The Personal MBA – Josh Kaufman (Sales)

April 29, 2012

Devon Sampson Business , , , , , , , 2 Comments

 

People don’t like to be sold, but they love to buy.

-Jeffrey Gitomer, author of The Sales Bible

 
“Sales are the only point in the business cycle where resources flow into the business, which makes completing transactions critically important.” (107)

“When you’re starting a new business, the object is to get to the point where you make your first profitable transaction as quickly as you possibly can, because that’s the point where (your work) transitions from being a project to being a business.”
 

The Four Pricing Methods

 
1.) Replacement Cost – “How much would it cost to replace?”
2.) Market Comparison – “How much are other things like this selling for?”
3.) Discounted Cash Flow/Net Present Value – “How much is it worth if it can bring in money over time?”
4.) Value Comparison – “Who is this particularly valuable to, and by how much more?”
 
“(Out of these four methods,) value comparison is typically the optimal way to price your offer, since the value of an offer to a specific group can be quite high, resulting in a much better price. Use the other methods as a baseline, but focus on discovering how much your offer is worth to the party you hope to sell it to, then set your price appropriately.” (113)

“Value-based selling is the process of understanding and reinforcing the reasons why your offer is valuable to the purchaser.” (114)

“Value-based selling is not about talking – it’s about listening.”

“Asking good questions is the best way to identify what your offer is worth to your prospect…Instead of barging in with a premature, boilerplate hard sell, successful salespeople focus on asking detailed questions to get to the root of what the prospect really wants.” (114-115)

“By encouraging your prospects to tell you more about what they need, you reap two major benefits. First, you increase the prospect’s confidence in your understanding of the situation, increasing their confidence in your ability to deliver a solution. Second, you’ll discover information that will help you emphasize just how valuable your offer is, which helps you in framing the price of your offer versus the value it will provide.” (115)

Concept Page on PersonalMBA.com – Value-Based Selling
 

There is only one boss: the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.

-Sam Walton, founder of Wal-Mart

 

“Understanding the other party’s next best alternative gives you a major sales advantage: you can structure your agreement so it’s better than their next best option.” (117)

A buffer is a third party you hire to negotiate on your behalf. They help you negotiate the best deal without compromising your relationship with the other party.

“As a social force, reciprocation is one of the primary psychological tendencies that underlie human cooperation…Here’s the tricky part: the desire to reciprocate is not necessarily in proportion to the original benefit provided.” (124)

An example of this given by Robert Cialdini in his bestseller Influence: The Psychology of Persuasion is how certain car salesmen offer a gift up front. “Can I get you a coffee? Would you like a soda? Some water? Cookies? Is there anything I can do to make you more comfortable?” It seems like a small gift, but studies have shown that this gets people to spend thousands of dollars more on average.

“Being generous is one of the best things you can do to improve your results as a salesperson. By giving away value and helping others as much as you can, they’ll respect you; it will build your reputation, but it will also increase the probability that they will be interested enough when you do present your call-to-action.” (125)
 

We confess our little faults to persuade people that we have no large ones.

-Francois de la Rouchefoucald, 17th-century poet

 
Making a damaging admission improves trust. As an example, Josh Kaufman mentions a time when he was looking to buy a car: one dealership made sure to photograph every detail of the car – including a small chip in the paint on the left side. This minor flaw wasn’t an issue for Kaufman, but the fact that the dealership was completely open about it got him to trust that the dealership wasn’t covering anything else up and he bought the car.

“Instead of making them wonder (what the catch is), tell them yourself. By being up front with your prospects regarding drawbacks and trade-offs, you’ll enhance your trustworthiness and close more sales.” (126)

“Your primary job as a salesperson is to identify and eliminate barriers standing in the way of completing the transaction. Eliminate your prospect’s objections and barriers, and you’ll close the deal.”

Key Concept – Common Barriers to Purchase

Risk Reversal is a strategy that transfers some (or all) of the risk of a transaction from the buyer to the seller, eliminating another major barrier to purchase.

The Pinnacle of Motivation

April 25, 2012

Devon Sampson Motivational Psychology , , , , Leave a comment

I am a diehard Vancouver Canucks fan.

Last year, we made a run to the Stanley Cup finals behind mercurial goaltender Roberto Luongo. As legend has it, Luongo would take walks down the Vancouver seawall with a hoodie and headphones before all home playoff games.

