Anything-Proof your Business: Adjustment (Part III)

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Prerequisite: Please read Part II.

In This Guide

Introduction (Part I)
Acceptance (Part II)
Adjustment (Part III) < you are here
Acceleration (Part IV)

Adjustment

Beginning

Now that you’ve suffered, accepted the reality of your business pain and have begun adjustments, it’s time to create repetitive frameworks and processes to make sure you set your organization up for long-term resilience. The first step is always the hardest, especially since much of this might be uncharted, but it gets easier with experience and time. It’s important to understand that many of these adjustments are only as good as your upkeep and updating rituals. Just because you do something today doesn’t mean you’ll do it forever. Likewise, a solution that is temporary shouldn’t be the sticks and glue that hold your business together for the long-term.

Technology

There are many different types of technology used in business, from machinery to tooling. Every single business depends on software. There are no exceptions. The type of software we will focus on can automate your processes, or amplify your communication between teams and customers.

Your customer support is directly tied to your abilities to communicate internally. The first step to improving customer satisfaction is to make sure every single member of your own team is communicating quickly, effectively and with few hiccups. If you’re still sending Word Docs and Spreadsheets to each other in emails, your business is moving too slow for this century, let alone an economic crisis. The two technologies I recommend to implement immediately are Google Workspace (formerly GSuite) and Slack. There are plenty of third-party agencies that can hello you set these up if you don’t have an internal IT organization.

Parallel to your internal communication, you have a big problem if you’re still using a homebrew CRM, lack customer self-service or are handling all requests via email and phone call. You need to stop and take a hard look at how you can improve each customer interaction with technology. Customers want speed in first contact and speed in resolution. The technologies I recommend are Facebook Messenger for Business, Intercom, and ZenDesk. If you’re a larger organization with complex case flows, tons of help articles, and a dedicated customer support team larger than 10, I would recommend Salesforce Service Cloud.

It can be overwhelming to replace your communications technologies, but the best results I’ve seen are when an organization commits, picks a date to switch and moves full speed ahead knowing there will be kinks to figure out along the way. If you just try these technologies over months in parallel to what you are using today, buy-in will decline, and your team will likely come up with too many objections that will cost you time and money. Be rigorous about the selection process and the entire timeline. You can solve new problems and growing pains along the journey.

So how do you choose the right technology or combination of technologies for your business?

By now, you’ve likely created a process to evaluate, price and negotiate a solution. If you don’t have a process, I recommend taking a look at Six Sigma HOQ (House of Quality). A lot of trainers and educators have written about it’s usage and application, and you don’t need to be certified in Six Sigma to use these tools. Some of the tools presented in Six Sigma, like HOQ, actually work well in isolation from other frameworks you are using.

Tips for success: Start with demos from each of the organizations above, have your leadership team present for those demos. Immediately after each demo, ask your head of IT or the best net promoter of that technology to continue the evaluation. Choose a date to reconvene to make a decision based on that evaluation. Make sure the leader assigned to evaluation has alternative recommendations if there are too many gaps, hurdles or implementation risks.

Leads/Funnels

Perhaps you have been historically dependent on leads that come in from a source that is no longer producing because of recent events. For example, perhaps you are a restaurant and have counted on OpenTable or other reservation systems to drive traffic to your business. Or perhaps you have a digital business that started experiencing an ebb contra to the flow that you normally see because one of your partners stopped referring leads. Regardless of the reason for less leads, it’s time to take matters into your own hands.

Direct customer acquisition can be costly if done incorrectly, but it’s also the best way to own the entire customer journey from start to finish. To find a repeatable process to acquire your own customers, you’ll need to understand marketing funnels as well as marketing messaging. If you don’t have that expertise in house, it’s time to find someone. They typically are referred to as growth consultants, growth marketing firms, or online funnel marketing experts.

Never forget the hidden value within existing customers. Repeat purchase and reengagement funnels are one of the best ways to start. This is often referred to as bottom-of-funnel customers. It’s often much easier to learn from a Facebook or email marketing campaign to target your existing customers than it is to target a net new cohort you’ve never engaged before. You can consider bundling your services, providing discounts on repeat purchases or even sending an email with existing testimonials to remind your customers why they chose you in the first place; aka your unique selling proposition. Here’s a good read on improving your sales funnel tactics and strategies.

Webinars and virtual events are a great way to get the word out. Free trials and free services are a great way to build trust once you’ve gotten a customer’s attention. A special promotion can close the deal, but be mindful of steep discounts as they aren’t sustainable and may attract a lower-level quality customer than you had intended to target.

