Once you remember what your profit drivers are, you can then refocus your efforts on figuring out how to increase the percentages or numbers for each of these profit points. And once you do that, you’ll see the multiplying effect they have on one another and how they can rapidly accelerate your profits.

That said, here they are.

1. The Size of Your Funnel. In other words, how many total leads do you have. Business is a game of numbers so if you have a small top to your funnel, everything below it will limited by that number–which means that finding a strategic and systematic lead generation system that can predictably deliver an ever-increasing number of leads is critical to any profit growing initiative.

2. The Number of Conversations or Presentations Per Month. In other words, regardless of how big the funnel is, there is always a smaller number of legitimate viable prospects who will buy that month. So figuring out how to increase the number of actual conversations or presentations you make per month is another critical profit driver. Even if your conversion rate is 100%, your total amount of profit is limited by the number of actual conversations or presentations made per month.

3. The Percentage of Prospects You Convert. All things being equal, if you can increase your conversion rate from, let’s say 30% to 40%, you have just grown your profits by 33%.

4. Your Average Transactional Value. This is the MacDonald’s approach to up-selling, cross-selling, and packaging. Yet, most companies and businesses miss out on this profit driver because they don’t take advantage of intentionally increasing the average transactional value per customer–which could easily bring about a 20-30% increase in their profits.

5. Your Profit Margin. Either by increasing the perceived value or price of what you’re selling, or by reducing the cost of goods sold or overhead, you could make substantially more profit every time you sell what you sell.

6. The Percentage of Customers You Retain. Since it costs about six times more to acquire a new customer than to sell to a current one, it just makes sense that you’d want to develop a series of strategies and tactics to ensure that you keep an ever increasing percentage of your new customers.

7. The Frequency of Customer Repurchase. In other words, if you can get your customers to buy more often, everything else being equal, your profits will soar. For example, if a men’s hair salon can get their customers to go from getting their hair cut once every five weeks to once every four weeks, that’s the difference between 10 cuts and 13 cuts–or an increase of 30% in profits.

8. The Number of Years They Continue to Buy From You. Again, if you can increase the longevity of your customers (since they have no cost of client acquisition any more–and they tend to buy more frequently), you will automatically increase the amount of your profits.

9. The Number of Referrals Your Customers Provide. Since warm leads tend to convert at a higher rate than cold leads, if you can increase the number of referrals your current customers provide, you could radically increase both your conversion rate and your profits.

So, there you have it–the Nine Profit Drivers for your business. If you’d like a pdf of these 9 Key Profit Drivers, click on this link and you can put up this graphic in front of you some place to remember that when it’s all said and done, if you focus a fair amount of your time and effort on figuring out how to systematically increase the percentages and/or raw numbers of each of these nine drivers, you could end up making a whole lot more money.

Note: Figuring out how to systematically increase those 9 Drivers isn’t necessarily easy (choosing which strategies and tactics to use, test, adjust, systemize, etc.) but the framework is. So don’t make it too difficult. Just stay focused and work on increasing each of these by a little bit and your profits will begin to soar!.

To your accelerated success!

P.S. If you need help with this, feel free to contact me. It would be an honor to help you!

Yet, what do most owners and CEOs (and their companies) focus their marketing (and strategy) on? Exactly! Being better than their competitors. “Our technology is 10% faster than theirs.” “We have the best pizza in town.” “Our bank has the best customer service in our city.” “Our music rocks more than your church’s music.” “Our paper towels are the better picker uppers.” Etc. Etc. Etc. And yawn, yawn, yawn.

I don’t know if you read “Blue Ocean Strategy” or not, but the metaphor that Kim and Mauborgne laid out in that book is perfect for this point. Their main idea was/is that most companies attempt to compete in a red ocean (an ocean filled with competitors where each is extracting blood from the other) which leads to commoditization and low margins/profits. Instead, they argue, you want to create a blue ocean where you’re the only one who does what you do–which also leads to uniqueness and higher margins/profits.

