Zane Safrit

Word-Of-Mouth: The Marketing Money Goes to the Customer

8. The Money Could Go to the Customer. Think about this. If you are a company that spends millions and millions of dollars on marketing, wouldn’t you be better off handing that money to the customer versus handing it to a third-party who has nothing to do with the future life-time value of the customer? Providing a better value-proposition to the customer is much more likely to endure goodwill than spending on marketing. A heavy marketing spend necessitates a higher margin (to cover the spend), and therefore a higher end user price to the customer! So the customer is negatively impacted by the presence or “need” of the marketing program. Plus, a margin umbrella now exists for competition that chooses to undercut your margin model with a more efficient customer acquisition strategy (such as giving the customer the money).

“More and more money will go into making a great customer experience, and less will go into shouting about the service. Word of mouth is becoming more powerful. If you offer a great service, people find out.” – Jeff Bezos

 

via The Dangerous Seduction of the Lifetime Value (LTV)

There are 10 items on this list to help you avoid LTV's dangerous seductive values.

My favorite was this.  It's so simple. You don't need to be a rocket-scientist or a smarty-pants author to understand this. Would you be better off investing (donating) to a hot-shot, boutique advertising firm or Google Adwords...or would you better off investing it in your customers and your employees?

Ask yourself. I did once. I found that we grew our company faster, easier, if we stopped donating advertising and marketing budgets to firms who had no interest in our business.  Instead, we donated it to our customers with better service and inspired employees properly incentivized, incentivized with rewards that aligned with OUR company's values and their personal values. We saw improved cash-flows, lower customer churn, higher conversion rates and more fun.

Oh yeah.

 

Cash, Not Clicks, is [Still] King

Publicly traded companies in the US sit on a pile of nearly $2 trillion in cash. And that pile of cash only grows. Link. That makes them not only king of their domain, but king of the credit markets, kings of their industry, their marketplace, and...our economy.

Wanna know where the jobs are? On their balance sheet in the Current Asset item labeled Cash.

For now, anyway.

That's not what inspired me to write this post.

What inspired me to write this post was the continuing series of articles and blog posts about the power of social media as measured by interesting metrics like: clicks, like followers and likes, like views and visits and RTs, trending topics and mentions and Klout. Oh. And my favorite is members. Members, not customers. members pay nothing....which as the members of Instagram found out was the ultimate sucker pitch. They paid with their digital, personal lives when Instagram sold all of them to Facebook for about a billion dollars. (And now, Facebook's secret advertisers harvest the details of those lives for their gain. Psyche! )

Those are all important. Temporal but important. They are stepping stones to what, class? Cash. That's right. If all those metrics don't lead to an increase in cash on your balance sheet....those metrics are meaningful only to the agency who showed you have exciting they can be....temporarily (they whispered that).

Now in defense of ad and social media agencies, they cannot control what you, their client, do with clicks and members, likes and RTs, followers and comments. They can only control how those are generated, through their campaigns they design and administer. And which you pay for. And which they then tout as signs of their power. So, of course, they'll discuss those metrics.

I bear no grudge, understand it, understand it's fair. That's what their paid to do. Would do the same in their place.

But, if they cannot explain how those metrics ...cold hard cash for your business, to make you King of your domain and all it includes, then their advice is....not worth a dime. They may be great people, incredibly smart and creative and chock full of awards from their successful campaigns...as measured by those metrics. But, if they cannot help you see how to translate those treasured relationships into cash....those treasured relationship are probably only a treasure for them and their reputation. Not yours.

Clicks are nice. Conversions are even better. Conversions generate cash flows and cash on your balance sheet.

Cash is [Still] King. Cash flow keeps you King. Remember that.

Twitter, [Crowdsource] Thyself for Cash-Flow Growth

Physicians, heal thyself. We've all read this somewhere.

This saying came to mind as I read about Twitter's decision to sell our tweets to several companies. And that came on the heels of the news that they agreed to self-censor in certain countries in order to be able to operate in those countries.

These two announcements or news stories, read as if the culture of Twitter is being dominated, more and more, by more and more accountants and attorneys. And decisions around their business model are being made to satisfy the needs of these two constituents.

And there are always conversations about how to generate the cash that sustains a fast growing company, like Twitter. That conversation may be even more critical given Twitter's size and that robust demand made on cash-flows to pay for servers and bandwidth and engineers, coders, etc, etc., and the intensity of the conversation around sustaining cash-flows may be even greater when your original business model was a ..freemium business model.

Paradoxically, oddly, maybe ironically, Twitter is a tool that brings openness and transparency not just to corporate and brand discourse with their public audience, but also to the discourse around civil societies and the freedoms or their lack they embody. See #Iran and #IranElections and ArabSpring and Egypt hashtags on Twitter. Twitter's simplicity and its global reach allowed for  streaming, live, realtime crowdsourcing on a global spectrum of topics, from the most mundane to the most vital.

That power has allowed us, Twitter's users, to invite it and us into each other's homes, our businesses, our communities. Twitter and its community of users forms an integral part of our day.

So, it surprises me that Twitter does not eat its own dogfood and crowdsource itself, us, its users, our community...for ideas on how to create sustainable cash-flows in ways more creative than the standard ...sell your users personal data.Or doing business with, supporting, legitimizing despotic leaders who refuse any semblance of openness and transparency for their citizens. (Why does that sound familiar...?)

Imagine if Twitter invited us, its users, to help create an unique business model that generated self-sustaining cashflows while continuing to honor its original mission?

Imagine if they created a hashtag to organize the conversation?

Imagine if their CFO hosted the event? I mean, c'mon if President Obama can be guest on Twitter chat, surely the CFO of Twitter could host one? Doncha think? I do.

Imagine if Twitter organized Twitter chats to occur around the globe at a certain day and hour.

• Monday's at Noon Eastern.

• Tuesdays at Noon Greenwich time,

• Wednesdays at Noon Sydney time....etc?

Would that be fascinating to see the ideas and see the variances from around the world on how to create a sustainable business model?

Imagine if they then moved the conversation to a forum page?

Imagine then they would not need to sell our tweets to unknown 3rd party advertisers?

Imagine they would not need to self-censor in certain countries and thereby continue to provide a real-time streaming global forum for important conversations?

Imagine the global education of Twitter's uses for users, big and small, savvy and newbie? They could witness how the pro's, those at Twitter...their CFO, used Twitter to crowdsource solutions for the most pressing problem of business, any size and in any country: cash-flows.

How many users and their own countries would welcome the chance to learn from the global community of Twitter users?

Twitter, [Crowd-Source] Thyself.

4 Cash-Flow Principles

Cash is king. So they say. And with nearly $2 trillion in cash, publicly traded companies here in the US are the recently annointed kings.

So, how does your company become a king?And as important, how does one sustain the positive cash-flows to help you retain your crown?

With that in mind, here are some principles that can serve to either keep you king or help you be a king in your business, king of cash flow.

Become a Learner.

Learners are leaders. That's a one-step iteration of the phrase, Leaders are readers. The quote is from Jim Rohn.

You must learn constantly what contributes or doesn't to your positive cash-flows. Why constantly? In today's global competition everything changes. Everything that changes in your business changes your cash-flows.