Tracking

As the saying goes, nothing measured gets done. In fact, you should know what you’re going to measure before you start any new marketing or customer acquisition strategy. For example, if you’re about to try Facebook marketing for the first time, you need to select the ultimate success metric as well as the feeder metrics that would send you signals along the way. Oftentimes, marketers choose metrics that are easily available or visible on the marketing platform, such as ROAS (return on advertising spend). Be careful as these metrics typically are missing something critical, such as returns, repeat purchase value by cohort or even profit margin.

In my experience, you should write out what you expect the results to be and then engage marketers to determine which metrics feed into this goal. As an example:

“We want $2m of new revenue within six months with 20% or higher profitability.”

Is much better than:

“Increase sales and revenue.”

If a marketer knows you want $2m of new orders in a short time, their approach will be different than if you had written:

“$2m annual recurring revenue within six months.”

One is done when you see $2m of revenue on your income statement, the other is done when you are on track for $2m of revenue by the end of year, or after twelve months.

I remember the first time I asked the leadership team to help select the three company metrics that mattered most. We had a list of over one hundred, and none of them alone would tell us the health of the company in a snapshot. In fact, most leaders stick to what they know, so every leader effectively chose a handful of metrics to show the rest of the leadership team what their department was up to.

As a leader, you need to figure out what’s important to the health of the entire company. There is no KPI by committee approach that I’ve seen work. Having said that, you should be confident that each department leader knows their own areas and what to measure. Those should be tracked in a separate scorecard, and if you use EOS already, you know what I’m talking about. You can use the EOS Scorecard as a means to record your KPIs, but if you’re just starting out, a spreadsheet is absolutely ok.

Ask your leadership team to each select one metric, just one, that reflects the health of a division, department or business line. This metric should convey growth or decline for a short period of time (week or month), success or challenges and can be understood by all. It might take them weeks, even months to figure out their metric. This exercise is phenomenal in that it really provides permission for a leader to go learn their department in a way they may be uncomfortable doing. They may pick a vanity metric that stays constant, in which case you’ll know they picked the wrong metric. Ask them to select a new metric that fluctuates weekly, even daily. Once they provide that, you ask why it moved, and be prepared for them to tell you they need to check with the team initially. Over time, that leader will learn there are metrics too volatile or too constant for executive reporting. Through this learning, they will ultimately find the right one.

Rely less on people

We depend on our employees, leadership, consultants and vendors as the sum of all parts to make up our business. However, this is a unique and uncharted time, and experience has shown me that the more critical someone is to an organization, the more devastating their departure will become for you and the business. While Amazon, Tesla and other companies may have figured out how to blend humans and robots, I don’t recommend automating everything or just bringing in machines to do repetitive jobs. I’m recommending decreasing your reliance on single points of failure and creating a path forward for your organization that transcends a single individual’s contributions.

For example, you have an amazing employee who gets things done faster than anyone else, and everyone who works with her tells you how critical she is to retain.

Guess what will happen when there’s a hint of layoff, restructuring or loss of business?

That’s right, your star performers hit the road and find the greener grass on the other side faster than you can create a retention package.

I’m a big fan of process documentation and paired learning. By having a document repository of critical job functions for key areas alongside knowledge transfer touchpoints, you will eliminate most of the pain that comes with individual reliance. If you haven’t started these yet and are worried about losing key people, you can create an incentive for your people to do so quickly. How I frame this is job elevation. When speaking with a high performer, you’ll let them know they need to offload their critical or time-consuming work in order to elevate their position beyond what it is today. Create a short-term goal for them to document and train at least one other person in your organization. Give that new person time to perform the actions on their own, to be reviewed by the star performer. Success is measured by the new employee’s abilities to autonomously carry out those processes without help. Rinse and repeat in other areas, with other duties or even ask the new trainee to train another employee as a backup.

Another way you can decrease your dependence on people is through software. I am surprised how many roles exist in organizations that involve highly-repetitive tasks that have a software solution. In working with a large SaaS company, I found out that the billing team would manually copy and paste client records from Salesforce to a custom billing application in order to process payment. I asked our Salesforce representative if there was a solution, and they pointed me in the direction of a $3,000 one-time adapter that would automatically do that same thing. The billing team had allocated two people to spend twenty hours total a week for this work. Not only would the company save money, but it would also remove the dependency on people to do this task, which was a real problem when those two individuals weren’t at the office.

