One of the most difficult things a business owner faces is the budgeting and accounting aspect of their business. Many of us rely on our CPAs to deliver the “news” annually, semi-annually, quarterly, or monthly, depending on how numbers-averse we are. But is this really the wisest way to do things?
The thought of getting into the numbers when it comes to marketing may overwhelm you quickly, but the truth is: you can’t create a good marketing plan without knowing a few key metrics. While tracking down these numbers might never be “fun” for you, if you can reframe the process and look at it as a treasure hunt, you can find gold. Here are the metrics all business owners should know.
Getting Down to Brass Tacks
Cost of a sale is one of the first things you’ll need to know. For the most part, you control the costs of a sale. Knowing your current cost is essential to determining return on investment (ROI). And once you know it, you’ll be able to make better-informed decisions from first touch (prospecting), through the process of conversion, and through the final sale or lack thereof (close).
You can go about figuring the cost of a sale out in one of two ways: calculate the average or calculate for individual products and services. Getting a feel for your overall business can easily be done with an average, but if you need to find out which product or service has the best profit margin, you might want to do some individual calculations. Ultimately, it’s up to you to decide which one will give you the information you need.
Number of Prospects and Number of Leads in a given time frame are two easy (and important) numbers to figure out and track. (For general purposes, a prospect is usually defined as someone who fits a set of common characteristics shared by your best customers, while a “lead” is a prospect that has identified themselves as being specifically interested in your products or services.)
You should always keep track of these numbers so you can gauge the cost of your marketing and sales activity. Knowing how many prospects you began with and how many became qualified leads is also a must in order to calculate our next metric.
Conversion rate gets confused with close rate all the time, but it’s different. A conversion is what happens when a prospect steps up in some measurable way and says, “Yes, tell me more” to some kind of marketing message or initial call to action. It’s these people or companies that should be placed into your company sales process.
Close rate is simply how many leads became actual sales (revenue into your business) within a given time frame. You can find keen insights as you further segment your close rate by individual products, services, or salespeople, to get a very good understanding of who or what is performing well for you.
Revenue is a number that should never be confused with profit. Profits are considered after everything is accounted for and the bills are paid. Profit is the number that’s left, which can even be a negative number if it is costing you more to produce and sell your products or services than you are bringing in from your sales.
But revenue is the total amount of money that has been brought into your company, and this is the amount that you use to gauge your overall marketing efforts. Expenses should be calculated, of course, but they need to be expenses that are associated with the marketing process.
There you have it: The key metrics you need to know. Not as bad as you thought, was it? Good. With these numbers, you can create your own treasure map to success. So revisit them regularly and empower yourself to make better decisions!
While many companies continue to shout rank and position from the rooftops, statistics are proving that you have to have more than this to garner sales and success from your online marketing efforts. In fact, it takes a concert of activities to really get things moving and keep them rocking along when marketing online. No matter where you show up on the page, one of the main action items that keeps you in the mix is getting good reviews.
Why Do Reviews Matter?
We have been preaching for several years to not rely on things you cannot control, and your rank and position is one of those things. Even if you have been #1 for the last several years, no one knows if or when Google or Bing will make a change that will impact where you currently are. Just ask around and you will easily find someone that has lost potential customers from living at the whim of a search engine algorithm.
Would it not be better to make such a good name for yourself in your area that people start searching for you by name? To provide such excellent service that even if a searcher has never heard of your company, the reviews that pop up next to your name quickly convince them you’re the company they should go with?
82% of consumers read online reviews for local businesses in order to make a decision about a product or service. The average consumer reads 10 reviews before feeling able to trust a business. And only 53% of people would consider using a business with less than 4 stars. So if you don’t have any reviews, you don’t have many reviews, or you don’t have very good reviews, you’re missing out on a lot of potential business.
As business owners, we must recognize that consumers are growing smarter as they search for information that makes them feel good about making a decision. They know that website rank and position can be manipulated or bought with ads, and they understand that many good and bad companies have good-looking websites. It’s the reviews that separate these companies.
One business owner we work with has so many great reviews on Google and Angie’s List, as well as in a lot of other places, that when he got knocked back to the third page of Google search results, it did not impact his business. People still found him because he has great reviews in all the right places.
