At a foundational level a business must solve a key customer challenge and make money doing so. The hard numbers define your profitability, and the clear understanding of a client’s deep psychology needs, and decision-making pressures shape your efforts.
“If you don’t know your numbers, you don’t know your business.” – Marcus Lemonis
Yet many companies large and small struggle to truly own these two core business elements in a holistic way. They’ll own one side of the equation and fudge the other or they’ll outsource elements from each side under the erroneous belief they’re saving time and money.
White Belt Awareness Part 1: Understanding Your Fundamentals
There are five straightforward financial metrics every business needs to own:
Cost Per Sale (CPS): The total costs to acquire a customer.
Dollars Per Sales (DPS): Revenue generated per sale.
Cost of Delivery (COD): Expenses required to fulfill the sale.
Profit per Sale (PPS): Funds remaining after fulfillment.
Return on Spend (ROS): Profit generated per dollar spent on M/S efforts
Here are two simple examples:
Clearly Firm B is in a stronger financial position as it’s Dollar Per Sale (DPS) and Return on Spend (ROS) demonstrates. Firm B can spend a lot more per customer to generate additional growth whereas Firm A is constrained. The key point is to have a clear understanding of the fundamentals and then use this awareness to make better decisions.
Too many companies get bogged down in irrelevant conversations that don’t really matter because they haven’t yet calculated the basics. Until everyone in the company is working from the same instruction manual, no one can make meaningful decisions.
Keep things simple and own the fundamentals.
White Belt Awareness Part 2: Understanding Their Psychology
There are five components to a prospect’s psychology:
Problem: Can you solve it better than anyone else?
Priority: Are they willing to spend the money + time ahead of other efforts?
Protection: Are they safer with you than with anyone else?
Benefit: Are you going to help them win and win on their terms?
Belief: Is this true and will this be true for them?
Every prospect has a commoditized view of their problem. So, they place their context (usually price) at the center of their buying decision – based on what they perceive the marketplace has to offer. Their false assumptions are the core barriers to their success.
Your company’s communication must cut through their erroneous perceptions and demonstrate to them they’re safer with you. Your firm needs to help them win, and the benefits you’ve promised will materialize in full.
Can you and your company crush their false assumptions?
Black Belt Awareness: Shifting How Prospects See Themselves
The special art is … shifting their beliefs.
People are buying your belief in yourself and the work you do.
Prospects are buying the emotional reward for having made the decision to work with you.
Clients are buying the change in their circumstances before they receive the outcome.
When a prospect becomes a client and experiences a shift in their identity, and you and your firm are attached to it, their perception of your value grows dramatically.
Taking the time to genuinely understand their psychology can radically change how you serve your market.
Case Study: Raspberry PI – From Education to Hobbyists and Professionals
Raspberry PI started as a computer science educational platform providing compact computer hardware to students and educators. I was an early user of their hardware kits and they were both educational and fun.
While staying true to its roots, the company now does a lot more including serving hobbyists and professionals looking for a broad range of HW and SW needs.
Key to all their financial growth has been their community involvement with dedicated forums, user groups, and their foundation. Raspberry Pi has been strongly involved in the ever-expanding movement to make things.
· The company has been deeply connected to their community from the beginning.
· The company has always put their members aspirations first and developed abilities based on demand.
· The company has built a very loyal following around emotional connection via the power of technology.
· The company has always held the believe – like its customers – that technology can solve humanities biggest challenges.
Two Natural Forces: Harmonizing Your Math and Their Psychology
Key choices behind your math include how you want to position yourself in the marketplace and your pricing, so prospects and customers always know you’re there to protect them and help them win.
Knowing where to spend marketing dollars that creates sustainable impact in the business and in your customers lives. Your math will instruct this knowing by pointing a beacon on what is working and what is not.
Communication is your secret weapon because it’s the first product your prospect buys from you – the idea that you can help them in a significant way by defending them in an uncertain world.
Getting these two major elements right is a conversation that unfolds over time as each side gets to know each other better and form a deeper relationship. The effort is worth the reward.
“Nobody cares how much you know, until they know how much you care.”
– Theodore Roosevelt
Step Into Knowing: Owning Your Math and Their Psychology
Knowing your math at every step means you have a clear foundation and a story about what’s possible.
Now you can create more of it.
Knowing their psychology at every step means you can make them safe in a chaotic world, help them win, and future proof their resolve because they know you get them better than anyone else.
Now they will share more about themselves and how you can help them.
Powerful when both sides work in harmony.
If this perspective resonates with you, contact me on LinkedIn or at scott@purplefinchgroup.com
Contact me HERE if you’d like to learn more about one of my 4-hour consults for tech CEOs. Schedule a free 30-minute conversation.
Stay focused. Keep disrupting. Be well.