Sometimes a software solution is less obvious. When our customer retention team showed me a few spikes in contacts during an outage, I found out that customers would call and use chat at the same time, waiting to see which path got them a faster response. You could prevent this from happening through software, but that’s not a great customer experience. Instead, I asked our retention team to focus on automating responses in our chat software during outages to direct customers to existing articles, guides and content. Within three months, our chat automation was able to close 22% of inbound support requests through this program. In another three months, it was able to close over 45% of support requests automatically.

Finally, you should start talking with consulting firms as a contingency plan for your key operations. If you have a team of 20 performing customer support, start looking at an outsourced model to handle just 5–10% of your customer contacts. Measure performance against your existing teams, and use that to continuously make it better. If you have the opportunity arise, you now have a backup plan to your internal support team, likely at a lower cost. Make sure you maintain good contact with the outsourced provider, and understand their ramp up and training time for increasing the number of contacts they take. Also, I never recommend completely switching to a single outsourced provider. If you have the time, creating competition between a couple different providers will give you leverage for negotiations down the road and you’ll be able to compare performance against your internal baseline as well as between the two providers.

This begs the question, can everyone be replaced with outsourced partners, robots and AI?

I think we are far away from any combination of those becoming replacements to the people in your organization. As I mentioned at the start, the right people in the right seats are your most important resource. There’s a component of EOS (Entrepreneurial Operating System) called the People Analyzer™ that helps guide you to finding the right people in the right seats. That tool is effectively a quarterly performance review tool that makes it easier for existing employees.

So how do we identify the right people for the right seats before they are employees?

There’s a tool for that as well. I highly recommend Culture Index, which is a combination tool and consulting program that leverages people analytics to determine who to bring into various roles in your organization, and it’s proven effective for finding top leaders and individual contributors. The results are remarkable, and I can’t recommend this enough. It will transform your recruiting initiatives.

Content engine

This is without a doubt, one of your most important forms of automation for inbound leads and customer retention. Years ago, I had made the mistake of thinking content was primarily a means to increase organic traffic; aka SEO. I have now come to understand content to be an organization’s digital footprint to guide a customer through the journey. Remember, your company is a product, and your content strategy becomes a way to inform, educate, guide and win customers for life while you sleep.

Content comes in many forms, shapes and sizes. Anything from a Tweet to an hour-long video is considered content. If you’re a restaurant, your menu and recipes are primary forms of content. But there’s art and science in the way you write about each menu item and how you cater to every customer’s needs during a pandemic or even during normal business hours. Customers can feel your brand and culture through the content you put out.

As a service company, your content provides a foundation of past successes, typically in the form of customer case studies and testimonials. While a potential customer might not choose to buy right away because of one piece of content, it becomes a critical touchpoint that reduces friction, eliminates objections and creates the desire for them to contact you.

As an ecommerce company, everything you do relies on your content strategy. When you post a new product, the way you write the product description, photography, reviews and social media posts are incredibly powerful to getting a customer to purchase.

There are some great reads on content strategy, and among them I prefer Content Strategy for the Web by Kristina Halvorson and Content that Converts by Laura Hanly. If you’d like to get started with free resources, checkout Neil Patel’s blog.

Reduction of offerings

It seems counterintuitive at first, to reduce your total offerings. But as the saying goes, less is more. In this case, do more with less. You can reduce the total burden on your staff, and yourself, by making an informed decision to eliminate or reduce products, services, offersings or even markets you cater to.

To achieve this, you need to take a look at your data. I’m often surprised by how many established companies lack the informational insight to grasp their highest and lowest performing offerings. If you don’t have the luxury of slicing and dicing comprehensive performance data real-time in a reporting tool, you’re not alone. Many small to medium sized organizations lack the data warehousing and data analytics strategies that they read (and dream) about.

The starting solution is simple, ask your finance, data or marketing teams to export the past 6–12 months of revenue in line-item form. Make sure it includes customer segments (geography, industry, number of employees, etc.) as well as the revenue details (product/service, revenue, profitability, etc.). Don’t worry about duplicates, you want to see every purchase, whether it was new or a repeat. Now you have a detailed spreadsheet that you can manipulate to tell you what’s really going on.

Start by asking a few questions:

  1. Which orders are your largest? Smallest?
  2. How many customers make a repeat purchase?
  3. Is there a pattern to your highest profit orders? Geography? Industry? Customer size?