In essence, it’s the same point I’m making here about marketing (and strategy). Whenever you’re focusing your attention on being better than someone else, you’ve automatically defaulted to a red ocean marketing strategy. Now, there’s nothing inherently wrong with that strategy. Being able to claim that your product or service is better by some quantifiable measure (Zyrtex works two hours faster than Claritin) is not a terrible marketing strategy. But it doesn’t get the same attraction and attention that something new does (a la Apple).

Several years ago, Al Ries and Jack Trout, in their book on the 22 Immutable Laws of Marketing brought this to the forefront, when they said,

“Everyone is interested in what‘s new. Few people are interested in what‘s better.” — Al Ries and Jack Trout

I can’t say it any better. In fact, you may want to write that statement on a wall somewhere (like in your conference room). Most marketing campaigns and strategy sessions are focused on being “better,” which isn’t bad–it’s just not great. What you want to focus on is “new, because ”everyone“ pays attention to the ”new“ and ”different“ or ”unique“ thing. Better just gets lost.

So, as you take a look at your company’s products and services, what can you add or change to create something ”new“ and ”different“ this year? What can you do to set your company apart from all the others in your market space? What could possibly create a blue ocean moment for you?

Once you identify that, make sure you make that the focus of your marketing (and strategy). Why? Because, ”Everyone is interested in what’s new. Few people are interested in what’s better.“

To your accelerated success!

P.S. Twenty minutes after (originally) posting this, I received an email from Apple with the following image at the top. Notice the key word.

My first question to him was, “You’ve started this by defining a process/product. But, for a moment, let’s forget about that and go back to the beginning and ask, ‘What’s your objective for this process?’ In other words, what do you want to produce when people are finished going through their experience with you?”

After he told me his answer I said, “Well, if what you want to produce is [X], then it seems to me that you have the wrong model.” In other words, he did what most people do, he created a model of what he thought people needed–and then set out to try to convince those same people that what they needed was what he was offering (which, of course, is the wrong way to do this).

Moreover, the model that he was using, was counterproductive. Because of the way the process was designed, it made it virtually impossible for him to attract the very kinds of people he wanted to attract. So instead of being able to attract the very best possible pool of customers, the reality was he was left with less than his optimal target market.

But he’s not alone. I find this same kind of experience in business after business. We design what we think customers’ need vs. what they want (and passionately want). We try to push marketing out to them in order to convince them that they have a need they don’t know they have. And we create processes that make it difficult for our optimal customers to use us. In other words, his story is often our story.

So, when was the last time you took a good look at your business model? Is it the right model? Does it really produce the results you want? Does it really drive the kind of outcomes you desire? Is it scalable? Is it still the right model moving forward? Remember, the world is constantly changing. The model that worked last year or last decade, may not be the right model for today–and even more importantly–for tomorrow!

If you haven’t done this recently, may I encourage you to take some time this week and evaluate your business model. I don’t know what the end result of your review will be–but I do know that the conversation I mentioned above caused me to go back and look at my own model–and yes, you guessed right–I had to make some changes to my model. My guess is that most of us do. So, when will you sit down and ask yourself the questions in the paragraph above?

To your accelerated success!

Most leaders underestimate the power of a makeover–and the speed at which they ought to be undertaken these days. It’s not unusual for someone to be surfing the web these days and think, “Wow! That site looks so … 2009,” and we’re only four months into 2010 (as of the writing of this post).

Next week (starting April 26th) marks the public makeover of a business icon–BusinessWeek (which was bought by Bloomberg back on December 1, 2009). They’ve even created a section on their website describing all the changes.

http://inside.businessweek.com/

Now, I haven’t seen the new remade version, but I do love what they’ve done to prep readers about the makeover. So, here are four lessons worth learning from them about creating a makeover.

1. Teaser campaigns still work. The Bloomberg team has done a great job of promoting the change. If you’re a reader of BusinessWeek, then you know they’ve been talking about “change is coming,” for awhile. And while it’s nothing more than an old school teaser campaign–it’s working. I’ve been reading BusinessWeek for years–and I haven’t been this interested/excited in years.

