Ready, Fire, Aim

Ready, Fire, Aim

Author – Michael Masterson

Just for Kicks (documentary) – Longeville, Leone
How to Become a CEO – Jeffrey Fox
Action Nothing Happens until something moves – Robert Ringer (author rec)
Buying Trances – Joe Vitale
The Tipping Point – Malcolm Gladwell
Getting everything you can out of all you’ve got – Jay Abraham
Influence – Robert Cialdini
Mail and grow rich – Ted Ciuba
If you’re Clueless about starting your own business – Seth Godin
The Tipping Point – Malcolm Gladwell

The Four Ws of Career Satisfaction: Demanding the Best from your Job
3 most important decisions in life are:

  1. What you do.
  2. Where you do it.
  3. With whom you do it.
  4. When you work and when you don’t work.
"I work when I want, where I want, and with whom I want, doing only what I want to do. If that isn't the definition of the best job in the world, what is?"

4 stages of business:

  1. Stage One: Infancy 1 million in revenue
    main Problem: You don’t really know what you are doing.
    main Challenge: Making the first profitable sale.
    main Opportunity: Achieving a minimum critical mass of customers.
  2. Stage Two: Childhood 10 million in revenue
    main Problem: You are only breaking even or may even be losing money.
    main Challenge: Creating many additional, profitable products quickly.
    main Opportunity: Increasing cash flow and becoming profitable.(cost-effective)
  3. Stage Three: Adolescence 10 50 million in revenue
    main Problem: Your systems are strained, and customers are noticing.
    main Challenge: Turning chaos into order.
    main Opportunity: Learning how to establish useful protocols and manage processes and procedures.
  4. Stage Four: Adulthood 50 100 million in revenue
    main Problem: Sales slow down and may even stall.
    main Challenge: Becoming entrepreneurial again.
    main Opportunity: Getting the business to run itself.

Smart entrepreneurs will encourage their employees to hire subordinates who are as good and capable as they are. If you are not doing that, start doing it now. It will make everything easier later on.

For a business to grow into a $100 million+ enterprise, it must be very good, if not great in five areas:

  1. Coming up with new and useful product ideas.
  2. Selling those products profitably.
  3. Managing processes and procedures efficiently.
  4. Finding great employees to do the work.
  5. Getting people, procedures, products, and promotions going.
    To be good or great in each of these important areas, a business needs to be led by a person or people who are very good at getting the jobs done.

2 fundamental skills to successfully start a business:

  1. You have to know how to make a sale.
  2. You have to be able to put that sales process into action.

You need to change your business into a company where innovation is a rule, not an exception.

The skill you need to meet that challenge is the skill of creating, almost instantly, and at will, a stream of good and profitable new ideas.

Entrepreneurs natural inclination:

  • They are attracted to challenges.
  • They enjoy being in leadership roles.
  • They are passionate about their ideas.

Entrepreneurs natural skills:

  • They are well organized.
  • They are good and analytical thinkers.
  • They are good at sales.
  • They are good at taking the initiative.

Becoming a five-start business genius with 5 most important skills:

  1. coming up with ideas
  2. selling products
  3. managing systems
  4. developing superstars
  5. taking action

Of the major functions of business-product development, customer service, accounting, operations, and marketing-the one that should always be given top priority in an entrepreneurial venture is marketing.

Rule #1 of Entrepreneurship: Without sales, it is very hard to sustain an ongoing business.

As a business owner, selling should be your number one priority-and you must act accordingly. That means spending the lion’s share of your time on marketing and sales-related activities.

To be a truly effective entrepreneur, you must become your business’s first and foremost expert at selling.

Every entrepreneurial business needs four personalities at the helm:

  1. Seller: someone to market the product.
  2. Improver: someone to improve the product.
  3. Organizer: someone to make sure things flow smoothly.
  4. Pusher: someone to get people to do what they are supposed to do.

During the first 2 stages of growth, the priorities should be in this order:

  1. Selling
  2. Pushing(to make sales)
  3. Improving(products and sales)
  4. Organizing

The ultimate strength of an entrepreneur: the ability to stimulate sales.

Rule #2 of Entrepreneurship: There is a direct relationship between the success of a business at any given time and the percentage of its capital, temporal, and intellectual resources that are devoted to selling.

When beginning a new business(or launching a new product within an existing business), the sooner you can make the first sale, the better your chances are of success.

In starting a business, your priorities and sequence of activities should be:

  1. Get the product ready enough to sell it, but don’t worry about perfecting it.
  2. Sell it.
  3. Then, if it sells, make it better.

Identify the optimum selling strategy for the stage of growth that you are in and then focus 80 percent of your resources on applying it.

Implementing your company’s optimum selling strategy should be your top responsibility. Questions to ask yourself:

  1. Where are you going to find your customers?
  2. What product will you sell them first?
  3. How much will you charge for it?
  4. How will you convince them to buy it?

Where will I find my customers?

Imitate the industry norm.

Do what the competition is doing, in the beginning, at least.

Once you have identified the top three to five products in the market, spend some time studying them.

Try to figure out which characteristics are the most appealing. Then make a list of any shortcomings you notice.

Discounting: The easiest way to bring in lots of new customers
A powerful and reliable way to grow a small business is to market an upwardly trending product at a substantial discount to its perceived value.

How to price products
The ideal pricing mix for me is one lead product that is promoted at a heavy discount and all other products sold by emphasizing quality.

If you are in the retail business, it’s likely that the price you will be charging is roughly equal to twice the cost of the products.

Figure out how much a customer will spend with you on average, over a lifetime(LTV). Deduct the cost of goods from that. Then deduct a percentage of your overhead. And then figure out and deduct how much you want to profit from that customer. The final number is your allowable acquisition cost, the amount of money you can spend to attract a first-time buyer.

Step one: Determine your Lifetime Gross Profit
Step Two: Determine your Lifetime Net Value
Step Three: Determine a reasonable profit

As a general rule, healthy retail businesses yield 10 percent net profits.

Depending on the nature of your industry and how good you are at customer service, after their initial purchase your customers will spend, on average, between 100% and 500% of their original price with you over time.

That means that they will be worth, on a gross profit basis, between 50%~100% of what they spent on their first purchase.