After cleaning out his locker following a first-round upset this year, Luongo revealed that he during these walks he listens to two main tracks: “Believe” by Eminem and a motivational speech titled “I am a Champion.” Intrigued, I decided to look up the latter and I was absolutely blown away. I watched it on Youtube about 15 minutes ago (11:30pm), and now I’m way too pumped up to go to sleep anytime soon.

I’d be doing you a disservice if I didn’t share this with you.

Enjoy.
 

The Personal MBA – Josh Kaufman (Marketing)

April 21, 2012

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In an attention economy (like this one), marketers struggle for attention. If you don’t have it, you lose.

-Seth Godin

 
Getting attention is the point of marketing, but remember that the only attention that really matters is attention from prospects who will purchase from you.

Don’t even expect people to be receptive to something that fundamentally contrasts with their world-view (eg: benefits of red meat to a committed Vegan).

“Receptivity is a measure of how open a person is to your message.” (83)

The two components of receptivity are: what and when.

    When – People tend to be more receptive at certain times of the day, and extremely non-receptive to even the best value-offerings in the wee hours of the morning.
    What – “The form of your message has a big influence on how receptive people are to the information that message contains. If the form of your message suggests that it was created just for them, you’re far more likely to get your prospect’s attention.” [eg: postal junk mail vs. hand-addressed Fed-Ex envelope] (83-84)

“Skilled marketers don’t try to get everyone’s attention – they focus on getting the attention of the right people at the right time.“

“Marketing is most effective when it focuses on the desired end result, which is usually a distinctive experience or emotion related to a core human drive.” (87)
 

People don’t buy quarter-inch drills; they buy quarter-inch holes.

-Theodore Levitt, former professor at Harvard Business School

 
Discovering where Probable Purchasers start looking for information after crossing the interest threshold (Point of Market Entry) is extremely valuable, because that knowledge will allow you to reach them first (eg: Procter & Gamble, Fisher Price, and many other companies make “care packages” that are given to new parents as soon as they leave the hospital with their new baby).

“The quickest way to waste a multi-million-dollar advertising budget is to try to force people to want something they don’t already want.” (92)

“If you encourage your prospects to visualize what their life will look like after purchasing, you increase the probability that they’ll purchase from you. The best way to help your customers visualize is to expose them to as much sensory information as possible – the information their mind uses to conclude, ‘I want this.’” (94)
 

Selling to people who actually want to hear from you is more effective than interrupting strangers who don’t.

-Seth Godin

 
“A Hook is a single phrase or sentence that describes an offer’s primary benefit. Sometimes the Hook is a title, and sometimes it’s a short tagline (eg: a title like ‘The 4-Hour Work Week’ or a tagline like ’1,000 songs in your pocket’)” (99)

Attention isn’t quite enough, however. You also need a Call-To-Action. Consider two billboards for the same place:

Devon’s Hamburgers are the best*

Take exit 25 and turn right for the best burgers in town

 
*Disclaimer: Statement is for example purposes only. There has yet to be conclusive evidence that suggests that Devon’s hamburgers are, in fact, the best.

The Art of Seduction – Robert Greene (The Charismatic)

April 20, 2012

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The word “charisma” was initially used to describe people that came across as having a direct communication with God, due to their energy and demeanor. It’s a Greek word that refers to prophets and to Christ himself.

“Create the charismatic illusion by radiating intensity while remaining detached.” (95)

“The face of a Charismatic is usually animated, full of energy, desire, alertness.” (97)

“When trying to concoct an effect of charisma, never forget the religious source of its power. You must radiate an inward quality that has a saintly or spiritual edge to it. Your eyes must glow with the fire of a prophet.” (98)
 

Qualities of Charismatics

 
Purpose

    “Since most people hesitate before taking bold action…self-assurance will make you the focus of attention.” (eg: FDR during the Great Depression)

Mystery

    Expressed by contradiction, or the hint of it.

Eloquence

    “The slow, authoritative style is often more effective than passion in the long run.” (100)

Theatricality

    Being larger than life, having extra presence.

Uninhabitedness

    “Show that you are less inhibited than your audience – that you radiate a dangerous sexuality, have no fear of death, are delightfully spontaneous.”
    “Fluidity of body and spirit…openness to experience.”