Side note: Yes, Google, Amazon, and others have a ‘fake review’ problem, but 76% of people still trust online reviews as much as recommendations from family and friends, so don’t give up on reviews and their importance.
Do People Really Trust Reviews?
Consumers are looking for quality businesses to hire and to make purchases from, and they are looking for those companies online. 88.47% are searching in Google, and Google surfaces a variety of results. Customers may or may not make it your website, but if they’re considering your business, they’re definitely looking at your Google My Business (GMB) profile, which has reviews on it. What are your reviews saying about you?
If you have been in business for long, you understand the power of a friend and family referral. With the majority of people (89% of 35-54-year-olds) trusting reviews as much as a personal referral, you must get into the practice of getting good reviews for your business day in and day out.
When Can You Stop Focusing On Reviews?
We have clients who have well over a hundred great reviews, and we encourage them to continue asking for the reviews during their workdays. Getting current reviews is always important for both the consumer (who wants to make sure you are still doing good work), as well as the search engines (because they love to put out current information). On the customer front, 48% of customers say an online review needs to be written within the last 2 weeks to impact their decision. 30% say within the last month.
So the answer is: you can pretty much never stop focusing on reviews.
The one caveat I will say when it comes to reviews is this: if you don’t do good business and you consistently get negative reviews, then you will kill your business over time, no matter where you are on the first page of Google or how many reviews you have. This is why having your business in order, with good systems and practices, are paramount before actively seeking online reviews. Let’s talk more about that…
Customer Service Matters
I am amazed how many businesses believe the review process starts once the service or product has been delivered. The fact is, the review process starts with the first contact a business has with the client or customer. Overwhelmingly, the number one area upon which all businesses will be reviewed is customer service. In today’s business climate, no matter what you sell or the service you provide, customer service matters.
You only have ONE chance to make a first impression. Whether you like it or not, the very first impression you make stays with people throughout the service or product experience. That means choosing who to have as your front line sales is a very important decision. They need to be able to understand, communicate, empathize, and work well with people! They start the relationship and the review cycle starts as well.
We’re not talking about providing Instagrammable selfie-walls and experiences, we’re talking about just treating your customers right. Being helpful, courteous, respectful, punctual…all those things you were taught to be as a kid. The best businesses take great care of their customers by providing exceptional customer service. But with a lot of companies treating their customers like United passengers these days, it doesn’t take much to wow a customer. Just be decent and good reviews should never be a problem for you.
How Do You Get Reviews?
Aside from knocking it out of the park in the service department, how can you make sure reviews keep coming in for your business? For service companies, one relatively effective way to consistently get reviews is to leave behind a card with all the information the client needs to review the service. The technician needs to be coached to hand that card out once the service has been completed and say, “Please review our service. It’s the best way for us to make sure our quality was what you expected.”
Of course there are also other great options for getting reviews:
- Including the ask and a link in your email signature when sending invoices or other correspondence to customers
- Investing in a review management tool like GatherUp
- Asking customers for reviews during follow-up customer satisfaction phone calls
No matter what, you have to ask. 51% of people who are asked to leave a review for a business will.
Pro tip: It can also be helpful to have your front line person set the expectation that you will be asking for a review. Even something as simple as, “We will ask you for a review at the end of our service,” gets the customer thinking about reviews and the details they might want to include.
How Should You Respond To A Negative Review?
Okay, but what do you do when the inevitable happens: you get a negative review?
One of the things I see most often publicized is negative/fake review responses from business owners that are knee jerk and not well thought out. Jimmy Fallon and Aziz Ansari even did multiple dramatic readings of some serious shockers. You definitely don’t want your business highlighted for a heat-of-the-moment, totally inappropriate review response. This is why we coach business owners to wait 24 hours before they respond to anything negative. You have to get over the pure human response of being hurt, found out (yes, sometimes you screw up) or exposed. This gives you time to gain some perspective.
Then, let them have it on paper. That’s right. Write down exactly what you would like to say to this person. This is like free therapy, so get it all out. Then take a minute to read it, take it in, and tear it up or erase it (if you do it on the computer).