2. Use video to tell the story of the change. If you go to their website, you’ll see a series of videos from the editor describing the change. Vision casting is usually done best with video (actually it’s best done live, but that’s not an option here). So having Josh Tyrangiel share his vision that, “We take people on journeys … and introduce them to concepts and people that will impact their lives for years, even decades …” was the right decision.

3. Use powerful, short image building phrases to describe the changes. Rather than impress us with their vast vocabulary skills, the design team has done a great job of picking up key phrases we can all understand immediately.

* Reinvented. Redesigned. Reimagined (the tagline for the change)
* More Clarity. More Energy. More Impact (each with four short sub-points defining the changes)

4. Remember that “Look and Feel”/Design matters. While story will always be first and foremost (and should be for a magazine), the Bloomberg team understands that the look and feel of a site or magazine (or whatever you’re producing for the public) does matter. The vast majority of people bring their eyes with them. And whether they want to admit it or not, within seconds, they’ve “judged the book by its cover.” Within seconds they’ve either decided, “culture current” or “old school,” or …

So, as you look at what you and your company are producing and offering, are you in need of a makeover? Is your website or are your other marketing materials in need of a makeover? Is your business model in need of a makeover?

If so, then you may want to take a page from the Bloomberg BusinessWeek playbook in order to make sure that your makeover works for you and your purposes.

To your accelerated success!

P.S. When was the last time your website had a new design. If it’s been more than 12 months, chances are it’s time for a face lift. One of the reasons I’m such a huge fan of WordPress (besides the fact it’s free and that it’s easy to edit) is that WordPress separates out the content and the theme/skin/template. So with one click of a button, you can change the whole “look and feel” of a site without having to change any of the content. In around five seconds you can have a whole new look. Then, you can update the content and layout when you have time.

Or if you could avoid the pain of missed communication–from frustration and conflict to lost opportunities and sales. Or if you could avoid doing or saying something that might injure a key relationship–what would that be worth to you? I’m guessing a lot. Well, get ready because you’re about to get that one idea/technique–and it won’t cost you a thing.

I learned this idea/technique from a minister and author from England named John Stott. In his classic book on pastoral communication (also known as preaching :-), Stott introduced a concept he calls quadruple thinking–and it’s brilliant! The basic idea is this. It occurs in four parts (hence the phrase, quadruple thinking).

1.    You think of what you want to say
2.    You think of how the person you’re communicating to will hear what you have to say
3.    You rethink what you have to say
4.    So they will hear what you want them to hear.

Brilliant! In other words, if you or I want to be more effective communicators (and as a leader of a small or medium-sized business or organization you ought to want to be), then

We don’t have the luxury of ever just saying what we want to say.

Why? Because communication always involves two (or more) people. And that means that the other person must ALWAYS be factored into the equation.

For example: You’re in a rush and under a lot of pressure. You call in one of your employees and say, “Here’s an assignment, just make it happen.” You don’t have a lot of time to spell out what you want done–after all, they’re an adult, they can figure it out. And furthermore, you don’t want to be known as a micro-manager. So you just hand out an assignment. Unfortunately, the person you handed that assignment to is, in Myers-Briggs language, an SJ.

SJs are great workers. They make up roughly 40% of the population. They follow assignments. They get things done. BUT ONE THING that SJs don’t do well is create from scratch. SJs like to do things right. However, if they don’t know what right is, they get stumped–which is why SJs LOVE DIRECTIONS. They like their leaders to spell out details.

So while you may think you communicated clearly to your employee, the reality is you didn’t. If, on the other hand, you were employing quadruple thinking, you might have thought. “Let’s see, Barb is an SJ. As an SJ, Barb is going to want lots of direction on this assignment. So, I better clear out 15 minutes to talk with her about this assignment today.”

On the other hand, if Bob is an NT (in Myers Briggs language–and NTs don’t like lots of direction) then your quadruple thinking conversation might go like this. “Let’s see, Bob is an NT. NTs hate to be straight-jacketed with lots of direction and control so I better just walk by Bob’s desk and give him this assignment and a due date.”

