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3 Things You Need To Know About Your Marketing

Do you find yourself constantly confused by the marketing advice out there? It can be hard to figure out what you need to focus on when you’re being told to do 10 different things at once.

One of my clients asked me, “If there were only 3 things I need to know to make my marketing work, what would they be?” So I made this video.

Prefer to read rather than watch and listen? No problem – here’s everything I said in the video as text:

What I want to talk about today is basically what are the three things that you need to know about your marketing to make it work in your business. Actually, I’m covering this topic because in today’s coaching session, one of my clients asked me this question saying, “There is so much stuff going around this whole marketing thing. Everybody talks about 10 different things. Tell me Shweta if there are only three things I need to know to make my marketing work, what would they be?” So let’s go.

The 3 Things You Need to Know About Your Marketing

The first thing you need to know in your business to make your marketing work is the lifetime value of your customer. The second thing you need to know is what is the acquisition cost of your customer? What does it cost you to acquire one customer? The third thing that you need to know is whether this acquisition cost is less than your lifetime value of the customer or not. So these are the three things – lifetime value, acquisition cost, and how is this equation stacking up?

1. Lifetime Value

Now just very quickly lifetime value of the customer again is based on three simple things. On average what is the risk retention of your business, how long does one customer stay in your business on an average? The second thing is on average, how much would this customer spend over this period of lifetime? The third thing is what is the margin that you make on that spend and therefore what is the gross profit you make on this particular spend? Then you can identify what is the lifetime value of your customer in your business.

2. Acquisition Costs

As far as acquisition cost is concerned it again is based on certain variables. The first thing is what is the marketing spend on a particular channel for which your are getting leads? The second thing you need to know is how many leads are you getting when you are spending that money in that particular channel? The third thing is based on your sales team’s conversion percentage, how many clients are you getting from those leads? So again, what is the spend?  How many leads are you getting and how many are you converting, which is, how many people are actually buying from you?  That determines the acquisition cost per customer.

3. Compare Acquisition Cost to Lifetime Value

When you compare these two figures, which is the lifetime value and the acquisition cost, while the acquisition is cost is less than the lifetime value of the customer you have actually created yourself an unlimited marketing budget and your marketing is actually working. If you don’t know these figures then very simply put you are playing a game in a blindfold manner and I’m not a big fan of that. It just leads to a massive waste of time, money and efforts. You start questioning whether marketing is a cost or an investment and I promise marketing is an investment, if you know how to go about it in the right way.

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Top 20 Killer Sales Questions

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Making a sale is very much an art – the art of education and persuasion. Similar to a lot of art forms, there are those with a natural flair for it who can do it without even thinking. However, boosting your sales by becoming better at persuasion is an art that can be taught, can be learned, and can be mastered.

This set of 20 questions is a collection to keep in your arsenal for whenever you need to get that little bit more information to understand your prospect better and help them make the right choice.

Print them out, memorise them, and when you get stuck in a sales conversation, pull one of them out. You’ll be surprised how well #19 and 20 work!

1. What is the most frustrating thing to you about…..? Why is that?
2. What makes you say that? (Why do you say that? / Can you give me some background on that? / What draws you to that conclusion?)
3. What do you see as the purpose of the meeting exactly?
4. What do you think causes … ? (Do you have a perspective on that?)
5. What have you done so far to address the problem?
6. What would you do differently if…?
7. What is likely to happen if…?
8. What won’t happen if…?
9. What are the implications for you if…?
10. Who benefits most from…?
11. What would you like in the future? / In an ideal world what would you have? / What would success look like for you?  What would make this perfect for you?
12. Is anyone else involved in the buying decision?
13. What are the key drivers for the other people involved?
14. Have you spoken to anyone else about this?
15. What is the most pressing issue you are facing in the business right now?
16. What would be easiest for you?
17. How important is that to you?
18. Will that be enough for you?
19. I agree you should think about it.  Often when our clients say that it’s because there is a particular issue they need to address. Is that the case with you? 
20. What would we have to do to make you go ahead with this?

Do you have any killer sales questions that work for you? Post it in the comments!

