Building a Revenue Engine

If you haven’t visualized your success and prepared for it you shouldn’t expect it. With whatever challenge or mission you set out to accomplish you should spend time reflecting and mapping out what success will look like and how you will find it. This will likely be a set of attitudes and behaviors that comprise a mentality of success as well as specific game plans to navigate the circumstance you can reasonably predict and ones for which you couldn’t. As an example you may be deciding to start a company or taking on a big responsibility for a company you work for. How you approach that challenge and your preparation will be directly linked to your success.

Do you understand the goal or the outcome? 

If you can’t articulate what success is and the people you work with don’t share that same image or articulation you are unlikely to arrive there with your colleagues. Spend the time discussing and verbalizing what outcome you seek and articulating how you will get there. 

Do you understand the critical milestones or way points along the way? 

As the complexity of the problem, the number and variety of resources, and diversity of people you need to weave into a solution increases the ability to keep everyone on the same page regarding your progress becomes critical. In addition to communicating your progress clearly you may also benefit by dividing your problem into phases or midpoints so you can clearly demonstrate and confirm success along the way to a bigger goal. The world of venture finance can be inverted to be seen as a series of additional investments once certain agreed upon or implicit milestones are hit. 

Do you have a way of measuring your use of resources and your progress to the goal? 

Building anything great requires having a lot of systems working well simultaneously. It’s often hard to juggle it all and know what to do when and in what order. A helpful tool is asking yourself and your team what is the most important thing for us to get working well? What will identify us or enable us to continue to survive / improve. 

It helps to have a clear sense of what are the most important things and get them working first. Once you have one system “online” you can focus on others. How do you know something is working and perhaps most importantly how do you know what should be working first?

Order things logically. 

The first question is what are the most important things for our team? 

I would encourage a discussion around this but questions for your team to consider:

One of the things I’ve noticed through lots of pitches is the difference between someone explaining how something works and someone trying to tell me what they think I want to know or hear. Guess which one is more effective?

If you answered the first one you can read on. If not, I’d recommend some earlier posts or some field research. The world builds complex things. We don’t intend to but it happens when you add people, process, and velocity. In order to keep that as accessible as possible many organizations hire sales, service, development, investor relations, and the like. This is the acknowledgement that we haven’t quite invented a product or service that explains itself to it’s user as it goes. 

I’ve found that the most effective way to “sell” is quite the opposite. It’s better to just explain to your listener how things work. You have to be able to understand who they are and where they are coming from first. If you get that (and be careful about being arrogant) and you know how your own (arrogance check) product , service, ecosystems etc. you should have a productive conversation. 

Some principles to better explaining versus crappy selling:

If you’re explaining something and it doesn’t make sense take the effort to improve it on your end. If you’re forcing people into your mouse trap it better be the best one ever and forever. (Hint: keep improving).

You don’t understand enough about your product/service, ever. Keep learning.

In order to generate business you need to get deals done. What does this mean my old boss used to ask? It means getting together, discussing a plan, assigning responsibilities, exchanging resources, giving your word, and following through on it. Great partnerships are built by improving and increasing that cycle ad infinitum. To get the whole cycle right and improve it is hard. This post will focus on the first part: getting together.

Here are some tips:

It helps if you know them previously or if someone you know well knows them. It really helps if your organizations have done business in the past. It really helps if you know them personally.

Big things don’t get done unless people meet in person. Technology is awesome but until we’re robots it won’t replace human to human interaction. 

Go the extra mile literally. Don’t worry about commute time for initial meetings that have high potential. It’s such a small cost to something that can be so big and it shows that you’re willing to meet people more than halfway. 

Make sure to keep track of your promises and follow through on them from the first interaction.

Listen more than you talk. Questions and listening facilitate learning and understanding. Unless you want to be a dictator in the relationship listen to your partner. 

Start at the top of an organization. It’s ok to work your way down. It’s harder unless you’re with exceptional organizations to move your way up. 

Don’t forget that when you are selling a product or a service your customer is looking for a feeling. You may be creating multiple feelings but it is an emotion or an experience that your customer is trying to acquire through the selection of you or your offering.

This may be peace of mind, security, the resolution of a hard problem, happiness, healthiness, enjoyment with loved ones, cleanliness, intelligence, surprise, etc.