It would be prudent to run your projections on 2 assumptions:

  1. A lifetime value of 50% of the initial price(conservative).
  2. A lifetime value of 100% of the initial price (realistic).

This idea of optimal pricing and discounting applies to front-end marketing only, to bring in first-time customers.

Designing an advertising campaign is like designing a house. You have to begin with an idea of what you what, the purpose of the house, and how you what to enjoy it. Then you have to translate those needs and desires into a structure. Finally, you have to tie it all together with a style, something that tells your guests just what kind of family lives in that house.

You have to create want in your customers’ hearts; stimulate emotions.

You need to get potential customers thinking about how your product is going to enhance their lives.

Your ads should be demonstrating one or several benefits of your product.

Rationality comes into play only after the irrational process-the emotional persuasion has already taken place.

You are hoping to arouse in your prospective customer a feeling of irrational exuberance.

Who are my target customers? And why would they want things to be easy?

Deconstruct every benefit you list into deeper benefits. And don’t use abstract language. If you feel that your customers are looking for success, define success in concrete terms. What, exactly, do they want?

  • More money? More prestige? And if so, why? A bigger home? A nicer car? What? And why do they want those things? To please their families? To impress their friends? And why do they want to please their families and impress their friends?
  • Keep going until you have described very specific benefits or desires that feel important and true to you. They should be based on emotions that are tempting or taunting your customers—fantasies they dream about during the day or fears that keep them up at night.
  • If you can figure out how your product can provide benefits to your customers that satisfy their deeper and stronger emotions, your advertising copy will be powerful.

You will find that the most successful advertisements are those that highlight a single benefit above all the rest.
When this benefit can be presented as uniquely characteristic of your product, you have an advertising proposition that can last and last and last.

If you want your best chance of selling a new product in an established market:

  1. Make it in some way better than the competition.
  2. Make is in some way seem better.

When you are starting a new business, you’d be crazy not to make the concept of underpricing a core part of your growth and marketing strategy. And if your business is mature, underpricing your competition is still the the strongest way to introduce a new product or product line or to enter a new market.

“You need to be faster, more varied, slower, cheaper, easier to work with, prettier, more highly recommend-something to distinguish it.” – Seth Godin

The unique selling proposition has to be a benefit to the buyer.

Take a good look at all the other similar products on the market and try to identify gaps by recognizing “unfilled customer needs” such as:

  • faster service
  • better prices
  • superior quality
  • convenience
  • personal service
  • a better guarantee

3 aspects of a solid USP:

  1. the appearance of uniqueness.
  2. usefulness.
  3. conceptual simplicity

All effective sales efforts have 4 components, The:

  1. Big Idea
  2. Big Promise
  3. Specific Claims
  4. Proof of those Claims

The Big Idea – The main idea you use to sell your product.
Look for something that excites you.
Big Ideas need to excite you. So start with that and trust your own feelings.

During the startup phase of your new business, selling must be your top priority. It must consume 80% of your and your employees’ time, interest, and creativity.
But what about the other 20%?

  • mentoring and being mentored.
  • teaching the team more about how the business works.
  • setting up business targets.

Creating happy customers should always be the primary focus of your company’s work.

You need to identify a specific CMQC(critical mass of qualified customers)-a target number of qualified customers who will make most of your subsequent marketing efforts profitable.

Your customers, not you, are the ultimate arbiters of what is good and valuable and exciting. The sooner you can find out what they think, whether it supports or contradicts your judgement, the better.

Tips and advice from the author:

  • Don’t be misled by phony business experts. Most people who are out there peddling ideas have never started a single business except for the business they started when they started giving advice
  • Be proud of your business acumen, but don’t be arrogant about your particular business ideas.
  • Ask for advice from smart people.
  • Don’t ever believe you know more than the market. Your customers, not you, are the ultimate arbiters of what is good and valuable and exciting. The sooner you can find out what they think—whether it supports or contradicts your judgment—the better.
  • Make sales your company’s top priority. Spend 80 percent of your time overseeing marketing and sales. Don’t delegate this role to someone else. Do consult with and hire good marketers and copywriters, but never let them run your business for you. In the first stage, the driving force of your business is sales. As CEO, you need to be in the driver’s seat.
  • Learn everything you can about sales and marketing. In your spare time, read books, take courses, speak to experts. The education you give yourself in sales and marketing will be the most valuable investment you will ever make. Not only will it help you successfully start your business, it will also give you the knowledge and confidence to start a second and then a third business then it succeeds.
  • Discover the optimum selling strategy (OSS) for your business––the particular combination of media, pricing, and positioning that will bring you the most qualified customers. Your OSS will probably be similar to the OSS of your major competitors, but there should be at least one element of it that is distinct—an advertising medium that you dominate, a clever pricing structure that no one else has, or a unique selling proposition (USP) that is better than your competitors’. Once you know your OSS, run with it. This is your fast-track pass to growth and profitability.
  • In determining your OSS, understand how pricing and other aspects of your offer affect sales. Recognize that your initial marketing goal is to achieve a certain critical mass of qualified customers (CMQC). To accomplish that goal, you need to determine an allowable acquisition cost (AAC)—how much you are able to “pay” to bring in a new customer. Generally speaking, the less you charge for your lead (front-end) product, the more customers you will acquire
  • In testing price to determine your OSS, favor the downside. Ultimately, your long-term profits will probably come from selling higher-priced products to your best, most loyal, and most well-heeled customers. But in the beginning, you want volume to achieve your targeted critical mass of qualified customers as soon as possible.
  • Don’t invest in a lot of inventory before you have figured out your OSS. Instead, find some way of pretesting your idea before you create the product. There are many ways to pretest new product ideas. You can sell them in advance of producing them as a special marketing test. You can purchase other, similar products but sell them with your unique selling proposition attached to them. You can dry-test a marketing strategy by selling without the product and then refunding all the money the test brings in. The bottom line: Get the selling part right before you build or perfect the product.

Main Problem: You are only breaking even or may even be losing money.
Main Challenge: Creating additional, profitable products quickly.
Main Opportunity: Becoming a business of innovation, increasing cash flow, and becoming profitable.
Additional Skill Needed: Coming up with a constant stream of new and potentially tipping-point ideas.