Note: Do not do this on Facebook or any other place where you can “accidentally” send it or someone else could read it. Nothing good can come from this being available to the public.
Now, sit down and again, on paper, write out a well-crafted response, taking responsibility if needed for the situation, and outlining what you propose to do about it. If you have a business coach or someone in your marketing department, run your response through them as another filter. (Psst. We help our clients with review responses all the time). Put something together that answers the complaint and lets the unsatisfied customer know you care about what has happened.
While you want to make good with the customer, what you really want to do is show your potential customers who are viewing this bad review that you care enough to get back with your customers. You can only help people who give you the chance to make it right, and some customers simply won’t give you the chance. But demonstrating that you care and want to turn around an unsatisfied customer speaks loudly about what kind of company you are. People will notice this as much as the bad review itself.
Here are 5 tips on what not to say when responding to a negative review.
Now keep those killer reviews coming by delivering the best possible service, each and every time! And remember, if you ever need help with review monitoring or acquisition, just give us a holler.
There is a book I read years ago by Jeffrey Pfeffer & Robert Sutton called The Knowing-Doing Gap: How Smart Companies Turn Knowledge into Action. What I learned from this book makes me laugh from time to time because I still find myself with a lot of knowledge and know-how, and no plan of action to put it in play. I would make a bet that many of you find this in your business and personal lives as well.
The real questions is: once you realize that you have the knowledge, how then do you create an action plan that puts that knowledge to work? I have found something that works for me again and again, and wish I knew or remembered where I got it from (but have no clue at this point). I just thought I would share it here and see if anyone else has any experience with this technique I call the 5 W’s.
It’s simple and it works on everything I have tested it with, every time — including marketing and business. The 5 are Who, What, When, Where & Why. That’s how I remember them, but it’s not the order I use. The order I find most useful is: Why, What, Who, When & Where.
If you are a reader of self-help or business books, I am sure you have read or heard someone say “finding your why” is the key to “financial freedom,” “business success,” or maybe even “eternal happiness.” I’m a bit more practical than that, and I say find out WHY you want, need, or feel you should do something so you don’t waste your time. If you don’t know WHY you are doing something then you shouldn’t be doing it.
The WHY also needs to be detailed and defined, just like any business goal would be. “I need help” or “I need time” is not a defined goal. “I need to start working on my business and not always in my business so I can create more than just a job for myself” is a well-defined WHY.
Now that your WHY is defined as wanting a business and not just a job you can start figuring out WHAT to do to get there. Will hiring an office manager, a new technician, or both get you there? This is a key part of figuring out exacting WHAT you need to do to get to your why. Once you have the WHAT figured out the next 3 W’s are for execution.
If you are the only person in your business, then the WHO may very well be you. However, if you have hired people or other businesses to help you do certain things, or you need to hire a person or business to help you, then one of them could be the WHO. The key here is to be honest with yourself when determining if you are the right WHO for the task at hand. If you are and you have the time and energy, then the decision is made. If not, then you need to hire someone to help you with carrying out the task(s). That might mean contracting a hiring manager, a business consultant, or a marketing company. The key is to hire the right WHO for the task at hand.
It is here where most of us make the biggest mistakes. It may take more the one WHO to carry out the WHAT. In the example above, you may need all three (a hiring manager, a business consultant, and a marketing company) to get to the place where your business is more than a job. But once you know WHO you need to do the WHAT that gets you to your WHY, then you can move on to WHEN and WHERE.
When & Where
WHEN and WHERE go together, as this is the action phase. You will want to define WHEN and WHERE to take action to get your WHY accomplished. This could be a onetime action or a series of action steps that have multiple WHEN’s and WHERE’s. It all depends on the WHY you established in the beginning.
Understandably, it’s easy to get lost in any of these steps, and I do believe your WHY has to be important enough to keep you focused. If you lose your way, then reevaluate your WHY and figure out if it’s strong enough or really that important. You may also need to reevaluate your WHO, and see if this is where the breakdown occurred. The vast majority of the time, it’s one of these two pieces that needs changing.
In the meantime, if you find yourself frustrated about your business not moving forward, ask yourself if you are doing the things you know how to do and thus should be doing or if you’re falling victim to the knowing-doing gap. The next steps are up to you.