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Target Markets Don’t Work

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Every good business owner knows that defining your target market is critical. However, what we’ve found, coaching businesses, is that most of them don’t know just how specific they should be getting so that their marketing is bringing in the perfect people. Let’s take the target audience “interior designers in London”. That sounds pretty specific right? Not specific enough. In fact, that’s pretty much a loose target.

Try to think of it this way: Marketing is not 1 to many. It’s 1 to 1, many times. What that means is that you should not be marketing to an audience. In fact, you want to communicate with an individual. And then you want to do that over and over again. When trying to define your target audience, instead define your target person. Who is your ideal customer or client? What kind of things do they like? What are their challenges? What are the ways that they communicate with the rest of the world? An easy way to begin defining this person is by taking an ex-customer or client – or even a current one – who was the best one you’ve ever had. If you can, interview them and find out as much detail as you can about their lives.

If you’re struggling to choose, here are a few rules of thumb when trying to choose that perfect person:

1) The target person should be easy to communicate with (responsive to marketing).

2) The target person should pay you a reasonable price with what they purchase from you (high average £ value).

3) The target person should not have a long lead time for decision making (short sales cycle).

4) The target person should be likely to come back and buy from you again and again (Repeat Business). Once you start building up that perfect person, you can then realise how to communicate with them on a personal level – and convince them that your product/service is the solution to their problems. And once you can convince that one perfect person, you’ll realise that everyone else who responds to your marketing is also another perfect client or customer.

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Customers are not interested in the lowest price

Are you constantly worried about your competitors undercutting you in price? Are you unsure of your pricing? If you are frequently adjusting your price to attract your customers, then you’re focused on the wrong thing. In this video you will discover the difference between price and value.

Once you master this value formula, you can finally charge the right price for the value you’re extending – and be confident in that price. Prefer to read rather than watch and listen? No problem – here’s everything I said in the video as text: Hi, this is Shweta and what I want to cover with you today is the difference between price and value. Now let me share a very quick story with you which happened over the weekend.

I went to a toyshop with my son and we wanted to do a little bit of splurging and indulging. He was looking at a couple of toys and he came up to me and said: “Mama, I want to buy this toy,” which was around £5, and to which I said: ”No, I’m not so sure I want to buy that one for you.” So he moved on and he picked up another toy, this time for £15. After studying the toy a little bit I said: “Let’s go for it. This looks interesting.

By the time we finished our shopping and we came out of the shop, my son looked confused. He looked at me and he said: “You said no for a toy which was £5 and you actually ended up spending 3 times more. Why’s that? I thought you’d agree for that £5 toy.” A very valid point from an 8-year old. What he was comparing was actually the price of 2 toys. What I was comparing, as a buyer, is actually the value of those 2 toys.

Now this is where I want you to think it through: what is the actual difference between value and price, because there are so many concepts floating about. People talk about “value for money” and they talk about “extended value to the customers”. I’m sure you are always thinking about these things. So actually what is this value, how would you define this concept?

The Value Formula: Value = Benefits – Cost

What I want you to do is jot this down so that it’s always handy for you to look at. The way I see value is value is equal to benefits minus cost. Right? Now, you, as a business owner, want to increase the value for your customers. There could be 2 ways or a combination of ways. But let’s keep it simple – 1 way is to actually reduce the cost and the other one is to actually increase the benefits. As soon as you do that, the value for the customer goes up. Now let’s also understand this: this cost, which your customer is incurring, is actually the price that they are paying for your product or service. That’s the cost for them. The benefit is the problem that’s getting solved by using your product or service, or how it actually helps them improve their current situation. That’s the benefit.

Now, what I’ve noticed is that most business owners are generally very keen on increasing the value for their customers, but they generally think about discounting the prices, reducing the prices or making offers, which actually brings the price down. Now that’s not the only way. In fact it’s a very expensive strategy – a very, very expensive strategy – for the business, which I’ll cover in a different block session other time. What you need to think, as a business owner, is, “How do I increase the benefits for my customers and communicate it loud and clear so that they know that these are the benefits that they’re getting.” In fact you should be charging the right price for the value that you’re extending. Never ever discount your services or products. That’s not the way you grow your business or increase the value for your customer. They are not interested in the cheapest price.