Remember, the goal of communication isn’t simply to process sounds out of our minds into words on paper, screen or air. The goal of communication is to connect with another human being for a specific result or reason. Therefore, they must always be factored into the conversation.

Now, in one sense, this seems so blatantly obvious, that it shouldn’t have to be stated. But it’s not. Common sense is not common practice. Every day in every workplace (or home), miscommunication takes place. And while neither you nor I can’t completely eliminate it, we can greatly reduce it by practicing this one simple technique: Quadruple Thinking!

1.    You think of what you want to say
2.    You think of how the person you’re communicating to will hear what you have to say
3.    You rethink what you have to say
4.    So they will hear what you want them to hear.

Go ahead, give it a try! If you really get it, this should change every conversation and communication you ever have from this day forward–that is, if you want to be an effective leader and communicator.

To your accelerated success!

P.S. Let me know what you think of this idea in the comments section below!

To help un-complicate the process of defining these terms, here are the definitions I use when working with clients (along with an example or two of each).

1.   Mission: This is what a company does. It should be short and easy to memorize. However, it shouldn’t be so generic that you can’t tell what business it’s in. Note: similar businesses may have very similar mission statements. Why? Because they essentially do the same things.

• To promote and develop the growth of tennis (The United States Tennis Association)
• To organize the world’s information and make it universally accessible and useful (Google)

2.    Vision: This is what a company wants to become. Vision is a seeing term. Therefore a vision statement should be future-oriented. It’s an image of what a company wants to create. It isn’t what a company is, it’s what it wants to become. While mission statements may be similar, vision statements should be very different. They should be motivating and inspiring. And they should drive decision-making.

• Be the safest, most customer-focused and successful transportation company in the world (Norfolk Southern)
• To be the preeminent publisher and provider of self-improvement resources that inspires and empowers individuals to lead the lives they most desire (Nightingale Publishers)

Note: For a video blog post on this subject of mission and vision click here >>

3.   Values – Values are the foundational beliefs about how you want your employees to act. They are the beliefs that create the culture of an organization. They don’t need to be exhaustive. Nor should the simply be the same from company to company. While integrity, trust, honesty, etc. are good core values, they don’t need to appear on your list unless you believe they must. In many cases, they’re givens. I recommend no more than five core values for a company. Once you get past five, very few people can remember them.

• Excellence – To do the best we can, with the resources we have, in the amount of time we have to do the tasks we’re assigned.
• Curiosity – To be insanely interested in knowing, yet never content with what we know. To be a life-long learner.

4.    Growth Initiatives – From a strategic standpoint, what are the three to five most important things you can do to grow your organization? Note: a growth initiative differs from what I refer to as a strategic initiative because a growth initiative is usually related to one or two business units or people—and it can often be completed before the end of the year.

• To add five new joint venture partners by September 30th
• To open an office in Shanghai by July 31st
• To complete a merger or acquisition by December 31st
• To create a strategic partnership with Apple by May 30th

5.    Strategic Initiatives – Strategic initiatives, if you want to keep your entire top team involved, should be initiatives that everyone can play a part in fulfilling. And they should be year-long initiatives. The main key thought of a strategic initiative is that it’s something everyone can contribute to, that will advance the organization. Also, strategic initiatives are usually designed to overcome constraints (whereas growth initiatives are often strength focused).

• To double the number of leaders who have completed our Level Three Leadership program and are ready to take on new assignments.
• To raise the level of execution excellence so that the number of errors rate falls to less than one per thousand.
• To train everyone in every department in effective customer service skills so that every customer has a more positive experience regardless of whom they’re interacting with from our company.

6.    Goals – Goals are dreams with deadlines. They are quantifiable. You should clearly know if you hit them or not.

• To generate $5.7M by 12/31
• To raise our customer service rating to 4.75 by 9/30
• To raise our profit margin from 30% to 35%by 12/31

7.    Tactics – Tactics are the individual activities an employee engages in to complete a goal/initiative/strategy/etc.

• To hire a merger specialist by 3/31
• To design a leadership development process by 6/30
• To recruit three college marketing interns by 3/31
• To renegotiate all vendor contracts by 6/30 to reduce our cost of goods sold by 40% (and saving us $1M)

Hopefully, those definitions and examples will help you get everyone on the same page as you work on (or refine) your strategic plan!