Most entrepreneurs never get to enjoy those Stage Four revenues because—for whatever reason—they can’t make the personal changes necessary to create the corporate changes. If you want to bring your start-up to the highest level, you will have to:

  • Recognize when the dynamics of your business and/or industry have shifted and change is needed.
  • Welcome those changes emotionally.
  • Encourage your employees to embrace the necessary changes.
  • Retain the knowledge and skills you have acquired.

Entrepreneurial Axiom: Every time your business changes, so must its leader-you.

Those companies that experienced accelerated their growth pace very quickly from 1���������10 million in a short span of time in every case: they had made a fundamental change from being a company that was marketing one product to a business that was marketing many products.
= An aggressive proliferation of new products.

Entrepreneurial Axiom: The primary factor in Stage Two growth is the development and marketing of new products. The faster you can develop and sell those new products, the faster your business will grow.

Focusing on selling a single product the first year and then pushing out as many new products as we could once we had the cash flow and creative resources to do so.

Our first product in this business was a collection of cheap perfumes made to look like designer brands-the kind of perfumes you see in flea markets. Back then, it was a rarity.

  1. We found a group of mailing lists that worked.
  2. At about the million dollar sales level, we began selling other inexpensive knock-off consumer goods, such as watches, sunglasses, and jewelry.
  3. We had sales in excess of $30 million in less than three years.
  4. We were constantly running into problems with vendors that could not keep up with our ever-increasing sales, and so we were having trouble fulfilling our orders.
  5. Our profit margins went down with the implementation of all the new management systems.
  6. When things were running smoothly again, we opened another line of products-informational products: a magazine and a series of books about gambling, sweepstakes, contests, and the like.
  7. These were not subjects I had any interest in, but our customers did-and that’s what mattered.
  8. Next, we started selling inexpensive electronic goods including radios, portable tape recorders, and television sets.

In retrospect, it is clear that our growth was the result of 2 calculated marketing strategies:

  1. Capturing a larger share of the static market by producing and selling a flurry of new newsletters.
  2. Increasing our yearly revenue per customer by selling higher-priced back-end products.

The secondary strategy involved selling products to existing customers-products that were similar to what they had bought before, but cut and polished in a more elegant way so as to fetch a higher prices.

Consciously developing frontend and backend sales is an important growing secret.

When you start a business your top priority is to collect as many qualified customers as you can as quickly as you can.

You should expect to generate your profits. Selling those customers other products is.

Backend marketing is extremely easy. All you have to do is tell your customers about your new products and give them some incentive-almost any incentive to buy. If someone has bought from you once and found it to be a pleasant experience, that customer will be happy to buy from you again.

It is not a good idea to create a lot products when you are just beginning. It’s much better to sell one good product extremely well. But once that product is producing cash and you have the personnel and other resources to produce new products, you should do so.

Selling a single product was your primary job as a Stage One entrepreneur.
Selling a million dollars’ worth of that product to get your business to Stage Two qualifies you to call yourself a master of marketing.

Get your business from 1���������10 million, so you’ll need to get more products to the marketplace.

  1. First, you must replace your stale lead (front-end) product with one or several new ones to continue to attract new customers.
  2. And then you must create a line of back-end products and sell them to your existing customers.
  3. Generally speaking, the more products you produce during the second stage of your company’s development, the faster you will grow.
  4. As a successful Stage One entrepreneur, you built a business that is great at marketing a single front-end product.
  5. As a Stage Two business leader, you have to transform your company so it can both produce and market many more.

It is nearly impossible to tell which products are really good when they are in the conception stage. The only way you know for sure is to launch them. Since you can reasonably expect to wind up with only one good product out of two or three, and one excellent product out of five or 10, the pragmatic approach is to get good at launching many products—and then to fold the weak ones and nurture the strong ones.

Consumers aren't looking for brand-new products. They are looking for clever new adaptations of products they already know and love.

When it comes to new, the human brain can take only a little bit of it. Eighty percent of the old and twenty percent of the new is a good ratio.

You can’t dictate to the market; you must let the market tell you what to do.

Because of goodwill, the likelihood that an existing customer will buy again is very, very high.

3 fundamental marketing facts:

  1. The secret to breaking into new markets or reviving a flagging business is to create tipping-point products.
  2. The secret to creating tipping-point products is to find hot products in rising markets and come up with some way to make then new and different.
  3. You need tipping-point products for your frontend, but you can make lots of money on the backend with ordinary products, so long as you make the effort to sell them to your existing customers.

Winning Stage Two formula: Create a small number of tipping-point products for your frontend to enter any new markets and to replace any frontend products that are flagging. And create lots of ordinary products for your backend.

You will produce tipping-point products—but probably only one time out of every 10 times you try. And that’s the reason you have to always try to come up with new tipping-point products, even though you know you can make lots of money with ordinary products on the back end. By always trying to be innovative, you wind up with exactly what you need: nine ordinary products for your back end and one tipping-point product for your front end.

If your new-product idea feels like a breakthrough, it might be (but probably won’t be). But if it feels ordinary, it will be ordinary. So always keep working on it until it feels really good.

The first product to market isn’t always the winner. Best sellers usually come later, in the second wave. Often these second-wave winner are knock-offs marketed by Fortune 500 companies.

Formula for creative brainstorming:

  1. A quorum of three.
  2. A maximum of eight.
  3. A limit of time.
  4. Established goals.
  5. High standards.
  6. A code of equality.
  7. Strict rules. a. Specific suggestions only. b. No specific critiscm. c. Be positive. d. Encourage the meek and cut the windbags short.
  8. A culture of creativity.

Product development is a three dimensional cube: price, product type, USP(unique selling proposition)
Price: cheap, moderate, expensive.
Product type: three different types of product
USP: three different levels of KOL

The primary purpose of a business is to grow constantly change in small ways that are positive and stimulate overall growth.

The best way to spur growth is through innovation.