I know of no other way to understand your cash-flows than to make it a regular habit, at least once a month, to review your cash-flow statements. Any accountant or bookkeeper worth paying should be able to generate those reports. Even off-the-shelf accounting packages like QuickBooks Pro generate monthly cash-flow statements.

Generate them.

Then compare them. Compare them to the previous period, to year-to-date, to the same period from the previous year. What has changed? What amounts or categories or TOTALS? Why?

This sounds so very obvious. But it always and even now, continues to astonish me how so few executives and business analysts overlook cash flows. Cash is king. Full stop. But Cash flow, positive cash-flow, keeps you king. Kings own their business; creditors need not apply. Kings choose their journeys and who can join them. It’s good to be king for a moment. It is even better when you stretch those moments into consecutive quarters and consecutive years.

Communicate

Nothing forces a thorough understanding like being required to explain to another audience what you just learned. ( Clearly a standardized test and the skills to pass one would be insufficient here.)

Each month I would review these statements, even when they were not yet reconciled between accrued and actual. And each quarter I would review in detail those results and write a detailed discussion explaining the changes and projecting what changes we could look to in the future.

Sure. It is time-consuming. But making sure our company remained cash-flow positive was a key priority. It was a key metric. All results eventually reflected in our cash-flow. That statement told a story. And it was a story I needed to understand at every step. And it was a story I needed to understand in order to translate it and its impact to those in the company.

Connect.

Connect what? Connect the report, its results and categories, to the lives of those in your organization. Connect it to the specific actions or initiatives or projects in your company. Connect it to the people who drive them, too. Connect it to their incentives, extrinsic and intrinsic.

You told them the story, right? Do not assume they connect the elements of that story for the whole company to the meaningful elements of their day: their work, their recognition, their growth, their achievements and their income.

One of the smartest things I ever did was first to show our sales agents how much we spent on marketing and advertising. This was done in response to their complaints about the decline in prospect calls. Naturally, they asked for more. Makes sense. Spend more, get more. Then I turned the budget approval to them. Here is how much we can spend. You can spend it all on one day or spread the investment in marketing over the whole month.

That is when they saw...not only what we faced in the market for getting our message heard, but how much it cost and how those channels no longer delivered.

And that's when they understood why we needed to explore more innovative avenues like blogging (then) and flowers to new customers and proactive calls after every new product purchase....

Recognition.

Recognition. Who feels a surge in adrenaline and ideas and engagement when they are recognized for their successes?

Feelings are great, you say. But you though this was a post about cash-flows, the quantification of a company's success. You're right. But first, a little background.

Look at the the 12 questions in Gallup's Q12, employee engagement benchmark.

What is Gallup's Q12?

Gallup's employee engagement work is based on more than 30 years of in-depth behavioral economic research involving more than 17 million employees. This research has appeared in prestigious business and scientific publications, including the Journal of Applied Psychology and the Harvard Business Review, and in our bestselling books First, Break All the Rules and 12: The Elements of Great Managing. Through rigorous research, we have identified 12 core elements -- the Q12 -- that link powerfully to key business outcomes. These 12 statements emerged as those that best predict employee and workgroup performance.

What is the relationship then between recognition, employee engagement and cash-flows? Let's go back to Gallup:

Beyond the significant differences engaged workgroups show in productivity, profitability, safety incidents, and absenteeism versus disengaged workgroups, we have proven that engaged organizations have 3.9 times the earnings per share (EPS) growth rate compared to organizations with lower engagement in their same industry.

Productivity, profitability, safety incidents and absenteeism...are all key contributors towards a company's ability to survive, to thrive, to innovate and to generate positive cash-flow results.

Employee recognition and rewards are about tapping into intrinsic rewards, says Carol Myers of Globoforce in her blog post Employee Rewards: Busting Common Myths

Every question delivers answers that result from that employee's sense, experience, of recognition by and among their peers, managers and leaders as well as their ability to generate the recognition they deserve.

Reminder

There is a reason why they call it 'cash-flow' and not 'cash-snapshot'.

Cash is king. Cash flows, positive and rich, keep you king.

Which Generates Sales? Twitter, Facebook or Email.

E-mail is the most likely to drive increased purchase intent among the largest number of online consumers. Facebook, by contrast, is the least effective channel to drive purchase behavior. That's because consumers generally become fans of a brand in real life before they become fans on Facebook - in other words, they're already purchasing from and endorsing their fanned brands. Finally, Twitter is the channel most likely to drive increased purchases and recommendations after a consumer chooses to become a follower.

via www.marketingvox.com

Interesting.

A few observations:

1. The study was conducted by coTweet and ExactTarget. One's business is Twitter; one's business is email marketing. That doesn't discredit their research. It is just a relationship to note.

2. Didn't Facebook's COO recently announce that email was going away? Link

Update (9/18/2010):

3. Twitter's not a social network. Twitter's VP recently notified the public that Twitter and its 100 million users is...not a social network. ReadWriteWeb.

That is an odd observation.

But, given it's source, it's a head-scratcher.

And, given the impact on sales from a network of trusted advisors...followers>friends>consumers>collaborators>stakeholders...a social network by any other definition...and given that Twitter is absent revenues, looking for a business model that generates revenues without sacrificing the community, er, social network, whose collaborations have built twitter into the force it wields in so many areas...well, I'm still rubbing my head.

Selling Social Media to Executives? Show Them the Money

[T]here are still many who are struggling to ‘sell’ social media to their executives.  And as Doug Frisbie, Toyota National Marketing Manager says, “The price of inactivity is greater than the risks of anything we’d be doing in social media.” via www.socialmediaexaminer.com

This is an excellent list of 9 ways. Each of the ways is described clearly, concisely. The author Ekaterina Walter is a social media strategist at Intel. She is a part of Intel’s Social Media Center of Excellence. She knows her stuff. And she knows how to address concerns within a large corporate environment that has built a recognized and respected brand...that generates some sweet cash-flows.  For the quarter ending 3/27/2010 the Intel generated $4 billion in cash from operations on gross revenues of roughly $10 billion. For art majors that's roughly 40%.

Most companies generate a little bit less than that from their operations on either the dollar or percentage basis.

These companies are interested in...cash. They are desperately interested in cash. Sure, they want to hear about Current Conversations and Data. Their Industry Peers and what they have done will have some interest for them, too. Still, too many of the executives in these cash-strapped companies may be a bit nervous about Empowering their employees. Right or wrong, good or bad, they are. Some will pay lip service. But most are wondering how to regain control of this ship and start generating those cash-flows they once did.

For companies in the enviable position of Intel, Ms. Walter has written a complete list with a complete discussion.

For everybody else, Ms. Walter's list remains awesome. One more way to this list would make it complete. That's

SHOW THEM THE MONEY. SHOW THEM THE CASH.

Show them the ROI and its sources that is possible from social media. Show them how current conversations, data, what they've learned from the mistakes of their industry peers and empowering employees can translate into positive changes in their cash-flows. 

Show them how it is a sustainable, self-sustaining, resource.

Show them that most of the tools are free or ridiculously inexpensive.

Show them that joining the current conversations with customers means a closer relationship with the customer. That translates into this DATA that is immediately meaningful to them:

* lower sales and marketing expenses.