You can understand this linkage through a variety of techniques and in many cases it’s better to utilize many versus relying on one. To better understand that consumer connection and ensure that your are growing and enhancing it you might consider:

Interviewing your customer about it.

Researching it by reading about the industry, product category, hiring consultants, etc.

Running experiments to better understand the dynamics.

Sampling it yourself, having your company use it. aka dogfooding

When you’re planning a partnership your first meeting is important. It’s all the information your prospective partner can rely upon. They may have information or pre-conceptions prior to your meeting (something you should know and plan for) and anything they will be exposed to after work (you should have a clear mapping of this). 

For this reason you should take care in managing and staging your first meeting. Some common sense things to do are:

Start at the highest point in the decision making pyramid when seeking a clarification. People do not naturally raise issues to their managers for a discussion. Most organizations are lazy and expect the layer below to resolve the problem. They consider it “lazy” if you raise an issue for input or further review. Though it’s a backward approach for building intelligent systems, it is more often true that not.

Resolved, when you are trying to get a commitment from an organization don’t waste your time working your way up the chain. There are no decisions to be made, you will in almost all cases be stuck. 

As you seek to grow your company and impact appreciate that strategy takes shape through time, effort, and asking intelligent questions. 

It is not making a decision on what to do next. Rather, it is an intentional process that involves various functions of your business recombining in a new way. 

Setting strategy often involves a higher level questions like what do we want to be and what values do we want to reflect and then connects to lower level questions like: how should we scale our product? What should we build next year? What markets should we serve?

To answer all of these questions you need to engage in certain activities:

Team conversations.

Customer interviews

Market research

Process mapping

Forecasting

Hiring

Project management

Roadmaps

A business acquires its customers through various channels. If you’re a direct to consumer business you might have an organic acquisition method, a reseller, a wholesale distribution, and perhaps a direct salesforce. It’s important to understand those channels so you can understand how they impact your business and how you can “trim” the speed of your growth to be just right. Some elements of a channel might include:

The cost of acquisition.

The lifetime value f(profitability & retention).

The satisfaction.

The referral power.

The demographics.

What are the key levers that drive flows of customers through those channels (price, commission, product, delivery method etc.)

You should have an understanding of each of your channels by these metrics and others in order of their importance to your business.

In an age of increasing intelligence, access to resources, and technology the only difference between you and the next person or product waiting to replace you is the quality of your work and your attention to detail. How well you visualize someone’s experience with you or your product is directly related to your win rate. 

Line up 10 competitors and you’ll find the top one gets more than 10% of the glory or reward. It’s true in sports, entertainment, markets, and profit margins. It’s not really worth competing unless you’re mentally prepared to be number one in your chosen field. 

I have been doing a lot of roadshows introducing a new form of health insurance to the country. It’s easy to do because I a) believe in the product b) know it pretty well and c) know our story.  I realized last week the power that comes from admitting you don’t know something.

I was asked a question, it was a good one, and instead of answering in a way that I didn’t have to reveal my lack of knowledge I admitted I did not know and I thanked the person for a good question. I offered to get back to him if he left me his contact info.

From there, I proceeded to investigate the question and come up with an answer. This enabled me to learn more about our product and loop back and share that with my future partner. 

Recognizing I didn’t have the answer and that I could get a better one for him enabled me to learn more and build on our relationship by being honest and taking effort to help both of us understand the product better.

When you’re building long term relationships things or issues can get in the way. Try hard not to let them. It’s easier said than done. Use these tools to help you make progress:

1. Share the issues that are on your mind. Whether that’s in person, in writing, or other form.

2. Try to separate your emotion from your logic. This is hard the longer you let a problem build or the more substantial it is to you. Use a friend or just partner to help you tease apart emotion and logic.

1.    When two parties freely exchange goods there is always a surplus. How that surplus is distributed is largely a function of the leverage or negotiating skill of the parties.

2.    You should reflect on whether you consider your “profit” from trade in absolute or relative terms. Absolute traders focus on the velocity of transactions they can perform times the surplus they create. Relative traders focus on the surplus they create relative to their trading partners. Absolute Traders are more likely to be happier and wealthier in the long run.

3.    Trading has distinct parts including the exploration of opportunity, ease of transaction, amount of surplus generated, division of surplus, and strategic implications of a partnership. The larger the “deal” the more time should be spent reflecting on each function.

4.    Transparency, directness, and reliability are dominant attributes of great traders.