Page 108: Identifying The Important Metrics

Page 108

GO IT ALONE!

Customers knew they had to think carefully before they used the artists’ time because they would have only so many opportunities. Finally, the three-revisions approach realistically weeded out undesirable, and ultimately unprofitable, customers. The company initially limited its risk because it assumed that if a customer would not be happy after three revisions, he or she would never be happy (and should either pay more or work with someone else).

Here’s a valuable takeaway thought from the 1-800-MYLOGO story: If a specific graphic arts activity can be set up as a repeatable and profitable business, then with enough creativity and thought, you can probably do the same for almost any service.

IDENTIFY THE IMPORTANT METRICS

Most successful businesses are repeatable formulas, because there are typically a few relationships that determine the overall success of the business. It’s vitally important to identify these crucial leverage points, so that you can focus your attention and efforts on improving them. In Profit from the Core: Growth Strategy in an Era of Turbulence, Chris Zook persuasively makes a related point. He argues that most businesses fail to fully realize the potential strength of their core functions and that a greater focus on the high-leverage points (which yield 80% of the benefits of the business) will inevitably lead to greater success.

Within the context of Speed Anywhere, here are the implications of these ideas. In this business, I am paid for leads that successfully translate into sales. If I send 1,000 prospects to a company and only 5 convert to customers, it is these 5 for which I am paid. The other leads have absolutely no value (and may even have a negative value because the sales force of the telecommunications company is wasting its time on fruitless sales efforts). As a consequence, the business has five basic numbers that I watch:

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