All effective businesses we come across follow the ARC principle.
They must Attract, Retain, and Convert customers.
By the time you swipe your card at the checkout line, and the store attendant hands you your items with a smile and a “Have a nice day!” you have completed the process.
You are now a cog in the wheel like everyone before you.
You have been attracted to the store either through word of mouth or advertising, retained (as you selected your choice items), and converted to a paying customer.
How do you make this principle work for you and your tribe?
If you are a business owner, you can optimize retention and effectively maximize your conversion by focusing on your customers’ time and attention.
If you can maintain the appropriate customer attention and manage their excitement for long enough, you will complete a sale, but there’s a balance you must maintain to retain your customer.
1) Avoid the impulse to overexcite
The overexcited customer may lack accurate information about your product or service, and instead of becoming a brand ambassador becomes a negative review.
2) Prioritize content, sales information, and references
Know what you’re selling, and know your competition. You can keep a customer’s attention with your advanced knowledge about the subject they need your expertise in.
3) Understand the price of the product or service you provide
Remember that time and attention are limited for lower priced items, but higher priced items require more attention, and have a longer sales cycle.
If your customer is purchasing a lower priced item, they will need a quick solution and have a short attention span; you should expect a very short time between attracting and converting the user. For higher priced items, anticipate longer times.
2019 was a great year for the stock market with the S&P 500 surging 29% (its best return since 2013).
While some people argue that the majority of that wealth is sprinkled on the top percent of the population, and believe that the growth highlights underlining inequalities in capitalism, I say this:
Regardless of where you stand on the political isle, the resilience of this economy and the merits of the free market should be applauded.
Even if you don’t actively participate in the stock market it is important to realize that we all trade goods and services every day.
We live in a barter system. If you’re a money manager and trade stocks for a living, bartering is your daily job, but for the rest of us, trade happens less obviously.
- We trade our daily work hours for pay.
- We trade the money we accumulate from working for products or services.
- We even trade the promise of future payment (credit, loans, or personal guarantees) for products and services.
While these trades continue throughout our entire lives like a constant stream of activity, at some point before any exchange or trade has even begun, an agreement or consensus about value must be made between the participants .
The value and price of all goods and services you provide are determined by the demand of others.
- You have an hourly / monthly rate for your work decided by employers
- Products and services have a price assigned by the market of consumers willing to pay for them.
- Loans, and credit are valued by the likelihood of repayment.
With this is mind, why do we encourage children not to care about other’s opinions? We are taught at an early age to be independent minded and that our self worth should not be determined by what other people think of us. However, if we’re honest with ourselves, it is other people who determine the value of every service or product we will ever provide.
Instead, I encourage everyone to become an asset and not a liability. Care about other’s opinions in so much as you provide them with things of value, whether it be good relationships they will never trade, or good service they will always depend on.
I spent my Friday evening blindsided by a rejection. I’m not immune to disappointment, but this project came with a side order of divine vision.
I distinctly remember dreaming of us closing the deal. Well to be honest, I dreamt of a face that looked like the CEO, and assumed it was a sign.
We had three meetings, all of which went amazingly well. We sent a detailed proposal. We were reasonably priced (at least I think we were).
We did everything right. We crossed all our T’s and dotted all our I’s. Even our E’s were written in cursive, beautifully ornamented, and sprinkled with fairy dust.
Then we received this response: “We aren’t going to go forward with YT Advisors in the short term, nor are we going forward with any other development team.”
It just so happens that the company decided to “direct funds away from development into a group of regulatory, reimbursements, and legal projects that will ultimately drive our position and make us better suited to develop the application we discussed together”
Here’s my takeaway (this is my lesson – for me and maybe you if you’d like a takeway).
Like Jay-Z so eloquently rapped:
If you feelin’ like a pimp n****, go and brush your shoulders off
Ladies is pimps too, gon’ brush your shoulders off
N****s is crazy baby, don’t forget that boy told you
Get, that, dirt off your shoulder
On to the next one!
When I look back at my days as a single able-bodied man, I can’t help but think of similarities between dating and business.
From the first nervous introductions leading all the way to the awkward goodbye, it takes a little practice to shed the embarrassing denials.
If you’re stuck in this awkward phase with your clients and you can’t get in harmony, or it feels like your customer is right and you are left handed, here are 5 tips to break the gridlock.
1) Acknowledge that your customer is right.
Early in your interactions with a potential customer, there are two opportunities for friction between (a) Identifying a problem, (b) Communicating the problem, and (c) Suggesting a solution. The customer can either disagree with the problem or disagree with your solution.
Fight the urge to convince. Instead, build on areas where there is harmony, and work on your solutions. After you have proven your successes you can revisit old opinions.
2) Understand your customer’s desired outcome.