* more customer referrals

* lower customer churn

* higher sales conversion rates

Show them that empowering employees means they have a meaningful chance to boost the average 20 percent of employees that actually come to work with the intent to make a difference.  Link.

What could they accomplish if 30% of their employees showed up with the intent to make a difference. A 50% boost in their operating results?

Show them that empowered employees mean:

• Earnings per share growth could be as much as 160% higher than their industry peers. *

• Return on assets could be 100% higher.

• Profitability can be 40% higher.

That will help them understand. 

The language of cash-flows and these metrics is the language they speak every day. That is the DATA they discuss every day.

Speak their language. 

SHOW THEM THE MONEY. SHOW THEM THE CASH.

* Page 7, The Corporate Lattice

3 Ways to Increase Return on Assets (ROA)

Paul R. Williams, CEO of Think for A Change, LLC, and author of The Innovation Manager's Desktop Reference, and one of the Top 10 Innovation Experts To Whom You Should Be Listening joined the show last week. You can listen to our conversation here.

We talked about this statistic shared by John R. Hagel, co-author of The Power of Pull: How Small Moves Smartly Made Can Set Big Things in Motion

Since 1965, return on assets has collapsed by 75% - it has been a sustained and substantial erosion in performance. There is no evidence of any flattening of this trend, much less turning it around. - Economic Recover? Don't Count On It

I asked Paul:

On a national level, you’re sitting in the White House and the Council of Economic Advisors reports this statistic for the nation. And President Obama turns to you and says Paul...what do you think? What are three steps the nation can take right now to reverse this trend or accelerate the embrace of sharing ideas.

1. Start changing our educational system We’re still teaching our kids rote memorization skills. We’re producing factory workers for an economy that no longer has factories. Start there, plant a seed for the future.

2. Invest more in entrepreneurs. At least get out of their way.

3. Third, we miss nowadays, our national BHAG, big hairy audacious goal. Until we find something we all can get behind and crank up the ingenuity of the nation we’ll struggle.

Now. How does that help you generate a higher ROA, return on assets, for your company?

1. Create a culture of learning within your organization. Gary Harpst discussed this in our recent conversation and in his book: Six Disciplines of Excellence. As you grow, you will find newer and bigger obstacles to face. A culture of learning creates a culture of solutions for those ever-bigger challenges.

2. Get out of their way. Let your organization members pursue their ideas, their solutions, their passions. Google gives 20% of each week to its employees to pursue their ideas. That seems to have worked.

3. Set YOUR BHAG, Big Hairy Audacious Goal? That's what rallies and inspires your people, keeps everyone moving towards a common goal, gives purpose when otherwise it's missing.

3 Ways to Re-Innovate Your Business

Are you looking for cost-effective, cash-flow easy, ways to re-innovate your business?

Are you looking for sustainable resources to create a process of innovation and re-innovation in your business?

Do you need a source of new ideas that connect your core competency to the needs of the market?

Look no further.

Thomas Koulopoulos, author of The Innovation Zone: How great companies re-innovate to bring amazing success and CEO of The Delphi Institute gives his answer and solutions to those questions.

As founder of The Delphi Institute, Mr. Koulopoulos built it into the most prominent and well respected global consulting firm with offices in the US, Canada, Australia, Japan, South America, and England.

Mr. Koulopoulos was a guest recently on our radio show. You can listen to our conversation here.

Here's what I asked:

I think all of our listeners are looking for ways to re-innovate, to make their department their company, their community great. What 3 things can they do today to start that process?

Here's what he answered:

I’m going to give you three really simple ways. But they are profound beyond measure and unfortunately not considered profound by large companies.

I mentor and am on the board of small businesses over the years. For me that’s where the passion exists in the economy. Look, there’s no economy better for small business than ours. You can create a small business overnight.

US is just behind New Zealand for starting a small business. Right behind us are Canada and Australia.

If you think of Canada, New Zealand and Australia, these are small countries. But everyone knows everyone.

We're a much bigger country, but here it’s very easy to connect. We’re very open to creating these connections. We have a strong VC community. So far this year the number of companies being funded has doubled as compared to last year.

The number one thing to do is: GET OUT THERE AND BLOG. Blogging is the single most powerful way to create serendipity. What you can do for others, how you can help others, altruism. Whether it’s twitter or formal like with WordPress. Get out there. Make your opinions known and make connections.

The second thing is make sure your web presence does talk about your core presence. This is where you conduct dialogue with the marketplace.

The third thing is you have to define what is your core competency. And how does that translate into value for your customers. What are you great at? What value do you bring to your clients that no one else can touch.

This is how you create a platform that can be leverage a number of ways.

Unfortunately small business is too busy to take the time out to articulate those answers. ...And it doesn’t take any more than 45 minutes a day to generate a strong return.

Now here's a question for you. Do you have 45 minutes a day to re-innovate your company in a way that's cost-effective, cash-flow easy, and generates a strong return...profound beyond measure?

4 Steps to Boost Your Cash Flows and Balances

Cash is King.

Cash, cash flows and cash balances, makes and keeps you king of your business. Positive cash flows and positive cash balances give you ownership of your company, control of your destiny.

Here are 4 steps I learned and followed as retail prices dropped by over 70% and still we found steps, albeit with a few scrubbed knees, to grow revenues by 80% and maintain positive cash flows and cash balances.

1. Sign the checks yourself.

Every check. Big or small. Make sure you sign them. That means you and only you.

This seems obvious. But many small companies allow their book keeper or accountant to sign the checks. Don’t. This creates a fundamental disconnect between your decisions and their costs. It is one thing to agree to buy a new server and see its price on your computer screen. That number and its impact become more real with the check you sign for its payment. And the connection between your decision and its cost and impact on your cash balances and cash flows grows stronger with each check you sign.

Sign the checks yourself.

Disclaimer: I have at times offered that option to the bookkeeper when a check needed a signature and I was away from the office. But I was blessed with an excellent bookkeeper, whose husband was a CMA, and said ‘no’. I’m glad she did.

2. Look at cash balances very regularly.

How regularly depends on your company’s situation. If you’re in dire straits, then you need to make that very regularly. A company in bankruptcy will look at their cash balances throughout the day.

I know of companies not in bankruptcy who manage their business daily, if not hourly, by their cash balances. Their company survives, but does not thrive. They have no time to look to the future much less plan for it.

I looked at our cash-balances monthly.

Why? If you sign each of the checks then what is the point?

• you see a bigger picture of the results

• this serves as a simple cross-check confirmation

• cash has been known to leave a company without a CEO’s approval even when he signs the checks.

3. Look very closely at your cash flow statements regularly.

I looked at our preliminary cash flow statements monthly. I reviewed, compared with previous quarterly results and discussed them in great detail with executives on a quarterly basis. That included my signing off on their results and their impact.

Those last two sentences are key. That gave ownership and accountability. Sometimes it gave great satisfaction. Sometimes, not. Given the disruption in our industry, it spurred changes in all areas of our operations and marketing. Doing the same thing and expecting different results in an industry changing as rapidly as ours would clearly not work. These last two sentences made that very clear every 90 days. Also made clear were the changes we implemented and their impact. They pointed us in the right direction, kept us pointed in the right direction, every 90 days.

4. Talk about cash with your organization

Disclaimer: I’m not a fan of open management where you share salary and bonus amounts.