To your accelerated success!

P.S. For a clean pdf of the above definitions and examples, click here >>

P.P.S. If you’d like to go a little deeper on the difference between mission and vision, click on the videos below (which are from more current blog posts)

If so, you’ll want to immediately get your hands on the new free report I just released today entitled, “The Seven Secrets of Fast Growth Companies.”

Inside it you’ll discover,

• The number one differentiator between slow and fast growth companies
• The two key elements you need to use to create a fast growth culture
• A simple practice that can radically reduce the time it takes to implement anything
• A lesson from a Harvard professor that can change the way you think forever about your products and services
• A top team practice that can change any meeting you run—and make it more effective.
• The one metric you need to use before choosing any growth idea if you want to be an accelerated growth company
• How you can create a business that’ll scale fast
• How to avoid letting your market think you’re just like “everyone else.”
• How you can create a business that works 24/7, especially when you’re not around.

• And the number one mistake that most CEOs of small and medium-sized make

To get your copy immediately, just fill in the form in the right hand column entitled, “Interested in the 7 Secrets of Fast Growth Companies?” and then click the submit button, “Send it to me now!”

Then after you read it, post your comments below!

How’s this for a gripping corporate story line: Youthful founder gets booted from his company in the 1980s, returns in the 1990s, and in the following decade survives two brushes with death, one securities-law scandal, an also-ran product lineup, and his own often unpleasant demeanor to become the dominant personality in four distinct industries, a billionaire many times over, and CEO of the most valuable company in Silicon Valley.

Not a bad story, is it? Furthermore, at the start of the decade, Apple had a market cap of “just” $5B. It now hovers around $170B (slightly larger than Google). What that means is that despite the market crashes of the dot.com boom and last year, if you had invested $1,000 in Apple in 2000, your investment would now be worth over $7500 (I think most of us would gladly accept that). And finally, Jobs has been instrumental in changing four completely different industries–computers, music, media and mobile phones—three of those in the past decade.

Any way you add it up, the past 33 years have been a pretty incredible run for Steve Jobs—and we’ve all benefitted—even if you’re a PC. But the question for you and me is, “What can we learn from him that can make a difference in our businesses?” Here are my top five lessons.

1. Improve on the next new thing. What’s fascinating about Jobs and Apple is that Apple has become the symbol for innovation. However, Apple rarely creates anything entirely new. In fact, one of Steve Jobs’ comments on this subject years ago was, “We look for the next new thing and then make it better.” In other words, Apple didn’t invent the mp3 player, they just made it better. They didn’t invent the cell phone, they just made it better. They look for trends they think are going to be big—and then figure out how to make that “new thing” infinitely better.

So, in your realm, what are the next new things or new trends you’re observing in your market space? How can you create a better product and/or service that can improve on the current offerings in that market space?

2. Change before you have to. As a long standing card carrying Mac Addict, one of my favorite sites is MacRumors. And one of my favorite parts of the site is the buyer’s guide which tracks the time between new iterations of a product (and let’s you know where they are in cycle). Even when Apple is making good money, they keep introducing new models or discontinuing old models so that none of their competitors can catch up (i.e. they change before they have to).

I’ll never forget the day Steve Jobs was talking about the iPod mini and how it was the most successful launch they had ever had up to that point in time. And then he said, “And that’s why today we’re killing the iPod mini … (dramatic pause) … and introducing the iPod nano!” Who else would have killed a cash cow right in the middle of a growth cycle? Only Steve and crew!

So, what products and/or services have you been riding for too long? Do you need to revamp or upgrade any of them? Do you need to discontinue any of them? And/or what new thing do you have in the pipeline?