  • Push your key employees to spend most of their time thinking about selling. (“How can we sell more? Where can we find more customers?”)
  • To take your business to the next level, you have to get everyone involved in innovation. You must persuade them that their work lives will improve in every way if the company continues to grow, and that the best way to cause that growth is to become really good at putting out new products.
  • Explain to them that it is natural for the product that spurred the company’s first growth to be replaced, when it tires, by another. Teach them the difference between front-end and back-end marketing, and show them how each is necessary to your future growth.
  • Make them understand that, from now on, change will be their constant companion. Every day, there will be new problems; every week, new challenges. Every month, they will have to come up with new systems and solutions. And every six months to a year, you will all have to get together and change the way the business works in some fundamental way.
  • Be sure they understand that all of that change will bring stress––and that if they want to grow along with the business, they have to learn to tolerate stress and embrace change.
  • Teach your employees to share what they have learned with each other. Let them know that errors and failures are inevitable for a growing company. Challenge them to be open about problems and challenges and to communicate with one another. Let them know that you want to accelerate and publicize mistakes, not to retard and hide them. As long as everyone learns from them, mistakes are good.
  • The process starts with you. To make your company good at innovation, you have to become an instigator of new ideas.
  • Be sure that all your employees—not just your research and development (R&D) people or your marketers—think of themselves as innovators. Let your employees know how much you appreciate good new ideas, including ideas for order taking, customer service, accounting, database management, marketing, sales, and product development.

Fresh product ideas, like fresh dairy products, go bad over time.

The amount of growth a company can expect at the second stage of its development is directly related to its ability to generate and test new product ideas quickly.

Good ideas are what's hot there, adapt it to local conditions, and test it. More often than not, if it works in the States, it works anywhere.

Methodology of Ready, Fire, Aim

  1. To increase the speed at which new ideas are tested, and to decrease the total corporate cost of each one.
  2. A way of testing more innovations, good or bad, in order to increase the number of goods ones that get implemented.

8 guidelines to streamline implementation of good ideas:

  1. Explain the key concepts.
  2. Support management.
  3. Walk the walk.
  4. Establish parameters.
  5. Get agreement.
  6. Accelerate gradually.
  7. Provide support as you go.
  8. Follow the program.

7 essential questions during the Ready phase:

  1. Do I have a good idea?
  2. Does it feel like it will work?
  3. Are my sales targets realistic?
  4. Can I afford to test the idea?
  5. Do I know the basic tasks that need to be done?
  6. Do I have the people who can do them?
  7. Do I have a plan b, an exit plan, in case my good idea turns out to be a bad one?

Start by defining what good means to you.

An idea, of and by itself, has no intrinsic value. It must be accompanied by action.

The most important thing, by far, is starting with a good product, a product that provides a big benefit to the customer. The benefit has to be so big, in fact, that it’s easy to communicate. The moment your customer hears about it, he has to be able to see himself benefitting from it. That’s a good product, one that offers that kind of huge, instant appeal.

You probably already have more of a feel for what a “good” product is than you realize. Don’t ignore it.

“What if I’m wrong?”; simple but accurate calculations:

  1. Ask yourself how much it will cost to make the idea come to life. Take that number and double it.
  2. Figure out how many units it will sell(or how much extra cash it will bring in), and cut that number in half.
  3. If the net result of doubling your anticipated costs and halving your expected returns still looks like a profitable venture, go ahead with it.
  4. If it looks marginal or negative, drop it and move on to the next new idea.

Finding the right people to execute your plan is perhaps the most important “get ready” activity.
You have to nail down who can help you start and run the business, and who can provide valuable advice(leading experts in the field). You should create a network of all of these individuals that you can draw on when you need to.
A big network is a steady source of opportunity.

“Who can help me get this done?”

The ideal Ready, Fire, Air business proposal looks like this:

  • It is more than one page but no longer than four.
  • It includes ballpark financial projections, including costs.
  • It identifies critical tasks.
  • It identifies a project champion and key support people.
  • It has a timeline for major tasks to be completed.
  • It describes a plan b.
If you routinely spend months or even weeks planning every new business venture, you are probably wasting time.

The key to being successful with start-ups is having a good general idea of what you want to do but being flexible enough to change plans quickly as you discover the invisible secrets of the market you’ve jumped into.

If you can develop the habit of 1. asking yourself the 7 essential questions and 2. coming up with a Ready, Fire, Aim business proposal for every new product or project you attempt, your chances for success in business will skyrocket-even if the ideas you have aren’t always brilliant.

Two reasons why most good business ideas and good product ideas never get off the ground:

  1. A desire for perfection. = Perfectionism
  2. Little chores. = Procrastination

The nothing-less-than-perfect attitude has been the theme of many success stories, but it is exactly the wrong notion to have in your head when it’s time to launch a new product or business. When the time is right to fire, you must fire. If you spend another moment aiming, the opportunity to hit your target may pass you by.

“I believe all successful people share this trait(the willingness to move ahead with a good but imperfect product). You cannot be action-oriented unless you are willing to make mistakes-even willing to look foolish or stupid.” – Robert Ringer

People who are obsessed with playing the “what if” game are destined never to get out of the starting gate.
In doing a brain scan on Bill Gates, the one thing I zeroed in on, above all else, was his strategy for getting Microsoft’s software out to the public as quickly as possible-bugs be damned.

3 simple rules of Ready, Fire, Aim

  1. Begin when you are ready-excited by the idea because your get tells you that it will work.
  2. Don’t waste time perfecting your product or planning for every contingency, since you can’t know what will work until your idea is in action.
  3. Only after the idea has proven itself in some way(when you know for sure that it will work) should you make adjustments to improve it.
Imperfections are really just profit opportunities waiting to be seized.
Getting things going quickly is more important than planning them perfectly.

So get your products ready. Then launch them. There will be plenty of time to perfect them later, if they sell well now.

For every product or business idea that has failed because it wasn’t properly perfected before it was launched, a hundred never got launched because their champions(entrepreneurs or executives) got caught up in the make-it-perfect-first game.

What would I say to someone else to get them to get moving from a standstill?

  1. Decide on your goal, the direction you want to take-even if it’s the wrong direction.
  2. Find guidance and encouragement. Hire a coach, meet with a business friend, or join a mastermind group, but don’t go it totally alone.
  3. Make it matter. Make it important. Make it now.
  4. Balance the time you spend learning and doing.
  5. Discover what motivates you. Usually it is not money itself, but what comes as a result of money.
Treat your customers as you like to be treated when you are a customer.

Most of your profits will come from backend sales, which means the easiest way to grow your company is to develop good, long-term relationships with your customers and produce really good products for them.