Talk about cash and its role in your organization’s success. Talk about it in ways and terms that are meaningful to your members. Show what allows. Show what its absence prohibits. Do this for them and their world: their work, their tools and resources, their chance to grow. Incentivize with rewards meaningful to your members for reaching goals with cash balances and cash flows.

An old saying goes What we put our attention on grows stronger in our lives. Putting your attention on cash with these steps makes cash and its opportunities grow stronger in our lives.

4 Business Books to Keep Close-at-Hand

Keep your friends close and your enemies closer. - Sun Tzu.

Well, Sun...I'd say:

Keep your friends close and your enemies closer...and your best books closest.

There are many great books for businesses. I read most, if not all, of a new business book each week.

There are 4 books I keep close-at-hand. Some I have kept close at hand for 6+ years.

If you're a small business owner, leader (...if you work in a small business... you are all of those...you have no choice, really...) keep these books closest at hand.

STRATEGY

Being Strategic: Plan for Success, Outthink Your Competitors, Stay Ahead of Change. Erika Andersen, its author, is one of those rare authors who offer a clear vision of possibilities and a means for everyone to map their way there. That vision of possibilities is OUR possibilities. Her mission in life is to help people have the life they want and figure out a plan about how to achieve it. She accomplished that with this book. Her book and its methodical, daily, approach to Being Strategic can be used for having the career we want, the business we want, even finding the love of your life.

I met Erika 18 months ago. I read her book then. I have kept it close at hand since then.

She was a guest recently on my radio show. You can listen here.

EXECUTION

Six Disciplines of Excellence: Building Small Businesses that Learn, Lead and Last. Gary Harpst is the author. He, too, offers the tools for small business to articulate their shared purpose and the means to reach that shared purpose together. Gary has laid out a plan of strategic execution with six disciplines where businesses create a culture of learners and leaders. This is employee engagement taken to a higher level. This culture of learning and leading sustains their ability to find new solutions as their growth brings greater challenges.

I read this book 3-4 years ago when I was CEO of a small company. I have kept it close at hand since then.

He was a guest recently on my radio show. You can listen here.

TALENT

The Smart Interviewer: Tools and Techniques for Hiring the Best. Brad Smart is the author. This book presents the CIDS interview for hiring new employees. CIDS stands for Chronological In-Depth Survey.

I used CIDS 4 times. 3 times I found a great, A-Player, person who was welcomed with open arms and made tremendous contributions. The other time I was able to avoid making a disastrous hiring decision.

 

That kind of success is rare with any resource. But from a $13.00 book....? Figure the ROI on that! Just the savings from avoiding that one hiring mistake brings an astronomical ROI percentage.

Brad was a guest on my radio show. You can listen here.

MARKETING & SALES

Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force, by Ben McConnell and Jackie Huba. This is the end-goal isn’t it? Create customer evangelists who volunteer to generate referrals, sell your products and put their reputation at risk in the process.

The conversion rates are higher as are cross-sells, repeat purchases, upsells and customer loyalty.

Lower metrics are seen as result in marketing and advertising expenses, customer churn, employee churn.

All this translates to...higher profits, higher cash-flows.

This book and its authors continue to play a huge role in bringing companies back in touch with us, their customers. Maybe, that’s why their website is Church of the Customer. Maybe, that’s why they have 100,000 people who subscribe to their blog?

I could and have in the past testify for them. When all marketing tools and resources generated zero results as industry in which my company then raced to commodity-hell...Ben and Jackie appeared with some timely support. And truth. Again and again.

I read their book back in....2003. It’s stayed close by since. Now, I’m their customer evangelist and not as often as I should.

Jackie was a guest on the show last summer. You can listen here.

3 Ways a Business Can Rise Above the Turbulence

 Steven S. Little was a recent guest on my radio show. Steven is the author of Duck and (Re)Cover: The Embattled Business Owners Guide to Survival and Growth

We talked about this turbulent economy and how do businesses survive? I asked him:

What are three ways a business leader can get on top of this turbulence?

Here's what he answered:

1. Get the facts straight first. The most important that a business leader or more importantly, a business owner can do right now is to be sure that their decision-making is based upon logic and fact because that is not always the case when in a crisis. They can’t go with their guts and then rationalize their decision.

2. They have to get up and do what needs to be done.

3. Whatever it is that you don’t normally do, get out and do it. It is those voids that need to be filled.

I like them all.

Gather your data and supporting logic. They should compliment. You cannot take the next step with them.

Do what needs to be done. Tough choices face us all. But the right choices become visible with good date and supporting logic.

Doing the same thing and expecting different results is insane. We're not in Kansas anymore with this economy. Nor will we ever be again. So, doing what worked in Kansas and expecting it to work today is...insane.

You can listen to our conversation here.

You can read highlights from our conversation here.

You can read my review of his book here.

Highlights from My Conversation with Todd Sattersten, author of Fixed-to-Flexible

Todd Sattersten joined the show last week. We wanted to talk about his new, and great book: Fixed to Flexible: Four Simple Lessons About Cost, Price, Margin and The OptionsAvailable to The 21st Century Business.

You can listen to our conversation here.

I’m a firm believer in that if you admire and respect folks, well, you should tell them. Right to their face or voice in this case. Todd’s one of those rare individuals who...packs a heart with smarts. Intellectually, Todd could hold his own with almost anybody. And those who may not, there may be a few...he’s smart enough to listen until he can.

And for those he clearly surpasses, he’s kind enough and articulate enough to make them feel they are his equal, sharing their unique solutions and views of the world. Those two, the big heart, the sharp mind, get applied creating friends and partners and fans wherever he goes because he helps them reach their goals. And quietly allows them all the rewards.

Any business, any size, can benefit from reading Todd's new book. And it’s free as a download.

Let’s talk about your new book. Fixed to Flexible: Four Simple Lessons About Cost, Price, Margin and The Options Available to The 21st Century Business.

Congrats. When did it go live?

It went up on Groundhog Day – my most favorite day of the year.

Our friend, Erika Andersen, has a phrase I love. The phrase is reasonable aspiration or hoped-for goal. What was your ‘reasonable aspiration’ or ‘hoped-for goal’ in writing this book?

There has been so much conversation around price in the last couple of years. I thought I could connect a different set of pieces together that people may have not thought of or seen before. I wanted people to think differently about what pricing means and what options people have available to them. Understanding that you have more options creates more power as you go to do things.

How will you know when you have reached it? What will change about your life?

I know I have reached it already because of the feedback. I have received more feedback on this project in just two weeks than all the feedback on the 100 Best Business Books of All Time.

Note: Todd co-wrote with Jack Covert of 800CEORead. Also, a great book.

There is clearly something that is ringing true with people regarding cost, margins, price and decisions.

How has it changed your life?

The way it has changed my life is that it make me realize that I need to do more projects.

You compiled a lot of research and case studies for this book. Where were you most surprised? Was it some data or a case-study?

I think the thing I found most interesting was a case study on a company called EverNote. They are a web-based service: I like to call it digital memory. You can upload anything and store it. I think it pulls together a whole set of ideas of the next business models that will evolve. It is a free service – about 2.2 million people utilize it for FREE. It is fully supported by 40,000 that pay $5.00 a month for the premium service. His model actually works and I love seeing that.

