Solving The Value Equation

Most Common Barrier to Small Business Wealth Creation

“100% of the time an owner has a sales problem operational shortcomings exist.” -Garry E. Meier

Believing you have a “Sales Problem” when operational shortcomings exist is the most common barrier to small business profitability that we saw in 2009 (At Ephor Group we interview more than 400 business owners per year). 

Commonly, inefficient financial and capital structures as well as ineffective operating models manifest themselves as a “Sales Problem.” But in reality an organization’s top priority is to improve the way it serves its clients. The second priority is creating an economically efficient operating model. And lastly, ensuring a organizational environment where people thrive takes precedent over adding sales resources.

Before focusing on sales (which typically means adding expensive, high-risk resources with a high probability of negative ROI) organizations commonly forget to ensure the following is in place:

1. Economically efficient customer acquisition model (An economically efficient model has been benchmarked against competitors and is more efficient). Also, an efficient customer acquisition model has some of the following attributes established:
   1. Recurring Revenue Model (long-term contracts, more than 2+ years client retention for 90% of clients)
   2. Technology is leveraged and enforces client retention and satisfaction
   3. The Customer Lifecycle (aka Maturity Model) is managed
   4. Pay-for-Performance policies and practices are prevalent
2. Cost-effective demand generation: creating a sales opportunity is cheaper that it costs competitors to create.
3. Brand equities in place that generate better margins.
4. Client account management practices lead to referrals and additional revenue opportunities:  It is easy for clients to get and see the value.
5. Retention is monitored, managed, and performing in the top-quartile.
6. Client satisfaction is known and the impact of client referrals generates substantial new revenues.
7. Alternative Distribution (aka Channels, Joint Ventures, and Strategic Alliances) is established and driving new monthly revenues (i.e. these revenue channels are “1-to-Many” versus “1to-1 direct selling”).

Outsourcing Business’ Alternative Distribution Landscape:

1. The NLTV (Net Lifetime Value) and Market Size for each target market (customer segment) is mapped and known.
2. Market and Competitive Intelligence as well as analytics are in place and lead to real-time decision making.

No services business will succeed with Direct Sales (including founder’s contributions) being greater than 50% of total income. Knowing and focusing on client profitability as well as alternative distribution is key to creating wealth.

Trends in HR Buyer’ Behavior

Fascinating report from our friends at HRmarketer titled: Trends in HR Marketing: HR Buyers’ Behavior — What to Expect in 2010, highlights purchasing behavior of the typical HR buyer.

A few key trends outlined in their report include:

• 31% of HR professionals report their company will hire 10-20 percent more staff in 2010;
• 26% of HR buyers plan on increasing their budgets for HR-related products and services in 2010;
• HR buyer participation in social media and the consumption of social media-delivered content such as blogs, social networking sites, white papers, research reports, podcasts and webcasts continues to increase;

Read the full blog post and download your report here:

Buyer Reports: Trends in HR Marketing: HR Buyers’ Behavior — What to Expect in 2010

Happy New Year From Ephor Group

To all our Clients, Friends and Colleagues:

Happy New Year!

We wish you and yours a healthy and profitable 2010, and a decade of prosperity. 

As you focus on getting the new decade off to a great start, let me share with you a couple of our recent publications which we trust will lend some guidance and support as you "Jump Start" the new decade.

1. “Small Business Playbook for the New Economy”
2. “Most Common Board Governance Mistakes”

We look forward to working with you in 2010! Again, thank you for your patronage and friendship.

Sincerely,
Garry Meier

Database List Sources for Marketing Lead Generation

The major database list sources for marketing lead generation for North American businesses come from data aggregators such as Hoovers/Dunn&Bradstreet, InfoUsa, or OneSource and are based off the NAICS.

The North American Industry Classification System or NAICS (pronounced "nakes") is used by business and government to classify and measure economic activity in North America. It has largely replaced the older Standard Industrial Classification (SIC) system.

Work began on NAICS in the U.S. in 1992 and the first version debuted in 1997 and was updated in 2007, toward NAPCS. The 2007 revision is available from the National Technical Information Service (NTIS) an agency of the U.S. Department of Commerce.

The NAICS system is designed to be somewhat compatible with the United Nations Statistical Office's International Standard Industrial Classification System (ISIC).

Brief summary of the major database list sources:

• Hoovers (which I am told will include HarrisInfo and Selectory) has 30 million North American corporations and organization records (65M worldwide) including the majority of businesses with more than $10M in annual revenues. Information is updated sporadically by verified users and by researchers annually. Hoovers is itself a large business with $125M in annual revenues and 380 employees and is located in Austin Texas, a subsidiary of Dunn & Bradstreet.   If you are looking to generate a list of companies then try Hoovers. Information Collected by Hoovers: a) · Company and business professional contact information, including name, title, address, phone number, fax number and e-mail address; and b) High-level company profiles and statistics, including industries and number of employees.

   

• OneSource (offers Hoovers information thru their tool) is run by 240 employees based in Concord, MA.  OneSource has detailed company statistics and contact information for 13M business records.  If you are looking at in depth or company profiling try OneSource.
  
• InfoUSA has 600 full-time researchers complete 20M calls a year and telephone verify their records. If you are looking for small businesses try InfoUsa (available for free at your local library under the title of “ReferenceUSA”).

There are other sources for when you need more detailed contact information from online social networking and Internet data aggregators such as:

• ZoomInfo, $10M in annual revenues, 85 employees located in Waltham, MA. Provides in-depth profiles on over 45M business contacts and 5M companies. Strong in Human Resources.
• Broadlook, is an online tool that scours the web and provides research, automated alerts, updates, and intelligence for sales professionals ($5M in annual revenues based in Pewaukee, WI). Great for really targeting medium to large organizations. 
• LinkedIn, has over 53 million members from 170 industries in over 200 countries and territories around the world. (approximately $17M in annual revenues based in Mountain View, CA)
• Jigsaw, $2M in revenues based in San Mateo CA and has a directory of more than 19 million business contacts added and edited daily by a dedicated user base of over one million.

Important notice: According to the Small Business Administration (SBA) there are roughly 30 million businesses with headquarters in the USA. Of these firms 99% are under several hundred employees.  The SBA reported that approximately 20k businesses (not a subsidiary and headquarters in the USA) existed in 2006 with more than 500 employees. Hoovers for comparison purposes lists 22.5k US businesses with more than 500 employees. According to Hoovers, every year your database faces significant attrition… here are a few more relevant statistics to keep in mind when building your marketing list:

• About 10% of all businesses close per year
• Approximately 600,000 new businesses open every year; less than 1% make it to $10M within ten years
• 21% of CEOs will change per year
• 20% of all addresses will change per year
• 18% of telephone numbers will change per year
• 17% of business names will change pear year

 

Criteria for evaluating database marketing list quality:

1. Accuracy – How accurate is the information?
2. Completeness – providing a breadth and depth of data (Do you need companies or contacts or both plus intelligence?)
3. Timeliness – How frequently is the information updated and refreshed?

A few more items to keep in mind when selecting your database list provider for marketing leads:

• What level of contacts (C-level or HR or Finance) are you looking for?  i.e. Hoovers is great for Owners and Finance and weak for HR and Sales for instance.  ZoomInfo is great for HR.  So are vertical solution providers like HRMarketer.
• There are industry specific list sources which may be a better fit than building a list based on the NAICS codes
• Make sure the list you are purchasing has email addresses
• Most list providers will provide a sample list for you to test quality