What they’re interested in is in maximizing value for themselves. That’s the key point that I want you to remember. And one more thing – the price that you charge has some relevance to the material cost, the time and effort that goes into extending that service and product, but that’s not the only thing. What you need to keep in mind is the extent of benefit that you’re providing to your customer. What it means in terms of emotional value, in terms of material value that they are getting out of your services and products. And then you need to set your price. Again pricing strategy and different concepts altogether but keep these bits in mind. They’re very useful when you’re determining your price or how you’re increasing your benefits to communicate value.

So I hope you got some value and some thought for your business to implement. And once again, make sure you look at this value formula very carefully, go back and see how you can increase the value for your customer. And make sure you undertake massive actions for massive results and on that note, I will see you again very soon, take care and have a great business.

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Get the money you already have

How much time are you spending (or more, wasting) on chasing up customers who owe you money? If you feel like you are working too hard to get them to pay up, then this video will help you refresh your technique for following up with aged debtors. Prefer to read rather than watch and listen? No problem – here’s everything I said in the video as text: Hi, this is Shweta and today I’m sharing with you a very simple, but very powerful technique of effectively chasing up aged debtors. I know it is not a very interesting topic but it is a very critical topic because it impacts 2 important things in your business:

  1. Profitability
  2. Cash Flow

What I’ve seen in most businesses is that the whole approach of chasing aged debtors is not very structured, it is very ad hoc, it’s not something that is measured or targeted and, therefore, it is an activity that simply happens and it is not very proactive. Generally speaking it is a very reactive thing to do.

There is a cash flow pressure so the business owner sits down with the team member in the accounts team and asks, “What’s going on? Show me what’s pending.” And boom boom boom, there is fire happening and some reactive actions get undertaken. That is not what I am after because being in the business should not give you that stress and should not result that reactive action.

It should be more proactive. Now chasing aged debtors or controlling your outstanding is a whole subject itself. There are things involved and I am not going to be covering all of that. But I want to cover with you 1 technique that I know is really powerful and will bring you a lot more in control of the situation.

Your Terms of Trade – don’t be someone else’s bank!

Now one quick distinction before I tell you that 1 technique is Terms of Trade – please be very clear as to what are your terms of trade. If you tell me, “Shweta 30 days is the credit time I give to my customers,” at least ask yourself a question – why not 21 days? If it is 21 days, ask yourself a question – why not 14 days? You don’t know what you don’t know and you need to at least ask the questions to see what answers come from there. I know that with most of our clients, we do try to push those credit terms.

I do not want you to be the bank for some other business.

I would much rather that that cash flow sits with you in your business so that you can deploy it in the right direction, rather than having those heart burns. So that is the first thing: please ask yourself this question and determine what is not negotiable beyond this point, where you cannot accept the credit terms to extend any further.

Build Your Outstanding Table

Now this should be very familiar to you because this is what I know you look at on weekly or monthly basis. First you have total outstanding, then you have a few brackets for days that the money has been outstanding: 0-30, 31-60, 61-90, >90 days. Now let’s take an example – £100,000 is outstanding in the business: 0-30: 40k     31-60: 30k     61-90: 20k     >90: 10k So this is the split within these 4 brackets. The first thing that you need to start doing is start measuring what is the current percentage split that you are seeing as far as this outstanding is concerned. So as in this example in the [0-30] bracket, the percentage split is 40%, and the other brackets are: [31-60] 30%, [61-90] 20% and [>90] 10%.

Now please make this distinction for yourself, it is a very important distinction. The 2 buckets towards the end – the 61-90 and the >90 day brackets – they impact the profitability in your business, because these are the clients who have not paid you even after 60 days. The chances of them paying is getting slimmer and slimmer. Let’s face it. That’s the problem. As far as the first 2 buckets are concerned – your 0-30 and 31-60 brackets – they are your cash flow buckets. In shifting a client, or a set of clients, from 15 days outstanding to 30 days or 40 days makes a huge impact on your cash flow. So these two is your cash flow, while the 61-90 and >90 day brackets are your profitability – both are very, very critical.