Note: Todd's interview with EverNote's CEO

Note: I use Evernote. It’s surprisingly cool, simple and very useful. And I've just touched some of its uses.

Who is your audience? More specifically, describe thereader you had in your mind as you wrote this book.

I was speaking to the sort of person that is like you and I, Zane: independent- creatives that are doing a variety of projects for people, whether they are assisting with customer service or graphic designers, copy writers or people with project ideas they want to commercialize. Pricing is the single most important decision people have to make and I didn’t really see a good resource to help with this. People need to know how to charge, what their products are worth, and different options. I think it ended up appealing to a wider audience but it was focused towards people who are trying to launch a project and how they should go about doing that.

Why do they need this book? What pain of theirs are you solving?

1. The unique connection of stuff. It connects the dots. It pulls together material that probably is spread over ten books and 50 websites.

2. It solves the pain of what am I going to do? They are not sure of their options. I try to convince people that there is a wider array of options available to them in terms of how they are going to market.

What are the 4 simple lessons about cost, price, margin and the options...?

If you are in business you concentrate on these things:

1. Costs - Costs are always going down. You have to manage with that. For the last 20 years the costs of hard drives have gone down 5% per quarter.

2. Price - Price is a signal. One concept I talk about is anchoring and you can sway someone’s perception about cost or product by anchoring them with a number beforehand. For example retail price tags: here is the old price- here is OUR new price.

3. Margins - Margin is when you connect price and cost together. It is the most important measure in business. It is like your weight. How many calories are you taking in versus how many you are burning tells you where your weight is at. You have control over price and costs.

4. Options - You Have Options. There are more ways than you realize how to go to market. Price discrimination is a way to create different price points for the consumer.

Time is another point. I am trying to connect all the commercial aspects of business together: sales, customer service, purchasing and pull these into one bundle and say you have many options and flexibility in terms of how you go to market.

28:57

Which lesson did we, collectively, fail as a country in the run up to this recession?

The one thing that strikes me is that money was cheap. When Greenspan set the discount rate to zero, it was here pricing got way out of whack by the fact that cheap money was available. As we are trying to get back to some semblance of order now, but I don’t think we will get past some of the problems we have been experiencing for the last 20 years.

Does our economic recovery wait while we learn this lesson? Or does one of the other 4 lessons turn us around?

It is interesting watching the status quo and the players in creating the situation we have got ourselves into.

We have a ton more options available to us.

Let us believe that we are smarter than we were. We need to understand that emotion is a powerful driver in decision-making and we need to have some speed bumps – breaking mechanisms in our free market system and they need to be balanced to stop the things that have happened over the past couple of years.

Do the 4 lessons apply equally to small businesses and large?

Yes they do. The power of the e-book is that I believe small businesses have a greater ability to apply these lessons than big business. Big business runs a little differently and small businesses are more flexible and creative in going to market. In the digital realm you have even more options, especially in book publishing. You can choose your price. I think small business has the ability to be more creative, but you have to get over the fear of pricing and product offering.

Let's say you're founder of a startup. Which lesson would keep you awake at night wondering if anybody gets it at your startup?

It continues to be price because there is no perfect answer to price. On the cost side, you can price shop the cost of the needed product. You can pay what you want to pay. When you get into the pricing aspect, there are many things that don’t have a set price – like a home or a car. There is plenty of leeway.

I am a big fan of cash-flow. That's the number I always talk about. Cash makes you king. Keep the cash flowing in and you are the king. And with banks no longer lending to small businesses, it's even more important. You reference a quote from Bo Burlingham of Inc magazine that says gross margin is the most important. Why is gross margin so important?

It tells you how hard you have to work. It tells you how many sales you need. As a business owner, at the end of the day you need to know that you make enough money to thrive. If you don’t understand the margin, you can very easily get yourself under water. Companies go out of business because they run out of money. The margin is what you get to take home at the end of the day. Margin tells you time. You need to be bringing in more money than you are spending.

44:47

In your book, great book again, you talk about an experiment by behavioral economist Dan Ariely usingWalt Whitman’s Leaves of Grass. What was that experiment?

Dan has done a lot of interesting experiments on how we perceive value. He wanted to see how his students would perceive value. He told them that he was going to have a poetry reading and it would cost $2.00 to attend. He sent out an email and only 3% would attend. This was not very promising. He made a second offer – which was free attendance. The percentage jumped to 35%.

He approached a second set of students and told them that he would pay them $2.00 to attend. 59% said they were interested. He then made a different offer, saying that the event would be free. The attendance rate dropped to 8%.

The response rates depended on the initial offer. The point is that you have a much more significant ability of how people value your product than you realize. You can construct value around what you do.

As I read it, I kept thinking about the efforts of the Big Three recently to offer more and more incentives to buy. Yes, they increased sales. But did they create repeat customers? Would making their products free have helped? What would have happened if they let the buyer determine the price of the car?

You have to understand that if it is a pay what you want, you may not recover your costs to provide the product or service. You might need a “lower limit.” I think it is tough for someone who offers a physical product to use this methodology.

What books are you reading?

Most books that are coming out are around the idea of action and work. It started with Dan Pink’s Drive: The Surprising Truth About What Motivates Us. It was a simplified model of how we should think about motivation.

Seth Godin’s book: Linchpin: Are You Indispensable? One of the ideas is how when we used to go to work, someone always told us what to do. Now we have to create our own maps. Defeat the “lizard brain.”

2 days ago I talked with Chip Heath, co-author of “Switch: How to Change Things When Change is Really Hard” which is about change.

(Listen to Todd's interview with Chip Heath.)

Rework by the guys from 37 Signals. It is about work and how we do stuff.

Thanks, Todd.

My testimonial for Todd's book. This is a short book. But I found the content and ideas and yes formulas made it a powerful book. A book I wish I'd read...a few years ago. All of it was so good, compact, crisp, I first grumbled what a headache. Disclaimer: I'm an art major. But as I read it again and again I saw the beauty of it. It opens the door to seeing your business in a brand new light, a light that can allow you to create new products, new services, new markets, with compelling gross margins and cash-flows to make and keep you king.

Right Advice for Starting Word-of-Mouth the Right Way

My advice is to be 100% confident in how you deliver a customer experience before you start to try to strike up conversations online. Because if you are not confident, you will not want to listen to some of the negative feedback online about how you are doing business.| John Moore, All Things WOM

He’s right.

Talk to your employees’ first. They hear what is being said about ‘their’ brand. They hear it among themselves. They hear it from customers.

And they know how to improve it.

Listen...to your employee’s first.

Listen... with your employees’ first.

Listen... to what they hear.

Then you will:

Be confident when you strike up a conversation about your brand with perhaps a stranger;

You will want to hear what is said, even if it’s a complaint. If it is a complaint you will be confident you can turn that complaint into a compliment.

And if you listen well...you can hear your profits grow.

Listen...so your profits grow

Raise your hand, privately where you’re reading this post, if you want more profits? ( Okay-y-y...almost everyone. )

Clap your hand if you are looking for that one lever that can generate more profits? And you want to see data to support this claim? Clap twice.

Here it is. Listen.

No, that’s it. Listen. To those who generate the profits.

Here’s the data:

80% of your employees can predict your failure. Stephen Lynch, COO for Results.com.