If you want to develop a business that keeps growing, don’t spend all your time trying to reduce your product costs. Spend a good deal of time asking “How can we make this better?”

Incremental imporvement is an ongoing process. Once or twice a year, you get together with your product development team and figure out how to make the product(and the experience of buying the product) more useful and enjoyable.

The idea is not to produce the world’s best watch for only 39,�������������ℎ������′�����39 watch.

If your customers are not buying it, you should not fix it.
I have found, over and over again through the years, that it is almost impossible to make a bad(weak-selling) product good(strong-selling) by improving it incrementally. It is much smarter to drop it, go back to the drawing board, and come up with something significantly different.

Let me say that again to emphasize my point: If the product fails to sell well, trash it. If it does sell, improve it.

Products that sell moderately should be improved too, but only after the top-selling ones have been taken care of.

The product goal is constant never-ending improvement, because the business goal is constant, never-ending sales.

To get your business through its first stage(from 0 to $1 million in revenue), you are going to have to expand your product line, and that means expanding your marketing skills.

How to be a sales and marketing genius
Step one: exorcising the righteous demons
To overcome your antipathy towards sales, rid yourself of the following 3 very common myths:

  • Myth #1: It is good to sell things that people need like grain and milk, but it is bad to sell things that people don’t need like TVs and gambling vacations.
    Reality: More than 90% of what people buy is based on wants, not needs.

If you want to market needs, move to a third world country and sell flour.

The things we buy because we need them are called commodities.

Consumers don’t want to pay a lot of money for them. They want to spend as little as possible.

Discretionary selling is selling to desire, which is exciting because it involves the breadth of human psychology, and unlimited in terms of profits because you can sell into a buying binge.

If you are selling discretionary product, the price you charge isn’t dictated by what your competition is charging but by how you position the product in the marketplace. And that is because the value of your product is not objective but perceived.

  • Myth #2: It is good to sell things, as long as you don’t charge much more than they are worth.
    Reality: What does value really mean?

95 percent of modern commerce is based not on selling basic commodities but on selling things that have been manufactured.
When something is manufactured, there is room for quality differentiation.
When there is room for quality differentiation, there is room for perceived value.
How much that little extra difference in quality is worth is entirely subjective.

  • Myth #3: It is good to make good things better, but it is bad to sell them.
    Reality: Give me a break. If you understand that more than 90 percent of what people buy (except for the purchases of the very poorest members of our society) is based on wants, not needs, and that some significant part (sometimes more than 90 percent) of what we pay for any given item is based on perceived, not intrinsic, value (think organic vegetables, Rolex watches, luxury hotels), then you have to conclude that the world of business is more than 90 percent about vibrating molecules, not meeting basic human needs.

Don’t be ashamed of doing to thy neighbor that which you secretly want done to you.
Treat your customers the way you want to be treated.

  • You want to be able to buy what you want to buy.
  • You want the product you buy to perform as advertised.
  • You want to feel like you are paying a good-to-fair price for it.
  • By a good-to-fair price, you mean relative to what other people are paying for the same quality.
  • You want your product delivered quickly and in perfect condition.
  • You want to be treated like a valued customer.
  • You want to be able to get a prompt, courteous refund if you are unhappy with your purchase for any reason.
    Make your own list. Then start running your company that way.

Deep down it’s not about the freatures or even the superficial benfits of your products. It’s about what the buying and ownership experience does for your customers. Ultimately, your customers want you to continue shaking their molecules the way you shook them the first time when you sold them your first product.

Step two: Shooting revenues through the roof with 3 basic approaches.
The only 3 ways to increase revenue

  1. You can sell your product to more people.
  2. You can get your customers to buy more products from you.
  3. You can charge more for the products you sell.

The key to running a successful Stage2 marketing program is to put your best people to work on the frontend. The frontend is where you need tipping-point ideas, and you are not going to get tipping-point ideas with your inexperienced or b marketers.

Put together your B team to market your back-end products. They should be direct-marketing experts, since a significant portion of your back-end sales should come from direct-marketing efforts. It doesn’t matter how your front-end customers come in; there is a way to back-end them directly. You do it by gathering their addresses (postal and e-mail) and beginning a campaign of communicating with them. Talk to them about what you know they are interested in—the products and services your industry provides. Make your back-end team good at this kind of communication. Teach them to provide value so your customers become appreciative of the relationship you’re building with them. The more you give your customers, the more they will reciprocate by buying products from you.

Your back-end sales is a matter of good customer service, and good customer service involves only three things:

  1. Knowing what your customers really want.
  2. Finding out how you can do that for them.
  3. Talking to them about what you are happy to do.

If you do one more thing—talk to your customers about what you are happy to do for them—your profits can skyrocket.
This is an aspect of customer service that too many entrepreneurs, even good entrepreneurs, neglect. You shouldn’t do that. Talking to your customers is one of the most powerfully profitable things you can do.
If this shop owner is as good as I hope she is, she is already collecting the names and addresses (or, better yet, e-mail addresses) of all her customers and is sending them information on a regular basis.

She should be sending them a monthly newsletter that talks about all the great new parenting books and information products that are specifically geared toward affluent parents. She should be talking about what events are taking place in the store and what new ones are being planned, and including testimonials (which she should be collecting) from customers who have experienced her special events in the past.

Step Three: A crash course in sales
Take an hour, right now, to study the following crash course in advanced marketing—and then study it again once a month for the next year. Each time you read through it, you will be surprised to discover that you have learned something new and useful that you can put to use to create more sales. When you have mastered all 20 of these lessons , your business will be producing at least $10 million in sales each year.

  1. Your customers don’t care about you or your business. They care about themselves.
  2. A small portion of your customer base is giving you the lion’s share of your cooperate profits.
  3. Understand why your customers buy from you.
  4. Almost every sales transaction begins with the process of generating leads.
  5. Learn multichannel marketing.
  6. Follow the Golden Rule of Marketing: Treat your customers the way you want to be treated.
  7. Understand the Secret of the four-legged stool.
  8. Understand that customer complaints and objections are the key to better selling.
  9. Maintain a “no dead end” policy regarding your products.
  10. Take advantage of customer inertia.
  11. Understand the 80/20 Rule.
  12. Understand the unique selling proposition of every product.
  13. Every product line needs its own branding.
  14. Never lose your marketing edge.
  15. Understand the Secret of the core complex.
  16. Practice reciprocity with your customers.
  17. Understand that intimacy is the key to a customer’s lifetime value to your business.
  18. Be confident and enthusiastic when you sell.
  19. Don’t push or bribe your customers.
  20. Develop and nurture a marketing culture that emphasizes three sentiments.