Set Your Targets

Now here is your one simple technique: you need to set your targets. I am not interested in reducing your overall outstanding figure (the £100,000 in our example). That is because having more outstanding is a sign of growth of your business; as you will grow, you will invoice more, your customers will be more and this amount will go up. I do not want you to set targets in terms of absolute amount; the target that you need to set is in terms of percentage. So what you need to do, you need to say, for example, my targets for the different brackets will change to:

  • 0-30 will go from 40% to 60%.
  • 31-60 will go from 30% to 33%
  • 61-90 will go from 20% to 5%
  • >90 will go from 10% to 2%

So this will be your ideal scenario, irrespective of the absolute amount because things will shift.

Decide Who To Chase

Now when you see that things are in line – perfect, brilliant, love that situation. However, if things are out of line – instead of 5% for 61-90, you have 20% for example – then you straight away have to take a look at your list of clients. Please, you are not looking the clients that owe you small amounts like £10, £100 or £500, because you want a quick impact in the given time and you want to look at the customers who are big in amount. Sometimes our team members – and even ourselves – we want to put ticks in the box and say, “Hey we have done/we have chased all of these customers!” No. What you want to do is eat the frog – actually chase customers who are holding onto the bigger money for your business.

So that is what you do, you start analysing, going after the big outstanding amounts. Similarly you start analysing the 31-60 as well. If it is out of the line, you start analysing and find out which clients have biggest amounts sitting in this bracket and for how long now they have been outstanding. If they are in a range of 35 days or something, that is OK, but if the are close to 60 days, your alarm bells should be ringing. You should be acting on it a lot faster, because hopefully you will be reviewing this whole figure set every week and not every once a month, or once every quarter.

Your Action Point

So your action point from today’s discussion is basically you need to see what is the percentage split that you have in your business right now, as far as your aged debtors are concerned, what is the ideal split that you would like to have, and set that target for your accounts team member or whoever is actually responsible for aged debtors. Make sure you are reviewing those figures every week. If the figures are out of line, what you do is analyse and focus on the big amounts, which are giving you that skew and let’s make sure that you and your team eat the frogs straight away without any further delay. So on that note make sure you will take massive actions for massive results and I will be in touch with you soon. Till then – let the action happen in your business.  

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Are your customers just a bit… different?

How often do you assume that what works for one customer will work for all your customers too? Unfortunately, a blanket approach for improving customer spending and loyalty simply does not work. Here’s an easy and smart way to segment your customer base so that you can undertake specific, results-orientated actions!

Prefer to read rather than watch and listen? No problem – here’s everything I said in the video as text:

Hi! This is Shweta and today, I’m sharing with you the importance of customer segmentation, and how this segmentation can actually help you take very targeted actions and get maximum impact from each one of your customers in a positive way. Now, I’m sure you will agree with me in that most businesses are built not just by acquiring new customers but also by retaining and nurturing existing customers. Otherwise, it’s a continuous treadmill exercise and very tiring.

Trust me: quite a few of the businesses end up doing that. Now, in my working with clients, what I’ve realized is that not very many businesses actually look at their customers’ spend analysis frequently enough or in the right way. And therefore they miss out the trick, and generally, if there’s a stress, they will talk about one blanket strategy for all the customers. Now, what I’ll share with you is an exercise that I did very recently with one of my clients because that’s what we do on a quarterly basis. We actually look at the customer base and we analyse the spending and see what strategies are required for each segment.

The 80-20 Technique

Now, just one quick pointer here, which will really help you. When you are looking at your customers, depending on the number of customers that you have, you might not be able to segment all of them. We’re looking to get quick results in a short time – that’s the whole idea of leverage. You might want to apply this technique of “80-20”. This is Pareto’s technique and what it really means is that you take look at the customers who are contributing 80% to your turnover. Generally, roughly 20% of your customers will be contributing 80% to your turnover. So what you really need to analyse is that 20% of customer base. That’s what you need to focus on because that’s what is giving you the biggest impact.

