August 24, 2002
Table of Contents
Quote of the Week
Featured Resource - NET MECHANIC
Staff Article -
MEASURING VALUE WHEN DOLLARS DON'T MAKE SENSE
- DEADLY SMALL BUSINESS MARKETING MISTAKES -PART 2
Thank you for subscribing to
the Peak Small Business Center
Small Business Newsletter!
If you prefer to receive the html version, let us know by emailing us at:
You can also view it online at:
Quote of the Week
Courage is the price that
life exacts for granting peace.
- Amelia Earhart
INTERESTED IN THE HOME BUSINESS NEWSLETTER?
If you're interested in subscribing or switching, a simple blank email will
do, as follows:
mailto:firstname.lastname@example.org - to switch to the home
business version and unsubscribe from the small business version.
mailto:email@example.com - to receive both versions of
Power tools for testing your website for HTML errors, browser compatibility,
MEASURING VALUE WHEN
DOLLARS DON'T MAKE SENSE
If you go out and spend $500
on advertising, measuring the value of the advertising you purchased is a
fairly straightforward exercise. You track your ads, know the response rate,
and you can see how many sales dollars were generated by your $500
But what about the value of a new accounting system? Adding two new
employees to handle customer service? Automating your email marketing
efforts? Implementing just-in-time inventory concepts?
With these types of investments it's easy to quantify the cost but very
difficult to identify specific dollar benefits associated with those costs.
It can be done, but sometimes it seems to require advanced degrees in
business and mathematics to carry out the analysis. Even then, you'll be
dealing with many factors that are intangible and defy quantification.
Even very large companies with seemingly bottomless budgets have
difficulties with this type of analysis. Most of the cost-benefit analyses
performed are really nothing more than very educated guesses backed up by
The problem with this type of analysis is the need to analyze in and of
itself. People, particularly those with lots of education, tend to
over-analyze. People working with large companies are worse because they are
usually in the position of having to justify an expenditure or requested
So how do you escape this analysis trap?
DEFINE YOUR GOALS FOR AN ACTION IN TERMS OTHER THAN MONEY
Let's take the example of adding two new customer service employees to your
business. It's a very natural tendency to attempt to attach an expected
dollar value benefit to this action. For example, "we will improve customer
satisfaction and increase repeat sales by 20 percent resulting in an
additional $200,000 in sales during the year."
While there is nothing inherently wrong with this type of goal, the focus is
misplaced. In order for this type of action to achieve the desired result,
you need to make sure the focus stays on solving the underlying problem, and
that is improving customer service.
If your customers are currently waiting 72 hours to receive an answer to
their question, solution to their problem, exchange of a faulty product, or
whatever their problem du jour is, your goal should be to reduce that
response time to something not only acceptable, but impressive. This should
be your overriding concern. Concentrate on the benefit to your customer
rather than the benefit you hope to derive in terms of increased profits.
Once your goal in taking an action is defined in these terms, measuring the
value of your expenditure becomes much easier. You will have accomplished
your goal when your response time has been cut to the desired level. You
WILL see an increase in profits but it will no longer be that important to
measure them. You will know your business is operating more efficiently,
your customers are happier, and you have made a net profit by taking the
action. You really do not need to know more.
Any time you are considering making expenditures to improve your business,
begin the process by identifying the problem that is causing you to consider
spending money on an improvement. Once you identify the problem, resist the
urge to place a dollar value on it. Isolate the non-monetary result of the
problem and make your goal the elimination of that result.
For example, let's assume you read about a software package that will
totally automate your email marketing campaigns, including handling
subscriptions and removal requests to your advertising lists. You are very
interested in the package. Ask yourself why? Is it because you just like
technology and this thing sounds really neat? Or is it because two of your
employees, or YOU, are wasting 10 hours per week maintaining your lists and
babysitting your mailings?
If you're wasting 10 to 20 hours a week maintaining lists and monitoring
mailings, define and measure the benefit to be derived in terms of the hours
saved by implementing the software.
There are several benefits to using this methodology to determine value.
First, it keeps your focus on solving problems. Profit is the ultimate
yardstick for measuring business performance, but profit is a high level
measuring stick. You need to get down in the trenches and concentrate on the
individual problems that are draining your profits in order to bring about
Second, it will help you understand your business better. By shifting your
focus from profits to actually running your business more efficiently and in
a customer-centric manner you will find that you're more in touch with
Third, it can improve your ability to SELL. As you get better and better at
identifying your internal problems and the benefits of solving them, you'll
find yourself having a more thorough understanding of how to sell to your
customers based on benefits rather than features and price.
This methodology is really about getting back to basics and simplifying the
way you view your business activities. Far too often we try to get too
sophisticated for our own good. We confuse ourselves with our own
intelligence. More often than not, simpler is better.
Copyright (c) 2002
DEADLY SMALL BUSINESS
MARKETING MISTAKES -PART 2
by: Cary Christian
Last week I gave you five deadly small business marketing
mistakes. This week I want to give you only ONE! But it's the biggest single
marketing mistake you can make. Drum roll please!
The single biggest marketing mistake you can make is:
NOT TRACKING YOUR MARKETING EFFORTS!
Let's assume for a moment that you are making most of the marketing mistakes
that you can possibly make, including the five deadly ones I gave you last
week. There is one infallible way to make sure that you don't make them for
very long, and that is by tracking your marketing efforts.
For example, if you aren't prequalifying your pay-per-click visitors, you'll
find you're getting lots and lots of hits and no sales. If you're using a
slow-loading flash presentation on the webpage you're sending visitors to,
you'll notice that few visitors venture beyond that page. If you're
purchasing guaranteed hits from a site that sends you lotto-validation
visitors, you'll find you're making no sales from the visits you get.
The knowledge you gain from tracking will allow you to cease using
advertising that doesn't work and shift your efforts to those activities
that produce the best results. I'm not going to belabor the point: you must
track your advertising. Tracking will save you thousands of dollars over the
long term. There is simply no excuse not to do it.
You can track most of your advertising using your website logs. For example,
if you advertise http://www.mydomain.com/test.htm on Overture, list the URL
It will be easy to find the Overture hits in your logs. You should then be
able to track this visitor through your website, including to your shopping
There is, of course, a lot of software available to make this process of
tracking easier for you. If you have web statistics software that produces
reports that allow you to track visitors through your site, your task will
be easier. You can also sign up with programs like AdMinder and ROIBot that
charge a small monthly fee for tracking services but provide you with all
the tools you need for complete analysis without much work on your part.
Regardless of how you choose to do it, it is critical that you implement
some method of tracking. You work hard to produce profit. Don't throw it
away on wasted marketing efforts.
Copyright (c) 2002
We hope you have enjoyed this issue of the
Peak Small Business Newsletter and found it useful.
Please visit our website at
http://www.peakconsultinginc.com to check out all the resources we
you need to contact us, please use the following links:
Our CEO -
Advertising Info -
To suggest content or ideas for articles,
click this link to
send an email.
You are receiving this newsletter because you
requested it on our website or through an advertising link on the Internet.
If you want to cancel your subscription to this newsletter, simply click the
following link -