The Secret of the four-legged stool: Every great marketing campaign has 4 elements.

  1. Big Idea
  2. Big Benefit
  3. Big Promise
  4. Big Proof

One of the most important secrets of developing a successful business: Getting your customers to buy many more products from you than they have ever bought before.

If you want to maximize the lifetime value of your new customer, you shouldn’t let him cool off after that first sale. Instead, you should send him an immediate thank-you note, along with a bounce-back promotion that replicates the psychological trappings of the prior day’s purchase and stimulates in him, once again, the desire to buy something from you.

That bounce-back promotion might be a brochure featuring some hot new pencil set, or a handwritten letter from the president of your company announcing a very limited edition pen that just arrived (with a photo of it enclosed). Since he is a customer in good standing, you might offer him a discount. And you should probably let him know that if he responds to this offer within 24 hours, he will be placed on your platinum list of VIP customers, which will give him access to the highest form of customer service you offer—essentially, he will have his own personal buyer.

Successful business owners understand that it’s not about what customers need; it’s about what they want. And that if you cater to their wants rather than their needs, you will have a much better (and by that I mean richer and more long-lasting) relationship with them.

The Law: The likelihood of a customer buying a particular product is inversely related to his need for it.
And Its Corollary: The less a customer needs a product, the more likely he is to buy it.

You should never feel bad about selling people products they don’t really need, because
a) there is very little selling that doesn’t fall into that category.
b) since buying things you don’t really need is something you do all the time, then selling to wants and desires is very effectively following the Golden Rule of Marketing Genius: Treat your customers the way you want to be treated.

20% of your customers will be responsible for 80% of your profits. This is a business truism that no smart businessperson should ignore.

  1. Identify the potential big spenders among your customers.
  2. Market to them aggressively as soon as they make their first purchase.
  3. Make sure your marketing stimulates their psychological desires, not their physical wants.
  4. Keep selling to them until they spend themselves out of their frenzy.

Understanding the psychology of selling is essential to ensuring a long-lasting, profitable business. At least one aspect of the psychology of selling-how people think when they buy nonessential(discretionary) products-is especially important to learn early on because it is counterintuitive.

What is good about selling commodities is that you are meeting a need. What is bad about it is that your customers won’t be loyal to you, and will always try to pay as little as they have to for the kind of product you’re selling.

What is good about selling discretionary items—and especially luxury items—is that it is relatively easy to convince your customer that your particular products are unique, and that only by purchasing them can he get the psychological benefits they offer.

What is also great about selling discretionary items is that your customers will never be satisfied with a single purchase. In fact, the more they buy, the more they will want to buy, because their purchases are stimulated not by need but by desire. And if there is one thing marketing geniuses know about desire, it is that it can be satisfied only temporarily.”

A marketing campaign that stimulates long-held and deeply held desires(acceptancerecognitionadmiration, and even love) will create the best kind of customers: buyers who will buy repeatedly over a long period of time.

The single fastest way to turn your ordinary business into a cash machine is to redesign your sales and marketing strategies to focus on stimulating buying frenzies among the top 20% of your customers:

  • Market to your core customers’ wants, not their needs. Figure out why your best customers buy your products. Don’t ask them directly, because they won’t tell you the truth. Study your best advertising campaigns and ask yourself, “What is the hidden promise here?” If you can figure that out—the deeper, embedded feelings and thoughts that are driving your best sales—then you can design another advertising campaign that will commence the moment you receive your first order and continue with regularity until the market has proven to you that it is exhausted. But until then, push on.
  • When a marketing campaign works, keep using it (with modest changes) until it wears itself out. Don’t assume that just because you are bored with it, your customers will be. Keep the main elements of the campaign (the tone, the offer, the type of promise) the same. Trust the market to tell you when it is sated.
  • Know that every industry has its own unique buying frenzy. How long it lasts, how much the customer will spend, and what kind of messages will work best—these are all questions that vary from one industry to another.

Buying frenzies vary depending on the customer’s socioeconomic bracket, her cultural belief system, her financial circumstances, and the advertising she is exposed to.

Personal goals fall into two types:

  1. doing something
  2. becoming something

Think about the lifelong personal goals you have had but never accomplished. What is it that stopped you?

  1. Do this now. Write down a list of everything you have ever wanted to do or become.
  2. Arrange that list according to what is most important to you (or will be most important to you in a few years).
  3. Narrow your choices to three. Then pick one of the three.
  4. Promise yourself that that goal, and only that goal, will be your top priority for the next 365 days. Acknowledge that everything else will be secondary. (This may be scary at first. Get used to it.)
  5. Communicate this decision to those people who will be affected by it.
  6. Then make an outline of exactly what you have to do to become what you want to become. Don’t worry about being good at it. Don’t worry about being recognized.
  7. Don’t worry about being good, and don’t think about getting any recognition for what you’re going to do.
    Do it because you have always wanted to do it and because time is running out. Start immediately.

