By Shaun Buck, Aug 20, 2017
As an entrepreneur, I am attracted to new. I love speed and growth. I am drawn to the shiny object.
I see friends of mine with really cool software-as-a-service (SaaS) companies that are growing at rapid rates, albeit typically with low profits. I see the insane multiple the market applies to the resale valuation of these companies, and it makes me want to be in the SaaS business.
I listen to people yell from the rooftops that mobile is going to take over the world and that pretty soon no one will buy anything or make a decision without first asking Siri. Hearing that makes me want to create an app.
Why am I telling you this? As entrepreneurs, we are nearly all attracted to new. Someone at some point even coined the term Shiny Object Syndrome to describe what ails us. In my 20s, I jumped from business idea to business idea; some worked and some didn’t. But, the things I learned in that phase of my life may have been my most valuable business lessons.
Marketing assets trump marketing tricks
In many cases, that shiny object is just crap in a shiny wrapper. The trick or tactic may work for a time, and trying it out may even be useful for a while (as long as you don’t divert any other resources – time, money, etc. – from proven winners to make this new campaign work), but soon enough, the true colours show.
If you want to be more successful tomorrow than you are today, never stop a successful campaign to test a new idea — no matter how bored you are with the old strategy. If you want to test a new idea, allocate additional marketing dollars to do it. Don’t pull the budget from something that is working; that’s how an amateur operates.
Retention is king
Big business gets this, but so few of us small business owners get how important retention is to growth and profitability. Retention is simply basic math, which I get isn’t sexy, but it is profitable. A percentage of annual sales needs to go toward customer retention. If you can decrease customer churn, you will massively increase growth and profits.
Let me give you a simplified explanation. Have you ever heard the media talk about the average American’s tax freedom date? It’s the date that the average American has to work up to before they actually earn any money for the year. Similar to your personal taxes, your business has a churn freedom date.
It’s different for every customer, but it’s the date upon which that person’s business actually helps your company grow.
In the end, churn is a real problem, and the solution for nearly all businesses starts with building a relationship. You need to be your customer’s friend in the business.
A process for everything
I am surprised by the number of businesses that are simply winging it – no structure, no process, no systems. When I tell entrepreneurs they need to add processes into their business, they often say things like “My business is too difficult or different,” which, quite frankly, I’m going to call BS on.
I’m sorry to break this to you, but your company is no different than six dozen other businesses like yours. You need to have a system, and once you create that system, you need to give it time to work; then, you make tweaks to the system to improve it.
At the end of the day, business is business 99.99 percent of the time. Unless you’re blazing trails in a brand-new industry like asteroid mining, your business needs just a few basic things to grow, succeed and profit.
I may not be in the business of drilling teeth, but give me 12 months as the CEO of any dental office in America, and we’d be well on our way to doubling the size of the practice. That sounds like an incredibly cocky statement, but my point isn’t to say I’m great – my point is that your business does not need to have today’s shiny object.
So what does it need?
Your business needs three things:
- Marketing assets you use over, and over, and over again – don’t get bored with tactics that make you money.
- A focus on decreasing customer churn.
- Systems and processes to keep things running.
And that’s it. There’s your foundation for long-term success.
*This article was originally posted on Entrepreneur.com