60%+ to 80+% of corporate projects fail. BusinessWeek

Are these two points...coincidental?

80% of your employees have no clue... what your mission statement says nor what it means. Institute for Corporate Productivity The operative word is ‘your’. It is your mission statement because you were the only person who contributed to it.

71% of your employees could care less. Paul Herr, author of Primal Management.

1. There’s only one way to show you care. Listen.

2. There is only one way to create mission statement that reflects everyone's mission and input. Listen.

3. There's only one way to avoid an 80% failure rate for your new projects. Listen.

Listening is an act of respect. It shows you care enough about that person to invest your most precious resource: your time. You honor by listening to, those whose skills and talents and dedication create profits for their company. They would anyway if you would but...what, I can’t hear you?

Let's add those three, together:

1. Show you care. ( Lower employee recruiting costs + lower employee turnover + lower training costs.)

+

2. Gather everyone's input into building your shared brand from the same page. ( Greater operating efficiencies + fewer errors + fewer internal problems from poor communication or silo mentalities + faster to market + more innovations)

+

3. Lower costs from fewer failures. ( lower cost-of-goods sold + lower returnables + lower R&D costs per project...)

Add them together, and...shhh....

Listen. You can hear your profits grow.

Now. I will be quiet. And listen. What do you think?

Highlights From My Conversation with Sally Hogshead, author of Fascinate

Sally Hogshead was our guest last week. She joined the show to talk about her most recent book Fascinate: Your 7 Triggers to Persuasion and Captivation.

In a separate tweet she referred to this show as the Cliff Notes version of her book. (Add kind and generous to her list of great qualities along with excellent writer and valuable resource for your brand.)

Following my guest's lead here's your first three steps to learning from Sally how to Fascinate your audience:

1. Yes, read this post.

2. Yes, listen to our conversation in streaming mode at this link.

3. Yes! Go Buy Her Book. This is the 3rd and most important step. It’s well-written, well-organized and well-presented with data, profiles, anecdotes of brands that fascinate and those that don’t.

But, wait, there’s more!

She includes steps any brand of any size can take today to persuade, captivate and ultimately...fascinate.

Now, on to step 1.

You have legions of fans. I’m not encouraging stalking but where are you, what cool projects are you working on right now?

My team and I just launched a project that I am really excited about; it is called “The F Score Personality Test.” It is a fascination score and you can take the test online now. We wanted to help people learn what is fascinating about you, your personal brand.

Based upon research with thousands of people we developed a test of 28 questions where you can discover how your personality is fascinating other people.

In the first three days we already had 3000 people take the test. It is not a test about whether you are fascinating it is about HOW you are fascinating. The test tells you which of your traits are most compelling to other people and how you can use those to be more influential with your audience.

[Host note: The test is well, fascinating. And the results are even more fascinating...and useful.]

We’re here to talk about your book: Fascinate: Your 7 Triggers to Persuasion and Captivation. Our friend Erika Anderson coined a great phrase in her book Being Strategic. That term is reasonable aspiration or hoped-for goal. What was your reasonable aspiration or hoped-for goal in writing this book?

I had a lot of goals in writing this book. As an author, writing is an intense process. I wanted to find an idea that I could own. I spent the first 6 months exploring themes that had not really been discussed.

The notion of fascination has been around for thousands of years, dating back to ancient times, but it was not considered a positive trait. I was really charting it through history...people at one time thought it was evil. It was at once considered a crime and paralysis of connections. I tried to tie it together with my marketing expertise and apply it today.

How will you know you have reached it?

When you have a connection with people where you can create messages and relationships that people focus on first and foremost. It is about creating a fascinating message that captures attention and interest. It must be effective and overpowering everything around it.

What’s been the most surprising response you’ve had?

The book is very much about brands, big business and ideas. It is surprising how people want to take the 7 triggers and apply them to their personal lives.

People are most interested in figuring out how they are using those 7 triggers and how to hone those triggers to be more effective AND which triggers they are not using.

What are those 7 triggers?

1. Power
2. Lust
3. Mystique
4. Prestige
5. Alarm
6. Vice
7. Trust

Your writing style was personal and immediate. It seemed you were writing to a single person. Me, in this case. But, describe the person you were talking to as you wrote your book.

I was writing to someone who works in a creative occupation, either an ad agency or product development, or sales and were frustrated with how the traditional means of marketing were not helping them accomplish their goals of being influential. There had to be a new way to make their messages more captivating. I put it in the context of how the reader would be immediately able to apply the knowledge directly to their lives.

Do you have a favorite corporate example for each one?

Lust:

Godiva. We developed a drink called Chocolixier. There was a whole sensory experience that lets the consumer relate.

Apple does this as well. You are able to be a part of the brand. It is about an openness and availability. You create a space where people want to draw closer. Brands are incorporating more of the Lust trigger.

Mystic:

This is a delicate trigger. People become curious to learn more.
KFC they keep their ingredients secret – in separate warehouses
Coca-Cola their recipe is also kept under lock and key.
The companies have successfully perpetuated the aura and intrigue.

Alarm:

A more complex trigger about establishing deadlines and consequences. You will become fascinated by the consequences. Alarm makes us respond very quickly to avoid negative consequences.

Brands can use this.

• QVC they say only 10 left in stock.
  

• FedEx When it has to be there overnight
  

• IRS We know that as much as we dislike paying taxes, we dislike the option of going to jail if we don’t pay our taxes.

Does a successful brand need to pull all 7 of these triggers?

Not at all. Very few brands use all of the triggers. Most choose one primary trigger that is near and dear to their consumer’s hearts and most effective for their goals.

Can they be successful with just one? Which one is the most common?

Brands try to use the Trust trigger without really earning it. Trust is EARNED!

26:06

Prestige is another. Most companies don’t live up to it. They may commoditize it or make it available to the masses.

Let’s talk about the limbic area of the brain, shall we? In your book, you write that the limbic area of the brain is the area of the brain, that part that houses rage, ecstasy, sadness, sexual arousal and fight-or-flight.That’s the mecca then for both advertisers and leaders, isn’t it? Getting a reaction, and getting the desired reaction.

That is one of the differences in using fascination in creating a message.

First is using traditional marketing that is housed in one part of the brain which is why marketing messages tend to sneak at people.

Fascination messages prompt a reaction from a deeper, more instinctive place. The Triggers don’t live in a rational place. They live in this limbic area so when a message that is truly fascinating, this prompts a reaction that you cannot ignore.

You write about Robert Fantz and his research around baby’s first party trick. That’s facial recognition. And his experiments proved that even at birth we arrive prepackaged with survival mechanisms to help us connect with others and form relationships.

Would you say our culture, here in the US, reinforces those mechanisms or chips away at them?

It is very complex. Our brains work really hard at birth to work with facial recognition. It is really important that we learn how to smile very early so we can develop a connection with our parents. Our brains are literally hardwired to accomplish Facial Recognition from birth.

Contrast that with Social Media, which has little Facial Recognition. There is this whole range of information that we look for when we are communicating that is essential to figure out someone’s intentions, to understand their communication and influences – all this gets wiped out with Social Media. It does allow for more connections but what drops away are the thousands of cues of what people are truly trying to communicate to you.

