To you as a founder, details are important.
When you are generating revenue and incurring payroll and other expenses, making sure the books stay in balance seems like an obvious task. But, I continue to be amazed at the amount of “found money” to be had when young companies pay close attention to their billing and collections. All our newest productivity tools that incorporate multiple forms of payment have made it harder to match product or service deliveries with invoices and receipts. A single transaction may pass through multiple disconnected platforms. Paper checks are outliers. What is cash? The simple times are long gone. You can no longer avoid taxes by sliding a few dollar bills underneath the drawer and not ringing them up.
Sales and transaction automation have the unintended consequences of making it easier for creative marketers to come up with all manner of special pricing and promotions. But, they often don’t provide the back end support to reconcile who owes what at the end of any given billing cycle. A human in your shop has to “own” the process of matching up everything coming and going. And, there’s not necessarily a natural rhythm, e.g. each weekly period begins on Monday at 12:01 AM. All your tools run in real time 24/7, as does your online presence, and capturing a moment when all aspects of a transaction are in synch is not an easy matter. Retailers used to favor 13-month years, so that they could discern sales trends based on steady 4-week periods from month to month and year to year and have consistent expenses to boot. Can you imagine that today?
If you have a commissioned direct sales team, right there you have some human watchdogs making sure nothing they earned gets overlooked. But, their perspective of accounting pays scant attention to returns, allowances, discounts, and other minutiae that may impact their commissions negatively. Again, you as a founder must have someone who owns all those calculations and validates them.
You will no doubt agree that it is much easier to collect the proceeds from a sale already made than to find a new customer and close a new sale. Running a tight organization is time and attention well spent. You’ll get wounded often enough in the marketplace; there’s no need to compound that pain with self-inflicted wounds from inattention to detail. Turnaround operators are generally very good in these matters. If the gap they are trying to close is not too great, no amount is too small to be examined. They know there’s found money lurking somewhere. They’re not afraid to ask questions and run their own spreadsheets to double check what’s presented to them. I will admit, however, that if the gap is very large, take Sears for example, you can’t save your way out of a bottomless well.
Let’s take a bit of turn here in his essay. Suppose your startup is on the verge of breaking even but has not quite enough runway. You’re satisfied that you’ve squeezed every nickel you can, and you still need a revenue boost to survive. What details then become foremost in your decision making? Here are some possibilities:
Product: You think you have the product dialed in, but have you verified that with customers? You may be very close but not quite close enough to feel the pull of demand instead of having to lean hard on the push of selling. Put yourself in your customer’s shoes. Would you agree the product or service is 100% on target? Are you proud of what you are delivering? Are you better than your substitutes? Is your brand associated with success attributes? Are your customer reviews consistent with your own image of your offering? In a world where every service or product is subject to Google reviews, maybe Yelp, Facebook, and many more, the crowd has a strong vote on your outcome. In many cases, you may be just a few details away from getting it right. Don’t fool yourself. You have enormous data at your fingertips; use it to keep from bluffing yourself.
I’ve always been an optimistic champion of the output of any startups I’ve been associated with. At the moment I can’t remember in which one the employees awarded me a pair of rose colored glasses.
Pricing: Your original model on which you raised your funding has probably long since gone out the door, but your current one may require some tweaking. You may get away with significant revenue improvement by changing from a site license to a per-seat fee, for example, or vice versa. Even if you grandfather your long-standing customers on their current plans, the market might let you try something different. Look at how many industries use dynamic pricing to leave no dollars on the table when demand peaks. Consider all the rewards and points systems that create brand loyalty and stickiness and extract more lifetime value from a given customer. I just reserved a hotel room for a wedding, whereupon I discovered that I could buy more loyalty points to pay for the stay for less than half the price of the standard “member” discount. (I actually called them to verify that what I was seeing online was real. Naturally they told me they only had in a rather large hotel very few rooms purchasable on points, so they got my money on the spot. I’ll never know if that was true, but I’m happy.)
Distribution: How many sales people have you jettisoned in the quest to find someone who can make quota and exceed your expectations? If your business requires direct sales, you know you’re busted on that question. What alternatives are there? What channels might make sense? Is there a distribution model where you make money and everyone else in the chain also makes enough money to give priority to your offering? What magic can you conjure by rethinking your sales model to enable you to make money at your current volume?
Marketing: Here’s a big issue in the era of data-driven marketing spend. If you have a consumer product, you can use Facebook and Google to hit customers right when they have a motivation to buy your offering. You don’t have to wonder which half of your ad spend was wasted; you know precisely what targeting, timing, and media ring up the sales for you. Even B2B markets are easily prodded into action by smart social media spend. How about elections? (Sorry, had to throw that in.) There are vast permutations involved in testing ads, defining the targets, timing them, and developing the optimum budget. The details drive the outcome, but you can A/B test most of them, especially if you have decent technology to support the task. At the opposite end of the spectrum, there are the broad strokes of brand building and public relations. You’re probably not quite ready to put your name on an NFL stadium, but there is wisdom in careful spending in this respect. You won’t get the instant attribution that you’ve come to expect from social media campaigns, but, over time, if you are monitoring your sales closely, you should see some impact. If not, don’t be afraid to cut or modify the spend. Brand building is smart when it is funded by revenues; it’s not how you want to exhaust your investment capital.
Support: That’s where details mean all in terms of customer satisfaction and repeat buying. Having just moved from Texas to Georgia, I’ve lost count of the number of hours I’ve spent on call trees shouting “representative” in dealing with everything from insurance to license plates. Not all experiences were bad. I’ve written some poor reviews, but my very positive review for the Fulton County tag office in the Sandy Springs suburb has set a personal record for views. That was a black swan moment, apparently. I hope I didn’t suck too many people into going to that particular office; I went early and was fortunate to have my 500 pp of documentation all in order. I do not wish to go back. The business point is that the details of how you take care of your customers determines a big portion of your success. The smallest details matter – hold time, wait time, quality of interaction, solving or not solving a problem, etc. Even if you sell something relatively inert, someone is going to want help. Again, keeping a customer, and keeping that customer happy, is far more efficient than finding a replacement.
If you find a typo above, dock my pay for missing a detail.