3. Eliminate what ticks people off. The supposed story of the iPhone is that a bunch of Apple execs were at a meeting when they were all complaining, tangentially, about their cell phones. In the midst of that discussion someone said, “We’re all a bunch of bright people. We should be able to do this better.” Or if you had ever tried to download an app several years ago and load it on a Palm device, you know it was a major pain (it ticked people off). What Apple did with the App store was/is nothing short of remarkable. Or if you had ever tried to download music and put it on your mp3 player pre-iPod, you know it was a major pain. The iPod and iTunes store combo simply eliminated that piece of the puzzle that just ticked people off.

So, what are the issues that tick off the people in your market space? Find the key ones and design a simple solution to solve that problem.

4. Repurpose what you can. If you haven’t been in the Apple fold, you could easily miss this, but Apple is great about repurposing ideas and technology. For example, back in the 90’s, if you wanted to see a movie trailer on the internet, the best place was to go to the Apple site, which highlighted movie trailers and their product Quicktime. But that experience and built in infrastructure for movies made streaming music for the iTunes store infinitely easier. And the experience of the iTunes store made creating the App store for the iPhone infinitely easier. Or the Safari browser for the Mac, made it infinitely easier to create a great web experience on the iPhone (which was night and day ahead of Palm and Blackberry when it debuted). Or the experience with NeXT, led to Mac OS X. On and on you could go. The, “Apple Way,” is not just to create something new, but to repurpose what they already know into a different arena.

So what do you know or have or do that could be repurposed to create a new product or service for your market?

5. Think big and small at the same time. Some leaders are just big picture people. Others are just small picture people. However, what makes Steve so powerful is that he’s both. Steve gets it that executives need to make big picture, bold strategic moves (like canceling several product lines in ‘97 and focusing on just four products). However, he’s also famous for being nit picky and focused on the very intricate details of the business–especially when it comes to design issues and market messaging. As he said to Ken Segall (who used to be at Chiat/Day, the ad agency) on day, “The third word in the fourth paragraph isn’t right. You might like to think about that one.”

Looking back on your history, are you more of a big picture person? Or a small picture kind of person? Whichever one you are, how could you add the other to your wheelhouse and become more versatile ?

So, there you have it, “Five Lessons from Steve Jobs, CEO of the Decade.” The only question remaining is, “What are you going to do in the next few moments in response to it?”

To your accelerated success!

My conclusion is that there are a series of drivers behind those strategies, tactics and procedures that determine whether or not one company is going to be successful at employing a specific strategy, tactic or procedure.

To give you a taste of the ten, here’s a video sample from a talk I did this past weekend in Phoenix for the Association of Information and Image Management (AIIM). Enjoy!

Well, one simple practice you can engage in, that’ll keep you focused on managing the money, is to get a DAILY cash report. Not a once a week or worse, once a month cash report, but a once a day cash report. You can have your bookkeeper or CFO or accountant send you the amount or you can create a dashboard that automatically updates that number every day, but regardless of what system you use, you really ought to set one up.

A great example of the power of this practice can be found on Verne Harnish’s blog this week. He writes about John Ratliff, the founder of Appletree who for years had relied on a big line of credit that he would access two or three times a month to get his company through each month. For years he had heard Verne talk about getting a daily cash report, but hadn’t acted on it. Finally annoyed by his company’s practice, he decided to start receiving a daily cash report. He then wrote the following to Verne.

“I started getting cash reports daily (only took 15 years!) and wow what an insight that is. Today is September 30th, close of the 3rd quarter (hard to believe) and we just finished the best quarter in our history, and maybe more importantly our best cash position ever! No LOC use this month and a killer cash position. Thanks for finally getting the cash message through my thick head.”

So, if you’d rather not wait fifteen years or keep dipping into your LOC, why don’t you try this simple practice of receiving a daily cash report. It’ll force you to think about revenues, expenses and cash flow on a daily basis–and that will take you to a new place that not knowing won’t. Avoiding or not knowing is almost always a bad strategy. However, knowing and being able to act quickly are almost always winning strategies.

To your accelerated success!