Fervency

    “Become the rallying point for people’s discontent, and show them that you share none of the doubts that plague normal humans.” (101)

Vulnerability

    A need for love and affection that your audience can satisfy (eg: Marilyn Monroe admitting that she “belonged” to her audience, made her audience feel like they had something to offer her as well).

Adventurousness

    “An air of adventure and risk that attracts the bored.”

Magnetism

    “The demeanor of Charismatics may be poised and calm, but their eyes are magnetic.” (102)

- – - – - * – - – - – – - – - – * – - – - – – - – - – * – - – - -
 
“People do not want to hear that your power comes from years of discipline. They prefer to think that it comes from your personality, your character, something you were born with.” (110)

“The less obvious you are (about your contentment), the better: let people conclude that you are happy, rather than hearing it from you.”

The Personal MBA – Josh Kaufman (Value Creation)

April 17, 2012

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Roughly defined, a business is a repeatable process that:

    1. Creates and delivers something of value… (Value Creation)
    2. That other people want or need… (Marketing)
    3. At a price they’re willing to pay… (Sales)
    4. In a way that satisfies the customer’s needs and expectations… (Value Delivery)
    5. So that the business brings in enough profit to make it worthwhile for the owners to continue operation (Finance)

“Take any one of these five factors away, and you don’t have a business – you have something else.” (36)

“The Five Parts of Every Business are the basis of every good business idea and business plan…If you’re thinking about starting a new business, defining what these processes might look like is the best place to start. If you can’t describe or diagram your business idea in terms of these core processes, you don’t understand it well enough to make it work.” (37)

Don’t expect skills that aren’t related to the Five Parts of Every Business to be economically rewarded.
 
 

Don’t go around saying the world owes you a living. The world owes you nothing – it was here first.

-Mark Twain

 
Key Concept – The Ten Ways to Evaluate a Market
 
When any two markets seem equally attractive in most categories, choose the one with competition; you’ll know from the start that there’s a market of paying customers for your product, eliminating your biggest risk.

“If you find a way to make a necessary but dull market interesting enough to pursue, you may have discovered a hidden vein of gold waiting to be mined.” (44)
 
Key Concept – The 12 Standard Forms of Value
 
“Don’t be shy about showing potential customers your work in progress. Unless you work in an industry with unusually aggressive, competent, and well-funded competitors, you really don’t have to worry about other people ‘stealing’ your idea. Ideas are cheap – what counts is the ability to translate an idea into reality, which is much more difficult that recognizing a good idea.” (62)

Nobody gets things right the first time so go through the Iteration Cycle to improve your project over time. Iteration has six major steps, which Josh Kaufman calls the WIGWAM method:

  • 1. Watch – What’s happening? What’s working and what’s not?
  • 2. Ideate – What could you improve? What are your options?
  • 3. Guess – Based on what you’ve learned so far, which of your ideas do you think will make the biggest impact?
  • 4. Which? – Decide which change to make.
  • 5. Act – Actually make the change.
  • 6. Measure – What happened? Was the change positive or negative? Should you keep the change, or go back to how things were before this iteration?

    •  
    “The Iteration Cycle often feel like additional work because it is additional work. That’s why so few people do it: it’s very tempting to skip all of these ‘extra’ steps and attempt to create the final offering outright.” (64)

    The more times your project goes through the Iteration Cycle, the better off it will be. Therefore, you should also focus on your Iteration Velocity, the speed in which you’re going through each Iteration Cycle.
     

    Our goal is to have more at bats per unit of time and money than anyone else.

    -Eric Schmidt, Chairman and CEO of Google

     
    The feedback you get should come from real potential customers, not friends and family. Ask open-ended questions to get them to do most of the talking, and then give them the opportunity to pre-order; it’s one thing to say you like a product but quite another to put your money where your mouth is. If no one is willing to pre-order, ask them why and you’ll discover their major barriers to purchase.

    Critically Important Assumptions (CIAs) – facts or characteristics that must be true in the real world in order for your business to be successful. Be very clear about your CIAs when working on a project.