You can overlay other data on top of this, such as implementation/delivery time and refunds. If you notice that your largest orders have a higher refund rate, ask your team why. If you find your smallest orders to take the most time to deliver, ask your team why. If you see a particular month with higher revenue, perhaps for a certain customer segment or offering, ask your team what promotions or advertisements were run during this time. If you have offerings that aren’t core to your business model, ask your sales team why these are being sold. This will begin an inquisition process that you should perform at least twice a year to analyze your revenue streams.

You’ll want to take a look at the lowest revenue and lowest profit items and start cutting those out. Your leadership team might have some ideas on why to preserve those items, but there’s a right time to do that and during a pandemic when cost control measures are right isn’t the right time. If there are brand new offerings that are just starting to ramp, you can consider these as market tests but remember, they could be huge distractions to your core business. If there’s an entire revenue stream that’s costing you more to maintain than the actual net profit it generates, you should make it a point to understand why along with the team that enables and services that revenue stream. At one company, I was surprised that we had a team costing $350k a year, generating $50k of revenue because:

“Customers had asked for it at some point in the past.”

Worse yet, nobody in the organization reviewed P&L by revenue stream so it went unnoticed for years.

Now that your spreadsheet is generating the right questions, consider automating the data collection and reporting so it’s no longer a manual process. There are so many great tools out there for doing this such as Google Data Studio, Domo, Baremetrics, Tableau, and KissMetrics to name a few. I’ve found the best solutions allow an export to an Excel/Spreadsheet for further analysis.

Physical vs. Digital

If your organization is used to delivering something tangible to a customer, your delivery and/or fulfilment partners and teams have likely been impacted. The good news is, you’re not alone in this journey and there are thousands of companies just starting to figure out their new normal in terms of distribution. If you’re in ecommerce, you might be striving to fulfill like Amazon does. If you’re in the restaurant business, you may have an extraordinary amount of takeout and delivery orders now. Regardless, the key here is repeating what’s working and attempting to put some scale behind it through automation.

One idea to consider: Promote gift cards for ultimate fulfilment at a later date. By focusing on selling gift cards, you can realize the revenue today and defer the delivery of your good/service at a time when it’s safe to do so. For example, if you’re a salon, you can sell a $500 gift card but let your clients know you are resuming operations when it’s safe to do so, and your website/social presence will have up-to-date information. If you don’t have a way for customers to purchase digital gift cards, Shopify is a great way to create a quick one-product storefront to sell a gift card.

Supply Chain

This area requires special attention, because it can make-or-break many small businesses, especially in the United States. If you produce your own products in-house, you are following local and federal guidelines for the health and safety of your employees. If you were importing products from other countries, not only are you following local and federal guidelines but are now at the mercy of customs regulations, temporary trade restrictions and the scrutiny of the source or origin of your products. I met a business owner who lost over 70% of their revenue during the pandemic because customers became ultra-sensitive to the product origin; China.

There are micro-adjustments you can do now, or jump straight towards the path of complete transformations. The severity and magnitude of your revenue impact will ultimately drive that decision for you. Continuing to depend on lean manufacturing processes will create shortages and delays in production, and riding price increases for raw goods and third party enablement can only prove to be catastrophic in a matter of months. If you’re not scared yet, you should be. Nothing has impacted global supply chains more exhaustively than this pandemic, but preparing now will help you become resilient to future challenges. This is your wake up call.

The first step is direct supplier risk mapping and identification. You’ll want to create a list, more so a spreadsheet, of all the suppliers you order directly from. Make sure you include annual dollars spent with that supplier, as well as the expected delays you are experiencing. If you only have a single supplier for a major component or product offering, a diversification strategy is the most common way to create a resilient process for the future.

Ask yourself, are there other suppliers that aren’t experiencing delays? Are there local suppliers? Can I produce this component myself?

Reducing your dependency on a single supplier is easier said than done, you’ll find yourself spending a lot of time communicating with potential suppliers but you may end up finding a better one along the way.

Second, and this is likely a parallel path, you’ll want to find a way to produce without that component. This may involve a redesign, reengineering or selecting a completely different alternative. For example, if you need a special battery that you used to buy in bulk from China, you may consider redesigning to a standard battery size so you can source more quickly. While that’s a simple example, the key takeaway is reducing your dependence on a part, supplier or offshore vendor that’s limited by regulations and trade restrictions.