We have to find new ways to infuse that in our Social Media messages and the most simplistic way is with emoticons and acronyms. In this style of communication our brains are under surge and we sometimes feel more alienated and dissatisfied. We are facially scanning for verbal cues.

Human contact is very important in creating trust and we have lost a lot of this contact and interaction due to technology. Picking up the phone and calling someone can increase the fascination concept versus just an email.

What is the FFA area our brain? Why should companies care?

FFA or fusiform face area is a part of the brain designed for one’s use to determine what another person’s facial expression is trying to tell you. The whole part of your brain is highly customized to help you understand other people’s faces.

There are many ways car makers play off of this. They make facelike structures with the headlights and the bumper and grill.

There is something that works with personifying something that would otherwise be very cold. When you put a face on it, it becomes more accessible, approachable and more memorable because it starts activating the FFA area.

What are the Gold Hallmarks of a fascinating message?

Gold Hallmarks are the ways in which you can evaluate if something is being fascinating or not. Fascinating things have very specific traits in common:

1.They incite conversation. We want to talk about them, whether we like them or not. We may not even really care about them.

39:38

2. It provokes strong and immediate emotional reaction. We can love it or hate it, but it is an immediate reaction.

3. It creates advocates. It doesn’t try to be ALL things to ALL people but rather have a core slice of the population putting in a lot of energy, whether they are for or against it.

4.    It becomes cultural shorthand for a specific set of actions or values. Harley Davidson for example – if I said he is the kind of guy that drives a Harley, you would know exactly what I mean. OR if I said that is the Cadillac of toasters. You would understand the value and image.

5.    It forces competitors to realign around it. It creates such a significant space in the marketplace that competitors can no longer continue on the path they were before. They have to move, make way and adjust. When Chick fil-A introduced their fried chicken sandwich, McD’s had to quickly follow up with their own.

6.    Triggers social revolutions. People become so passionate about it beyond the sheer utility of the product and it changes the way they think and act on a much bigger level. It is no longer about the parody level. It stands for much more. Brands can live on a higher level.

Now. Is there a connection between the Gold Hallmarks of a fascinating message and the 7 Triggers to Persuasion and Captivation?

In part three of the book, I outline the “how to.” Every trigger can help you achieve one of the Gold Hallmarks in a different way.

• The Lust trigger is about drawing people closer.

• The Power trigger is about controlling people.

• The Prestige trigger is about elevating you above people.

By applying the triggers in specific ways you can achieve the Gold Hallmarks, but it depends on what is natural for your brand, what is appropriate and the goals that you want to achieve out of that.
 
Which one determines a brand’s survival?

In the economy of where we are right now, the most survival oriented one is to provoke a strong and immediate reaction. Middle of the road will not cut it anymore.
 
What are steps a listener can take to make their brand more fascinating?
It is about taking what you already have and the person and company that you already are and finding a way to apply the triggers so they connect with your audience.

Figure out what your primary trigger is – the way in which your brand, naturally and authentically speaks to people and makes them more interested in speaking with you.
 
Your book seems written for a brand’s external audience: customers. Do you see any difference for their internal audience: employees?

51:45

This ties into the material in my first book about creating a radical career-becoming more valuable and retaining top talent.

It is important for employers to fascinate their staff if they want to be able to keep them. People are fascinated with time off versus more money as it demonstrates the employer using the Trust trigger.

Which companies drive higher cash-flows: fascinating companies or companies we respect?

The two of them are not mutually exclusive. Respect is a form of fascination. The relationship is very intertwined. We are sometimes fascinated by brands we don’t respect.

Jägermeister is a prime example. It tastes so horrible but after you do a shot there is a sense of pride and group bonding. No one respects the brand but people do it anyway.

Thanks, Sally. You've shared wonderful insights into our shared triggers, triggers that we can learn to leverage to persuade, captivate and...Fascinate.

Cheers!

The irony of social media? We don’t connect.

The irony of social media is that the more its advocates tout social media’s ability to reach out and connect......the less we connect.

The more content there is about ‘listening’ to your community...the less it’s done.

Oh, sure. There’s lots of networking. Jerry Lee Lewis, the Killer, sang about a whole lotta shakin’ goin’ on...Back then Jerry had the bull by the horns:

We ain't fakin'
Whole lot of shakin' goin' on

Today it’s a whole lotta networkin’ goin on’....but far less connectin'.

The greatest disconnect seems to be with social media agencies, consultants and ‘experts’ and their business clients. Those are the clients who wish to remain in control of their destiny with a business model that creates and sustains positive cash-flows.. They constantly look at every metric, ultimately, for its impact on cash-flows. And that is reported in the ever important...cash-flow report.

These are metrics like: calls, leads, conversions, sales cycle, upsells, cross-sells, customer churn, employee recruiting, employee training, employee turnover, customer service costs (salaries, training, resources), customer service calls and emails, sales and sales increases.

It is rare to see a discussion of social media metrics extend much farther than clicks to a website. Rare, not non-existent. The most hopeful post I’ve seen was from Jason Falls in his post: What Social Media Can Do for Your Business.

Part of it has to do with the fact that social media thinkers and advocates have never been very good at illustrating a definitive tie to business success through their medium of choice.

We have found the enemy and he is us. But identifying the problem is the first step on that journey, right?

Still too much commentary on social media’s use for business include statements like this:

Most speakers and participants in #es20 agreed there is no one way to properly or honestly measure the ROI/ return on investment in a business going social. Social Enterprise 2.0 - start(s) inside

I’m guilty here. Being a CEO blogger back when blogging was something odd and a CEO blogger was...even odder, I spoke from my very deep understanding that blogging (back before Facebook and Twitter...) was the tool to communicate our brand’s message in a personal way. That personal way meant no global competitor, regardless of their budget, could compete on that message

The cost? $14.95. Per month. And a little bit of my time each day. Together this tool generated far better metrics on all the above than any amount of advertising using any media.

Then I realized. Oh. Not every business leader has been forced to compete in a commoditized industry where traditional marketing not only fails, but is expensive while it fails. ( That will change. Soon, every business leader will face that scenario, repeatedly.)

Personal passion does not always connect..even with today's social media. What connected with my peers was the connection of social media to what mattered to them...clicks, calls, leads, conversions, sales cycles...cash-flows. And how that blog post done today generates metrics reported next month in their standard reports ending up ultimately with the improved numbers in their cash-flow reports. And improved cash-flows makes them King.

Why cash-flow? Cash-flow is the lifeblood of business, particularly startups and small businesses. It is never more important than now as commercial banks have chosen to tighten credit requirements for startups and small businesses.

Adding insult to injury are the agencies who in one hand encourage a disinterest in meaningful metrics that show a ROI, while at the same time touting metrics and contract terms that insure their own internal ROI goals are easily met. Upfront payment and payment regardless of results is a fine way to not only accomplish your ROI regardless of your client’s. It is also a fine way to generate customer vigilantes to greet those partners who can listen to their clients and can deliver a solution for their clients’ needs which delivers a positive ROI for both.

But, it’s not just agencies. It’s us. A recent study with obvious elements of conflicts of interest shows that we trust our online peers less and less.

That claim is a convenient distortion of the reality. The reality is our online communities are one big networking event, 24 x 7.