The Segmentation Matrix

Now, what we did together, this client and myself, was that we put this 20% into a very simple matrix. And on the X side, which is the horizontal axis, we wrote “Customer Spending” – the money that the customer is spending with you. So it’s the pounds. We set the left side as (Low) and the right side as (High). On the vertical axis we put “Margin”: the percentage that you are making with that client, the profitability of that particular client or customer. So this is the percentage and so the top was (High) and the bottom was (Low). So the first thing was: we looked at our 20% of customers which impact, more or less, 80% of the turnover.

So our top kind of set of customers and we plotted those customers here. So if a customer has spent high value with the business and that business has good margin, obviously that customer sits in the top right quadrant. So you write the name of the customer there, let’s call them (A). Now, there would be another customer who has actually spent less and actually also given very low margin. So that could be your (T) customer in the bottom left quadrant. There could be another customer who has actually spent less but the money that they have spent with you and your business would actually be giving you a good margin. So let’s say that is (B) in the top left quadrant. And then there’s the customer who has actually spent a lot with you and your business but every transaction that they make with you actually doesn’t give you much margin. So let’s call it (C), and put them in the bottom right quadrant.

business coaching servicesThe Star Customers

Now the customers who are sitting in the (A) section, and you will hopefully have multiple customers sitting here, are your STAR customers. They are the customers that you want to have more and more of. You want your (B)s, and (C)s and (T)s to all move towards this star class. They are giving you a good spend and they are giving you high margin as well. Now, once you’ve got them here, think about it practically. Do they need deals? Do they need some kind of loyalty strategies? Yeah, maybe… maybe not. They surely need some solid relationship management strategies here because they are your top-notch clients. They give you good spend and good margin.

The Increase Margin Customers

Now think about (C) category clients, which are actually spending high with you but the margin that you are making with them is low. Now, they are already doing good business with you but we are not making high margin from them. We decided, me and my client, that here we need to have more Operational Efficiency Strategies. And the idea of Operational Efficiency Strategies is to basically increase the margin on the business that we were already getting. So this is the idea to increase the margin so eventually these (C) clients move into (A) clients.

The Increase Spend Customers

When you’re looking at the (B) segment, which is my low spend and high margin, you want to get more business from them because anytime they give you business, your business or makes good money. So when you are looking at this category, you want to try to keep it simple, so the main thing you’re trying to do is increase the spend of people. There’s one main concept here you need to remember – attrition is not just when your customers stop spending money all together. There are 3 kinds of attrition.

  1. When they stop altogether.
  2. When they are actually spending less frequently with you. So they are spending money but they it’s just the number of times you do business with them is less.
  3. They are spending frequently with you but every time they spend, they are actually spending a lesser sum. So the average pound value is going down.

So once you have your customers sitting in this (B) bucket, you need to analyse further. People are spending less with you because they are not giving us business more frequently? Or is it because they are kind of giving us business, but they are not giving us the right value? What’s happening here? Once you split this further, you will say: “Okay, to increase the frequency, you will have more loyalty strategies kicking in, communication strategies kicking in.” If the issue is that they are coming to you very frequently but they are not spending enough. Then you need to be focusing on average pound spend strategies which could be cross selling, upselling and designing your strategies around that theme. So the whole idea is not to have one blanket strategy if you feel that your customers are not spending enough with you, or if there’s a little bit of inefficiency in your business. You have to think smart and act smart.

Split it! Segment it! Know which customers need what activation from you, what activation strategy is required, and what action is required. Because at the end of the day if you can measure in a very concrete manner, you can manage better and you can improve. And that’s the whole idea.

Your Action Point

So, here’s an action point that I would like you to implement from this discussion today. You need to have this matrix in your business and I want you to get your top customers who are contributing to around 80% of your business. Have a list of all those customers and put your customers in this matrix, once you know the margin that that customer is giving you. Plot those customers in this matrix and that should give you the answers. The same strategy is required for each segment. Once you do that you will see better actions happening in the business and more targeted results. Take massive actions for massive results.  

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