Your customers’ needs should drive your business. Before creating a solution, you should always identify the customer’s current state and their desired outcome. This applies whether you’re building an app for millions or running a babysitting company.
Once you know what your customer has and what they want, you can avoid providing solutions that they don’t need or giving tools they already have.
3) Re-align your company / yourself to focus on the success of your customers.
For many companies, there’s a tendency to focus on the bottom line. In the process, most of these companies neglect the experience of the customer.
Beyond the monetary value, a loyal customer is an advocate for your company. Once you re-align your company and employees to focus fully on creating memorable customer experiences, your customers will build a relationship with you and encourage others to do the same.
4) Communicate consistently and transparently.
Communication that is open and transparent is the foundation of a strong long-lasting customer relationship. It is critical to work on this foundation by being honest, trustworthy, and responsive. You will find that when you are, your customers will believe in you and be loyal to your business.
5) Avoid deflecting and reflecting.
Don’t reflect a solution.
If you provide the same services in the same way your customers can provide themselves, you might need to re-evaluate your business.
Don’t deflect a problem.
If your customer mentions a challenge they have with your services, don’t use this interaction as an opportunity to point out problems with other services or refer to a time before your service when things were worse.
Use all problems as opportunities to improve, and all your solutions as opportunities to impress.
MOST STARTUPS FAIL
We’ve been told this so many times as entrepreneurs we’ve practically memorized the failure statistic (90 percent). Chances our little startup will fall in the gutter are so high, that entrepreneurs willing to go forward with their business are either:
1. Clinically insane – the crazy people, the blindly dumb or naive
2. Truly lucky (don’t play poker with these guys)
3. Certifiable geniuses.
A few weeks ago, I was given the opportunity to lecture to a group of these entrepreneurs at Square One (a startup bootcamp at CET) about Creating an MVP. Twenty minutes into my Powerpoint presentation I was fielding practical questions and an hour later a lady, quiet throughout the majority of the lecture, looked me straight in the eyes and asked,
What do you do if you don’t want someone to steal your idea?
I took a moment to pause; I’d heard this trick question before. Despite encouraging people with big ideas to share them, we often realize that most young entrepreneurs fear people stealing their ideas. “Share your idea” I told her. “The more advice you get, the better you’ll refine it”.
In retrospect, here’s what I should have politely explained:
Ten steps to get your idea off the ground.
1. Start small
When most founders have a big idea the first thing they do is try to put their big idea in a big product. While it seems like a smart way to start, it completely ignores customer feedback. You end up building a product you envision, but no one wants. Instead, start small and test your hypothesis about your customer.
2. Have a clear vision
Define your mission very early and very clearly. Company culture, product direction, new team members, and the future of your company depends on it. If you find yourself in a team without a clear vision you’ll be jumping from one idea to another.
Tactics without strategy is the noise before defeat – Sun Tzu
3. Understand your customer
Step outside and talk to your customer. Who are they? What do they think?See? Feel? Do? Ask them what problems they have. Find out if your solution is appealing to them. What are the alternatives the customer uses today?
Understanding your customer is one of the keys to the success of your business.
4. Trust your instincts
The natural traits of a great entrepreneur cannot be taught. They are able to take calculated risks, identify market trends, and provide creative solutions. When others see problems an entrepreneur sees opportunities. It is important to amass knowledge of your market and customer and use your instincts to act on what you gather.
5. Use all available resources
It takes a village to run a company. Start by building yours. Get your family and friends involved. Start leveraging your network, contact your business associates, talk to other entrepreneurs. Reach out to your chamber of commerce, research local mentorship programs. There are people willing to help.
6. Pin point your value proposition
Why will a customer use your solution? Decide what things you will do to cause a customer to pick you over a competitor or an alternative. What is compelling about your proposition and which customer needs are you satisfying?
7. Develop your product
“Do it” is an active mentality and it begins by developing. After you have an understanding of your customer, gathered available resources, and pin pointed your value proposition, build your Minimum Viable Product (MVP).
8. Operate efficiently
When you are operating your company it is extremely important to be cost and resource efficient. Most companies fail from a lack of customers, so make sure all development, sales, and marketing efforts work together to grow your customer base and build customer relationships.
9. Invest your time and money
Expect others to follow your example. Invest your time into your company if you expect your employees to do the same. More importantly, invest in your employees and build strong relationships. If you consider a comparison to an army, you can either have an army of mercenaries or patriots. A passionate employee has a powerful incentive to stand by your side.
10. Take measurable actions
A core component of the Lean Startup methodology is the build-measure-learn feedback loop. One of your early goals as a company is to quickly build a minimum viable product, measure it’s effectiveness and learn from the experiment. As your company matures, your goal is to get to a product market fit efficiently. This is done by actively measuring the successfulness of the business decisions you make.