Most important ideas about Stage Two entrepreneurship:

  • Stage Two begins when the growth you have been enjoying from selling your first lead product ends. Some entrepreneurs make the mistake of assuming their first great success will go on forever.
  • Accepting the fact that it won’t early on while sales are still strong gives you a planning advantage.
  • Let your key people know that when sales slow, things will change. The business will no longer be as simple as it was. The big difference will be in the number of products you will be marketing. Stage Two growth is stimulated by the development and marketing of a profusion of products.
  • Don’t make the mistake of shifting into Stage Two until you are ready for it. Stage One is about selling a single product as aggressively as possible in the market that is available to you.
  • Take full advantage of this opportunity. Become an expert at selling. Make sure your key employees understand the process too, because when you get to Stage Two you will want to delegate much of this responsibility to them.
  • When you have exhausted the potential of your first product, call your people together and announce your next major companywide goal: becoming very good at creating, testing, and marketing lots of new products. Explain how this growth will benefit them. Don’t make specific promises, because they may be impossible to fulfill. But persuade them that growth means the opportunity for a better, more interesting work life and more income for them.
  • The transition between Stage One and Stage Two is a chance for you to become a better, more sophisticated leader. Being able to visualize the future and communicate that vision will no longer be optional. During Stage Two, it is a necessary skill.
  • Learn how to create efficient four-page business plans. Teach your key employees how to create them too.”
  • Introduce your employees to innovation and speed as the two essential skills of Stage Two growth. Discuss why they are necessary. Explore how they will change the way you do business. Establish them as corporate values.
  • Organize your business to deal with both front-end and back-end product development. If appropriate, identify two separate creative teams. Put your strongest marketers to work on the front-end products. Establish a corporate culture that values both front-end and back-end efforts.
  • Teach your front-end creative team the concept of tipping-point marketing. Require them to keep track of trends and think forward, always focusing on the customer’s needs, wants, and desires.
  • Set high creative standards. Challenge the team to develop at least one breakthrough promotion per marketing season.
  • Understand the difference between reinventing good ideas and slavishly knocking off successful products. Instill a sense of intellectual pride among your creative players.
  • Rid your business of the idea that being second or third in the market is bad. Focus everyone’s attention on developing good and useful products. Stay profitable, but generate growth through a proliferation of first-rate ideas.
  • Understand how to run effective brainstorming sessions. Establish time limits. Set standards, rules, and specific goals. Establish a culture of creative equality.
  • Understand how the “magic product cube” works. Use it to quickly identify all the many ways you can create new products.
  • Incorporate price, product type, and the idea of a unique selling proposition (USP) in your calculations.
  • Use the magic product cube to establish the potential for new product types, but don’t follow it slavishly. Instead, respect the experience you have gained. Encourage your creative people to think intuitively.
  • Become an advocate of innovation. Teach your people that the natural law of business is to grow or die.
  • Understand the difference between distress and eustress. Diminish the first. Enjoy the latter.
  • To preserve moments of genius during product-development sessions, use a tape recorder and insist on the 24-hour rule.
  • Learn the danger of going too far afield with new-product development. Stick with the “one step removed” rule.
  • Teach your people what 80% of G = IV 2 means. Make it an indelible part of their thinking.
  • Learn to love new ideas and hate sluggishness. Teach your key people to have the same feelings.
  • Understand why your existing customer base will always be your best market.
  • Take advantage of the relationships you have with your customers by pummeling them with back-end offers.
  • Figure out how to test your ideas as cheaply and quickly as possible.
  • Make direct marketing an integral part of your back-end strategy.
  • Deepen the relationships you have with your customers by communicating with them more frequently and in more depth. Use the Internet to make that economically feasible.”
  • Make your people feel comfortable as innovators by establishing the concept of accelerating acceptable failures.
  • Understand the effectiveness and efficiency of Ready, Fire, Aim.
  • Make it a regular part of everything you do.
  • Understand what a good idea is. Teach your people to be humble and let the market dictate what is good, bad, and indifferent.
  • Know how to make ordinary ideas good and good ideas great.
  • Rid yourself of the desire for perfection.
  • Teach yourself how to avoid getting bogged down by little chores.
  • Understand that taking action, even incorrect action, is often better than doing nothing and waiting. Make the process of taking quick action ubiquitous, especially among your product-development people.
  • Remember, it’s Ready, Fire, Aim, not Fire at Will. There are skills involved in getting a good idea ready for action. Learn them.
  • Practice them.
  • Do you know why only fools stay positive in the face of serious doubt? If not, find out.

Before launching a new product, ask and answer the following seven critical questions:

  1. Is it a good idea?
  2. Does it feel like a good idea?
  3. Is it economically feasible?
  4. Can I afford to test it?
  5. Do I know what has to be done?
  6. Do I have the people to do it?
  7. Do I have a Plan B or an exit strategy?

Learn how to create a Ready, Fire, Aim business plan. Use it every time you create a new product. Make sure your plan:

  • Is no longer than four pages.
  • Includes rough financial projections.
  • Identifies critical tasks.
  • Identifies key people.
  • Ties tasks to dates.
  • Answers each of the seven critical questions.
  • Does your marketing team understand the importance of brevity? If not, teach them.
  • Learn the trick of contriving realistic projections quickly. Teach it to your top marketing protégés.
  • Know how to locate and manage champions, workhorses, and superstars. To be effective in Stage Two growth, you will need them all.
  • Understand the signs of procrastination. Don’t fall victim to it yourself, and don’t allow others to.
  • Don’t waste your time trying to hoard your good ideas. Recognize that if they are good, someone else is already onto them, not just you. Putting good ideas into action will make the difference.
  • Make speed a priority.
  • Read the story about incremental degradation in the candy company. Tell it to your people. When they have a full comprehension of it, introduce them to the idea of incremental augmentation.
  • Do you know why you can’t really measure the value of incremental improvements? If not, find out.
  • Become an expert at assessing success quickly. Know when to play your cards and when to fold them.
  • Understand when it pays to reduce product costs and when you shouldn’t try.
  • Become skillful at reducing costs while increasing quality.
  • Do you know the difference between the Golden Rule and the Rule of Gold? Do you know which one to follow?
  • Cultivate a sharing culture in your business, especially among your product-development and marketing people. Teach them why hoarding doesn’t pay.
  • Make sure your salespeople understand the foolishness of going for short-term money. Teach them to believe in lifetime value.
  • Learn to recognize hoarders and avoid doing business with them.
  • Adopt the maxim “If it ain’t broke, fix it.” Teach your employees why that works in business.
  • Be aware of the costs of incremental augmentation, especially the strain it puts on your best production people. Find ways to relieve that strain without lessening your commitment to quality.
  • Determine how often improvements should be made for each of your products. Set up a schedule and keep to it.
  • Make it a habit to speak to your customers about the improvements you make. If at all possible, take full advantage of the Internet to communicate with them.

Figure out how sales-oriented you are. Make a commitment to change your thinking if it needs changing. In particular, learn the truth behind the three most common myths about sales and marketing:

  • Wants and needs.
  • Fair value.
  • What good businesspeople really do

Develop and execute a three-part marketing plan:

  1. Selling your product to more people.
  2. Selling more products to your customers.
  3. Charging more for your products.