    “Using what you make every day is the best way to improve the quality of what you’re offering. Nothing will help you find ways to make your product better than being its most avid and demanding customer.” (80)
     

    Make something that people want…There’s nothing more valuable than an unmet need that is just becoming fixable. If you find something broken that you can fix for a lot of people, you’ve found a gold mine.

    -Paul Graham, Founder of Y Combinator

     

    Rework – 37signals (Marketing)

    April 15, 2012

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    We’re willing to lose some customers if it means that others love our products intensely.

     
    There’s no such thing as a marketing division, because everything has to do with marketing.

    Don’t blindly copy your competition even if something they’re doing is clearly working. The problem with copying is that it skips understanding, and you cannot grow without understanding why something works.

    The main way to de-commoditize your project is to inject yourself into it. That way, you’ll always be leading; it would be stupid for anyone else to try to better than you at being you.
     

    When you don’t know what you believe, everything becomes an argument. Everything is debatable. But when you stand for something, decisions are obvious.

     
    “Emulate drug dealers. Make your product so good, so addictive, so can’t-miss that giving customers a small free taste makes them come back with cash in hand. This will force you to make something about your product bite-size. You want an easily-digestible introduction to what you sell.”

    “Instead of trying to outspend, out-sell, and out-sponsor your competitors, try to out-teach them.”

    “Big companies can afford a Super Bowl ad. You can’t. But you can afford to teach. They can’t.”

    The reason you’ve heard of great chefs like Emeril Lagasee, Jamie Oliver, and Paula Deen rather than other top chefs is because the aforementioned chefs share everything they know.

    It’s okay to share your secrets because no one can beat you at your own game.

    People have an insatiable need to see behind the scenes, so show your customers behind the scenes of your company (eg: Youtube videos of your creative process, making-of documentary) and you’ll pique their interest – not to mention create a unique bond with them on account of the fact that they’ll see the personality and humanity of your company.

    “Don’t be afraid to show your flaws. Imperfections are real, and people respond to real.”

    Rework – 37signals (Project Management)

    April 14, 2012

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    “Long-term business planning is a fantasy. There are just too many factors beyond your control.”

    If we can’t accurately estimate projects that take 2 hours, how can we estimate projects that might take a year? The longer the project, the more magnified that planning errors become.

    “Working without a plan may seem scary. But blindly following a plan with no relationship with reality is even scarier.”

    “Details make the difference. But getting overly infatuated with details too early leads to meetings, disagreements, and delays. You waste time on decisions that are going to change anyways.”
     

    “Directors cut good scenes to make great movies.”

     
    Be a curator. If you just took a bunch of paintings and put them in a room, it wouldn’t be a museum – it would be a warehouse. What makes a museum great is the stuff that ISN’T on the walls; what makes a museum great is there’s someone saying “No” to things.

    “The best is a sub-sub-sub-set of all the possibilities. It’s the stuff you leave out that matters. So constantly be looking for things to remove, simplify, and streamline.”

    It’s easier to add things later on than it is to remove a piece from a bloated monstrosity.

    Instead of looking to fill up your shelves, be a curator of your shelves.
     

    “Adding something is easy. Adding value is hard.”

     
    “Sometimes it’s fun to play a bit and build something cool. But eventually, you’ve got to stop and ask yourself whether it’s useful too. Cool wears off. Useful never does.”

    “The enthusiasm you have for a new idea is not an accurate indicator of its true worth.”

    Rework – 37signals (The Creative Process)

    April 13, 2012

    Devon Sampson Business , , , , , 2 Comments


    The “real world” that most people talk about when shooting down ambitious ideas isn’t a place, it’s an excuse.

    Learning from successes is much more valuable than learning from failures because there are almost infinite ways to fail (things to learn not to do), but very few ways to succeed (learning what you actually should do).
     

    “Evolution doesn’t linger on past failures, it’s always building on what works. So should you.”

     
    The best way to make something great is through iterations. Stop theorizing about what will work. Find out now.

    Inspiration has an expiry date. SEIZE IT.

    “Do everything you can to remove layers of abstraction. The problem with abstractions, like documents and reports, is that they create illusions of agreement. A hundred people can read the same words, but in their heads they’re imagining a hundred different things.“

    Only by getting to something real do you get to true understanding. Whenever possible, show rather than tell when discussing ideas.

    Listen to feedback from your customers, but don’t write it down. If it’s really important, it’ll keep coming up and you won’t be able to forget it.
     

