At Level 5 you are a visionary – a dreamer with a vision. It is often said that all the best ideas start with a simple dream. It is not enough to just dream – we must take action to make our dreams come true. Sell the dream, then work to make it a reality. Always keep your mind focused on what is not currently real but soon will be. Then trust yourself and your team to make it so.

Level 5 capital

Level 5 Entrepreneurs do not have to work for money. They certainly do not trade time for money, and do not rely on profits as their primary source of income. They are interested in Return on Investment (ROI). They make money by raising capital. They create money by adding value.

Share price can be considered the entrepreneurs stock in trade. Their relationship with money is through the stock market. As Entrepreneur, you operate using your finely honed skills and deep economic understanding. When everyone else is in a panic, like today’s market, you remain cool headed because of your understanding of the economic seasons, briefly mentioned in last week’s article.

Turn, Turn, Turn

The Bible talks about this seasonal concept in Ecclesiastes chapter 3 verses 1 – 8 (the Birds put these verses to music in their famous song Turn, Turn, Turn, in 1965, written by Pete Seeger in the 50’s). Understanding the timing of your ventures in relation to the economic seasons is vital to your success and one of the reasons others entrust their money to your vision.

With our current economic turndown, we have once again entered the economic season of winter.  For the savvy entrepreneur, winter represents the beginning of the wealth creation cycle. Acquiring or starting businesses near the end of economic winter, at a fraction of the cost of during other seasons, enables the entrepreneur to maximize ROI during the summer in the form of IPO (Initial Public Offering) or acquisition.

Entrepreneurial wealth creation – a tool for good and for maintaining individual freedom

Many who reach the top of the e-ladder become great philanthropists, donating money and brain power to charities, hospitals, children’s organizations, scientific research, and education.

The e-ladder is the foundation of our capitalistic system, which has produced the greatest wealth and lifestyles for the largest percentage of the population than any other system in the history of mankind. How far you choose to climb has nothing to do with your value as a person. It has everything to do with your vision, your gifts, your willingness to work hard, take calculated risks, and to constantly learn. Marc Nuttle, a Norman attorney and advisor to many presidents, in his insightful book “Moment of Truth” clearly delineates how intricately our capitalistic free enterprise system is linked to our personal freedom as individuals. I highly recommend his book.

To maintain our freedom as individuals it is imperative that many exercise this freedom by climbing the entrepreneurial ladder. We climb, first and foremost, to provide for our families, and second, to do good for others. When we climb the e-ladder, we are providing jobs, opportunity, and hope for those who follow!

Like all things in life, running a business has its ups and downs, its highs and lows, and its successes and failures. Celebrating the sweet victories is easy, but how do you cope with the agonies of defeat?

First things first, like it or not, failing is inevitable. Every single person has failed at one time (or in most cases, lots of times). Throughout history scores of renowned great achievers not only failed, but failed over and over again. When Albert Einstein was young, his grades were so poor that a teacher asked him to quit, saying, "Einstein, you will never amount to anything!" Michael Jordan was cut from his high school basketball team for his lack of skill. Winston Churchill failed the 6th grade. Soichiro Honda was turned down for an engineer position with Toyota Motor Corporation.

Here’s another truth: Failure is not something to fear. Failures and mistakes are lessons that can be used as stepping stones. And even though it may feel like it’s the end, it’s actually just the beginning. According to dictionary.com, failing is “an act or instance of failure.” But according to John Maxwell, bestselling author of Failing Forward, “Failure is simply a price we pay to achieve success.”

Failing forward is a willingness to learn from failures and implement the lessons into your actions, behaviors, and business. It’s choosing to pick yourself up and continue to move forward and toward your intended outcome in spite of being discouraged.

Think about the last time you failed and ask yourself these questions:

  • What can I learn from this?
  • What could I have done differently?
  • Do I need to acquire or improve some skills?
  • Who can I learn from?
  • What will I do next?

Now take the answers to these questions and plan how you will incorporate the lessons into your future actions.

So the next time you find yourself flat on your face, be grateful for the learning opportunity, dust yourself off, keep trying, and remember that the most inventive and successful people in the world not only fail, they are the BEST at failing.

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Janna Hoiberg
Telephone : 719-358-6936

Colorado Springs, CO 80920 
or

Moultonborough, NH 03254

Colorado Springs Location