Take my Ready, Fire, Aim crash course in marketing, including all of the following lessons:

  • Your customers don’t care about you or your business. They care about themselves.
  • A small portion of your customer base is giving you the lion’s share of your corporate profits.
  • Understand why your customers buy from you.
  • Almost every sales transaction begins with the process of generating leads.
  • Learn multichannel marketing.
  • Always follow the Golden Rule of Marketing.
  • Understand the Secret of the Four-Legged Stool.
  • Understand that customer complaints and objections are the key to better selling.
  • Maintain a “no dead ends” policy regarding your products.
  • Take advantage of customer inertia.
  • Learn how to intelligently apply the 80/20 Rule.
  • Understand the unique selling proposition (USP) of every product.
  • Never lose your marketing edge.
  • Understand the Secret of the “Core Complex.”
  • Practice reciprocity with your customers.
  • Be confident and enthusiastic when you sell.
  • Don’t push or bribe your customers.
  • Become a master of the buying frenzy. Understand why customers really buy your products, and let them enjoy most what they truly like about the buying experience.

For every product line, determine:

  • How strong the buying frenzy will be.
  • How long it will last.
  • Understand how to apply the Ready, Fire, Aim methodology to any goal you have in life—business or personal.

When you speak to a profit center manager, for example, you will want to know revenues, profits, and—depending on the business—deferred income or inventory. From customer service managers, you will want to know the number of problems addressed, the percentage that were solved, and the amount of time it took to solve them. When you get a report from a fulfillment manager, you will want to know how many products were delivered, how long it took to deliver each one, and how much it cost. And from a marketing manager, you will want to know how many new customers they have acquired, how much those customers are spending with you, and how many refunds they’ve had to process.

Many businesses never get beyond Stage2 because the entrepreneurs who grew them refuse to make the personal changes needed to accommodate the next level of growth.

Growing a Stage3 business requires at least 6 skills:

  1. Controlling operations
  2. Managing your managers
  3. Communicating your vision
  4. Networking for joint ventures
  5. Negotiating deals
  6. Being good at hiring

The best COO types that I have found have been working successfully as business managers-often in accounting, but also in other operational areas-for mostly larger, established corporations.

It is also important to curb your instinct to correct mistakes. And never correct your managers in front of their people.

I’ve found that criticism is more effective when it is expressed after something positive has been said, and when it is phrased as a question rather than a declaration.

When writing memos:

  • Before you begin writing, figure out what you want to say.
  • Don’t try to say too much. Each memo should focus on one and only one topic.
  • Begin each memo with a statement that identifies why it is important.
  • Explain why the memo matters to the business, and also explain, if at all possible, how it will benefit the reader.
  • Keep your paragraphs short, and limit each paragraph to a single idea.
  • Write clear, concise sentences, and make sure each one expresses a single thought.
  • End the memo with a recap of why your message is important to the company and how it will benefit those reading it.

Good writing is good thinking clearly expressed. Think well. Write simply.

Best business negotiator I’ve witnessed:
Business colleague: “So, what do you think it’s worth?”
BB: “I don’t know, what do you think it’s worth?”
Business colleague: “I was thinking maybe $500,000.”
At this point, BB responds in one of two ways. Either he says, “That seems fair to me,” or he says, “Gee, I don’t think I can afford that.”
That’s it. Nothing more. He has been making deals like this for as long as I’ve known him, and I have to say he is the best negotiator I have ever met. He offers no haggling. If the price is within the acceptable range, he just accepts it. If it is out of the range he just rejects it.
Of course, you’ll have to figure out what number you will be willing to accept before the conversation.

The art of making a good deal:

  • A good deal is one that lasts.
  • Once a deal goes bad for one partner, it goes bad for the other one.
  • It is almost impossible to hold a partner in a bad deal if he really doesn’t want to stay with it.
  • Legal words on paper have their value—but that value lies in protecting you from getting screwed, not permitting you to screw your partner.
  • What is fair isn’t a single point; it’s a range. Trying to get exactly what you want is a childish game.
  • Situations change over time. Partners do too. Fairness shifts accordingly.

Get candidates to talk about themselves as much as you can.

If you notice one who keeps turning the conversation back to you and how he can help you, then you know you’ve found a winner.
Great employees understand that their main concern should be how much they can do for the business, not how the business can take care of them.

7 Myths about training, motivating, and mentoring employees

  1. Employees need job descriptions in order to know the scope of their responsibilities.
    Reality: Job descriptions aren’t necessary.
  2. Employees are always motivated by money. It’s naïve to think differently.
    Reality: Money is not even the second most important motivating force for very good people.
  3. To win loyalty from your employees, make them all owners.
    Reality: Most employees don’t want to be business owners.
  4. Flat organizations create happier and more efficient employees.
    Reality: Employees like hierarchy.
  5. The way to make work fun is to fill the workplace with amusements.
    Reality: Fun comes from doing good work, not from distractions.
  6. A good boss is a sensitive boss, one who is willing to respond to employees’ personal problems.
    Reality: Mixing business with friendship is always a bad idea.
  7. A good boss listens to employees complaints and responds to them.
    Reality: Some complaints are better off ignored.
Finding great people and converting them to superstars is the single most powerful way to solve all your business problems and continue your company's growth.

Remember that you are not looking for someone to do it the same as you do it. You are looking for someone to do it better than you do it, even if he does it differently.

When you began your business, you may have spent half your time as an employee, 30 percent of it as a manager, and only 20 percent as a business builder. When sales kicked in and your business moved into Stage Two, your role as an employee should have been eliminated, and you should have been spending perhaps 60 percent of your time as a manager, 30 percent as a business builder, and 10 percent as a wealth builder. In Stage Three, you should have been spending no more than 30 percent of your time as a manager, at least 50 percent as a business builder, and about 20 percent as a wealth builder. And now that you’re in Stage Four, you should make another shift and spend even more of your time as a wealth builder. The amount of time you spend on managing or business building is entirely up to you.

The most important change you can make when your business gets to Stage Four is to gradually remove yourself from the CEO role and spend your time, if you want to, acting as both an adviser to your company and as its primary wealth builder.