Third, many companies are exploring a regional strategy for production. You may have had contact in the past with geographically close suppliers that had a slightly longer production cycle. It’s time to bring out your rolodex and make those calls. Longer term, you also don’t want to cut out suppliers that are under temporary restrictions. In other words, don’t close the door on a supplier in China that you’ve worked with successfully for years. In fact, you may be able to find a way for them to deliver using lower capacity ports and shipping strategies for the interim. I know one business that relied completely on a manufacturer in China, and their interim solution ended up being re-routing shipments to the United States via Singapore.

Fourth, ask your supplier if they have other locations they have spun up, or are planning to spin up. These manufacturers may have secondary locations in other countries, and some are even willing to work with you to create a location closer to your headquarters. As an example, many automakers are migrating production to Mexico or South Carolina to reduce the delivery time and overall reliance on a single manufacturing geography that can create potential bottlenecks and failures.

Finally, make sure you are informed of federal and local government regulations weekly, if not daily, along with potential avenues for speeding up your access to components and raw materials. WHO (World Health Organization), for example, has a process to request critical supply chain items if your business qualifies.

Leadership

The people you count on every day are also counting on you for their paycheck. Jeopardize this one thing and loyalty, dedication, performance and commitment will all take a back seat to the individual’s priorities.

So how do you incentivize, motivate and lead through this challenging time while retaining your key executive team?

There are books, videos and entire curriculums taught around this topic. Candidly, all of those efforts take a year or more to bear fruit. The real question becomes how to adjust immediately. But be mindful, as these adjustments are only a way to buy time for the longer-term strategies that I’ll discuss later on.

Adjustment 1: Reminder leadership of your organization’s meaning

As Guy Kawasaki, author of Art of the Start says it: Make meaning. Your business was started and is still in existence because it has a purpose. Beyond the prestige, money and notoriety, there sits a larger than life meaning behind what you are doing. Your leadership team needs to be reminded of this, weekly, during this tough time. It should be ingrained in your culture and all that you do. While there are solid examples for some of the largest companies out there, there’s little in terms of small business meaning. So here are a few examples to provide inspiration:

Restaurant

Feeding the world during a time of need

Donating thousands of bread loaves each month to end hunger

Free family meals for the recently unemployed

Salon

Helping people feel good in a challenging time

Free haircuts for kids and senior citizens

Ending COVID-hair for good

eCommerce

Buy a pair of shoes, we give a pair to someone in need

Earth’s most customer-centric company

Help people save money so they can live better

Software

A computer on every desk and in every home

Organize the world’s information and make it universally accessible

Bring the world closer together

You may notice some of these are philanthropic, some cultural, and some read as mission statements. Just saying it isn’t enough. Once you come up with yours, you need to live it and tie it back to your business every single day.

Adjustment 2: Autonomy to help solve the problems

If you’re just running around barking orders, this creates a recipe for stifling creativity and job satisfaction. You are paying your leadership big bucks, and you need to trust them to help solve problems. If you don’t have confidence in your team, get a new team. But you won’t realize the true potential of every leader unless you create an environment of autonomy and failure. The two go hand-in-hand.

I remember the autonomy problems faced in a SaaS organization I was helping. Once you write the word autonomy in your culture, everyone thinks it gives them freedom to do what they want. That’s a mistake. You need controls and measurements to tie everything back to the business. Another common problem is the misuse of micro-managing adjectives. The controls and measurements are there to avoid micromanaging. Yet you’ll always have the few bad apples who think they have better ideas and better goals than your leadership team came up with. And they won’t tell you until they miss the goal of course. How do you know? Simple. If you have a leader who doesn’t promote autonomy the way you intended, you’ll have a dissatisfied team, non-performing leader and missed organization goals.

Adjustment 3: Communicate, communicate, communicate

Left to their own accord, every employee, including leadership, will draw their own conclusions, spread rumors and make things up to make sense of what’s happening.

“The CEO did that, not me”

Or:

“COVID did that, not us”

Those are just examples of common excuses. As a senior leader, owner or CEO of the organization, you need more touchpoints to communicate than ever before.

If you had a quarterly all-hands, move it to monthly. If you do bi-weekly 1:1s, consider moving them weekly. If you have a newsletter you send to employees or customers once a month, consider moving that weekly. Share the good, bad and key projects. Your job role now includes motivator, cheerleader, life coach and should inspire everyone at your company to be better.

Continue reading Part IV. If there are topics you’d like a deeper dive into, have feedback on, or want just a little more clarity, please don’t hesitate to comment.

CEO | Founder | Entrepreneur | Father. Formerly @volusion, @intuit, @eharmony, @iac. Perpetually seeking enlightenment. https://www.linkedin.com/in/bardiadejban

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