    “If I had listened to my customers, I would’ve gotten them a faster horse.”
    -Henry Ford

    Rework – 37signals (Productivity)

    April 7, 2012

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    “When you put off decisions, they pile up. And piles end up ignored, dealt with in haste, or thrown out.”

    “Sometimes abandoning what you’re working on is the right move, even if you’ve put a lot of time into it. Don’t throw good time after bad work.”

    “Interruption is the enemy of productivity…interruptions break up your work day into a bunch of work moments.”

    “You can’t get meaningful things done when you’re always going start-STOP-start-STOP”

    Getting into a flow state of productivity is like going into REM sleep – it doesn’t happen as soon as you fall asleep. It takes a certain amount of uninterrupted time for true productivity to take place.

    When collaborating with others, use passive forms of communication such as e-mail whenever possible; this way, people can respond when it’s convenient for them instead of having to drop everything at unexpected times.

    Meetings are toxic because:

  • they’re primarily about abstract concepts rather than real things
  • they get off-topic far too easily
  • the agendas are often so vague that no one is quite sure of the goal

    •  
    Meetings are also black holes of productivity. If you have a one-hour meeting and you invite 10 people, you don’t just lose 1 hour of productivity, you lose 10 hours because each of those people lose an hour that they could have spent on actual work.

    If you NEED to have a meeting, at least follow these guidelines:

  • invite as few people as possible
  • set a timer and conclude the meeting as soon as it rings
  • have a clear agenda
  • begin with a specific problem
  • meet at the sight of the problem instead of a conference room
  • end with a solution and make someone responsible for implementing it

    •  
    If it’s good enough to get the job done, do it. You can always turn “good enough” into “great” later.

    “Just because you’ve got a list of things to do doesn’t mean it’s not done.”

    “The way to build momentum is to finish one thing and then move on to the next. No one likes to work on an endless project with no finish line in sight.”

    “If you absolutely have to work on long-term projects, try to dedicate one day a week (or every two weeks) to small victories that generate enthusiasm.”

    “Long lists are guilt-trips. The longer the list of unfinished items, the worse you feel about it. And at a certain point, you just stop looking at it because it makes you feel bad.”

    Break your lists down into smaller lists. By breaking down a list of 25 items into five lists of five items, each item you finish completes 20% of the list instead of just 4%. Don’t you feel better?

    The Personal MBA – Josh Kaufman (Finance)

    April 3, 2012

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    “Finance is the art and science of watching money flowing into and out of a business, then deciding how to allocate it and determining whether or not what you’re doing is producing the results you want. It’s really not any more complicated than that.” (151)

    “The very best businesses create a virtuous cycle: they create huge amounts of value while keeping their expenses consistently low, so they make more than enough money to keep going without capturing too much value.” (152)

    An under-appreciated benefit of profits is the fact that they can act as a “cushion” against an unexpected rise in expenses.

    There are only four ways to increase your business’s revenue:

      1. Increase the number of customers you serve
      2. Increase the average size of each transaction by selling more
      3. Increase the frequency of transactions per customer
      4. Raise your prices

    The purpose of a customer is not to get a sale. The purpose of a sale is to get a customer.
    -Bill Glazer, advertising expert

     
    “Lifetime value is the total value of a customer’s business over the lifetime of their relationship with the company.” (160)

    “Allowable Acquisition Cost (AAC) is the marketing component of Lifetime Value. The higher the average customer’s Lifetime Value, the more you can spend to attract a new customer, making it possible to spread the word about your offer in new ways.” (161)

    “Keeping a running tally of how much you spend and how much revenue you collect from the start of your business’s operations is the only way to figure out whether or not you’ve actually made money.” (166)

    “Purchasing power is the sum total of all liquid assets a business has at its disposal. That includes your cash, credit, and any outside financing that’s available.” (168)

    “Because debt keeps money in your account, it maintains your purchasing power.”

    “Compounding is the accumulation of gains over time. Whenever you’re able to reinvest gains, your investment will build upon itself exponentially – a positive feedback loop.” (174)

    “If you reinvest the revenue your business generates and your business is growing rapidly, you can multiply your original investment many times over. Compounding is the secret that explains how small companies that reinvest their profits become large companies in a few short years.”