Ok – you’re a senior executive, perhaps a student or maybe an eyes wide open entrepreneur. Perhaps you’re an investor that hit a 100 banger in your portfolio and you now know everything. Whatever the case, you have some business that you’re involved in and your looking to take it to another level. Here is a simplified way to look at your business and an exercise to get others engaged in a meaningful discussion about getting the business to flourish.
BOLD Statement #1. Business always has and always will be about 1) Satisfying customers better than the competition in the long run and 2) not running out of cash in the short run. If you can do those 2 basic things, you will have a business that continues to operate. An operating, perhaps barely sputtering along business is not why we are in business. That is not very satisfying. We all want to make a bigger impact that the sputter along business. Add 3 basic funnels to the model and you have a recipe that allows to diagnose potential sputter spots and identify areas of breakthrough performance. You don’t need a team of MBAs or business consultants to do this for you. Whatever team you have at your disposal is quite capable given the model and a healthy dose of authentic dialogue and commitment to excellence in execution.
Funnel 1 – Exposure
The exposure funnel is all about exposing prospective customers to your product or service. Creating awareness, generating demand, etc. You have barriers in doing this, least of all budget and human resources e.g. you simply cannot talk to everybody on the planet nor do you have enough advertising budget to reach everybody, everywhere. There are other barriers as well and you must have a strategy and credible plan to overcome those barriers.
Funnel 2 - Conversion
Conversion is more than turning prospective customers into customers. Getting money from customers is necessary but not sufficient. You want to make sure that your customers are actually using your product or consuming your service. You have barriers in doing this. You must also have a strategy to overcome those barriers.
Funnel 3 - Retention
Retention is oft overlooked but equally critical to your long term success. Retention is about retaining customers for the long term. Happy repeat customers that refer you to other prospective customers and whom return to buy or consume your next offering. Note: exposure become less expensive when you are exposing customers whom you already retain. Again you have barriers to retention which again require you have strategies to overcome.Summary
There you have it – a model for your business today or even a business that you’ve yet to start or invest in. Now with the model in hand you are able to ask basic questions of yourself and other stakeholders. Ignore one of these funnels and unless your business is really really, lucky, your business will sputter or worse. Pay attention to the funnels, thinking critically about the barriers to each, then crafting and implanting strategies to overcome those barriers, will reward your business. For example, say you have no problem with exposure, many prospective customers are exposed and a healthy percentage of these prospects purchase, becoming customers. Returns and complaints are low, you don’t seem to be gaining any customer testimonials or suggestions for improvement. Is there a problem? Uh – yeah dummy. Chances are your customers have purchased but they have not fully adopted the product. If they are not actually using the product you will not receive product feedback and customer testimonials. Your ability to improve your products and services will diminish. Worse, these customers are unlikely to refer you to other customers OR purchase future products and services from your business.
A Fortune 50 software giant was expanding its technology platform in attempt to sell related server software into large enterprise accounts. Account executives and technical teams were successful with customers in getting pilot projects started based upon this technology platform. Many of the customers completed the pilots and even purchased the requisite server software. Things looked great on the surface. However, when personnel in other parts of the organization became involved in trying to gain customer testimonials or develop case studies, problems emerged. It turns out that much of the software purchased was never deployed; projects were abandoned at the proof of concept stage. Answers received from customers varied but all had the same basic message, “We never deployed that software”. Weird huh, people buying software that they never deployed. WHY? It turns out that the account executives were compensated at the point the pilot completed and the server software was purchased. They simply moved on to the next opportunity, checking out of the process leaving the delicate handholding and account management details up to the technical personnel, partners, and customer. Without the glue to pull it together it was left to chance. Further complicating matters was the fact that partners that would be necessary for deployment were different than the partners and personnel involved in the proof of concept pilot. Deployment stage partners never even had the opportunities on their radar. They didn’t have a chance to be successful. Luckily, smart people in the software giant saw what was going on and set out to make some changes.
Here is what we did...
We put programs in programs in place to track the progress of pilot projects all the way to deployment. We changed the compensation structure, providing an incentive for account managers to stick around and become the point person in the account for all time not just up until the sale. We also rearchitected the CRM system so that the workflow reinforced the business objectives. We put programs in place and funded them to ensure that partners were brought in at the appropriate stages and that there were clearly defined handoffs between complimentary partners, all facilitated by the account team lead by the account executive.
The software giant looks like one company in the eyes of the customer, revenues are up, numerous case studies have been developed to give the company more credibility in the enterprise space. Account executive productivity and retention have increased. Partner satisfaction and productivity are also up. All good stuff and it wasn’t too hard once we were looking at the right stuff and having relevant conversations.
Exercise - Give your senior management team a blank piece of paper and ask them how the business works. Tape these to the wall and relate the drawings to the model outlined here with the 3 funnels. Have some dialogue about what barriers are impeding your ability to expose, convert, and retain customers. Discuss strategies to overcome these barriers. Repeat the process at different levels of the company with cross functional teams. Put it all together in a framework, reinforce it with meaningful measures that your personnel can wrap their minds around. Have fun. Prosper.