Networking isn’t trust. Networking is an introduction. Networking is the first step to developing a relationship of trust. That I have total strangers among my followers or readers doesn’t mean I trust others less. It means I have a bigger pool of people I am getting to know in order to genuinely connect with and trust them. I no more trust a stranger I met in person at a conference than one I meet and follow on twitter.

However, over time...and with social media tools and resources...my circle of trust, Focker, will grow.

But it will never grow, social media will never be the ultimate playing field leveler, the resource for change, if we don’t listen. And then connect its power to the metrics that measure its success in a way and a language that even non-believers can understand.

Because if it social media is so cool, and it is, and so powerful, and it is, then why do 75% of businesses fail to use it?

Three-quarters of small businesses say they have not found sites such as Facebook, Twitter and LinkedIn helpful for generating business leads or expanding business in the past year, according to a survey conducted for Citibank Small Business of 500 U.S. businesses with fewer than 100 employees.

Also, 86 percent said they have not used social networking sites for information or business advice. Ten percent said they have sought business advice and information on expert blogs. - Reuters, Oct. 8, 2009

Maybe, it’s because no one’s connected its coolness and power in a way with what’s important to those who want to believe. And that’s sad. Because the connections exist.

Sermon's over...for now.

Trying to practice what I preach...tell me what you see. Do you see better connections being made for business with social media's use? Who's doing it? Who's sharing it? Who should I be listening to?

Small Business Lending Disconnect

An article in CFOZone highlights the disconnect between small business lenders and their former customers. The disconnect was highlighted in recent survey by the Federal Reserve of Senior Loan Officers.

Here's the banker's perspective:

In its January 2010 Senior Loan Officer Opinion Survey on Bank Lending Practices released Monday, the Federal Reserve determined that the 78 respondents generally ceased tightening standards on many loan types in the fourth quarter, but have yet to unwind the considerable tightening that has occurred over the past two years. You can read the full results here.

Here's the small business perspective...now, two years later.

Additionally, the Fed survey suggests firms don't necessarily even want more loans. Only two banks reported moderately stronger demand for loans from small firms, while 18 reported weaker demand. In all likelihood, healthy firms are unwilling to take on the burden of additional debt in such uncertain times.

Don't necessarily even want more loans? How about don't even want to bang their head against a brick wall, a wall they, the small business customers and their employees, built for the bank.

Small businesses report they no longer are interested in loans from commercial banks. Why should they be interested? If they survived this recession, then they did it on their ability to extract concessions from employees to vendors, from customers to partners...and not from the help of their former partners in growth: commercial lender.Those small businesses that survived have little interest in being customers of those who chose to abandon them while they struggled to survive.

Banks celebrate their means of survival by citing their survival without needing federal assistance...while not discussing how they cutoff the source of jobs in their communities.That source is their small business customers.

And now we have a jobless recovery. That means at some point...those consumer loans will no longer be a source of revenue for the banks, either.

I have a feeling that some banks and even small businesses may play fiddles while their communities burn metaphorically.

That might be how these two reconnect in the future.

$30 billion...hey, it's a start

Today, President Obama will announce the latest initiative in his series of plans to spur growth, bolster hiring and free up credit for small businesses: a new $30 billion "small-business lending fund" created from TARP money.

The fund would be available to community banks with assets of $10 billion or less for small-business lending...USAToday

Hey...it's a start.

The logic for this is that small community banks with under $10 billion in assets are:

.. the small, local banks that work most closely with our small businesses — that provide them their first loan, and watch them grow through good times and bad.

The questions that are not clear include:

• Why so late?

• When will these funds be made available?

• When will they create jobs?

• Why have the community banks, many who remain healthy through this economy, chosen to stop working closely with their community of small businesses?

• Why have the larger banks not participated in these loans despite their ads to the contrary.

• Why does it fall on the federal government to facilitate commercial lending NOW when many banks see their balance sheet reflect healthy asset-liability ratios?

• Exactly how do these banks expect our economy to recover, jobs to be created, customers of their lending products to be created...unless they participate with their role of lending?

• Again, why does the fed need to ...push capitalists to behave like capitalists if the fed is led by a WH labeled as socialist?

Whatever the answers are, this $30 billion in funds for small business lending is a step in the right direction. Steps in the right direction, against obstacles and resistance, is the sign of a leader.

Radio Show Guest: Steven S. Little, author of Duck and (Re)Cover

Steven S. Little is a guest tomorrow on my radio show. We'll talk live at 9:30 AM, Central. Steven will share some ways and resources that embattled business owners can not only survive but even grow. And yes, grow during these tough times. His latest book is Duck and (Re)Cover: The Embattled Business Owner's Guide to Survival and Growth. This is a great book, as you can read from my review where I basically said...read it!

His earlier books are:

* The 7 Seven Irrefutable Rules of Small Business Growth

* The Milkshake Moment: Overcoming Stupid Systems, Pointless Policies and Muddled Management to Realize Real Growth.

I look forward to speaking with him. There are two listening options:

LIVE at 9:30 AM, Central, January 13

1. Call-in live during the show at 646-915-9212

2. Listen in streaming on-demand at this link.

LATER

1. Listen in streaming on-demand at this link.

2010: The Year of Customer Penance?

It's the week after Christmas. And many of us now...see who we forgot on our Christmas list. ( Yikes. I see 2010 being the (another?) Year of Christmas Gift Penance.)

How many companies forget the same, very important, people every year? You know who I'm talking about: Customers.

Did you forget your customers this year? Its ok, if you did. It's too late to change, anyway. The only positive to this oversight is that... you're not alone.

But, that's the point. You're not alone. You're lost in the crowd of all the other companies who forget their customers, each and every year.

And there's your opportunity. You can stand out from this crowd of millions...by instead remembering your customers in 2010.

Make 2010 your own Year of Customer Penance. Remember your customers every call, every email, every service, every feature, every day, every week, every month.

Jeanne Bliss and Jackie Huba remind us why in Jackie's interview of Jeanne: 4 Questions with Author Jeanne Bliss:

Q: Do companies need to be customer-driven to grow?

Companies forget that customers keep them in business. Customers who love companies grow them. To understand this, think of customer math -- a rigorous way to track incoming customers by volume and value and then reconcile that number with the lost customers in that same period, comparing incoming and outgoing customer volume and value. The ‘aha moment’ comes when the math reveals that company marketing dollars are spent replacing customers lost rather than growing the business with the addition of new customers.

I bolded and repeated the key points. Her answer is the essence of a sustainable business model.

Companies forget that customers keep them in business. Customers who love companies grow them.

Customers....grow companies. Customers who love companies...grow those same companies.

The 'aha moment'? Maybe, in hindsight, we can call it the Moment of Regret. That's the moment you regret seeing those customers and their referrals and revenues leave. So you take your marketing dollars and chase after those customers you neglected, ignored, insulted...forgot. The ones you lost.

Again, if by chance, as you review your year-end reports you experience a few moments of regret, don't worry. Have the regret. Recognize it for what it's taught.

And make 2010 your Year of Customer Penance.

And, this time next year we'll celebrate what's in your year-end reports with:

• added cash-flows

• higher sales conversion rates

• more upsells, cross sells,

• lower turnover among employees

• more referrals

• more testimonials.

NOTE: I'm a big fan of both Jackie and Jeanne. Their clarity and focus on the power of customer-driven organizations makes it easy to riff.