Gratuitous sorcery and incantations from actual Wizards.

Information can be objectively true but have no relevance to you personally.

This is the difference between objective reality and perceptual reality.

The opposite is true, as well.

You can perceive a person to be beautiful when that person is objectively average. You can also perceive information to be important when in truth, it is not.

But in perceptual reality, that person is beautiful.
In perceptual reality, the information is important.

Objective facts do not win the heart and mind. The magic that creates perceptual reality – personal truth – is relevance.

Relevance is a happy shout of Yes to the question, “Do I care?”

Just because a thing is true doesn’t mean we have to care.

The first time I taught publicly about perceptual reality was in 1994 when I was invited to speak to 1,500 jewelers in London at the 400th Anniversary Celebration of the Goldsmiths of the United Kingdom. Afterwards, Pennie and I were whisked away to the world headquarters of DeBeers to meet with Roger Van Egan, their director of marketing.

DeBeers wanted to know why my small handful of jewelry clients were selling 20 times more diamonds than the average American jeweler.

My answer, in a word, was “relevance.”

On date nights, my jewelers were on the radio speaking to couples in cars.

“The Christmas season is a GREAT time to get engaged. She’s going to want to show her new engagement ring to everyone she cares about, and most of those people are going to be conveniently gathered together at Christmastime. If you show up at the Christmas party of your girlfriend’s parents and she is NOT wearing an engagement ring, you get to listen to Great Aunt Gertrude talk all night long about her recent gallstone operation. But if your girlfriend IS wearing an engagement ring, the only thing Aunt Gertrude will want to know is whether you’d like another piece of pie before, or after you ride Cousin Larry’s new motorcycle. One more thing: the day she starts wearing your engagement ring is the day her Mom quits calling you “What’s-his-name.”

“But your ad didn’t say anything about why he should buy an engagement ring from your client! You said only that he should buy an engagement ring!”

Au contraire, mon frère. That ad made my jeweler fun, approachable, and most importantly, NOT SCARY.

But when courtship mode has run its course and the honeymoon is over, men who believe “actions speak louder than words,” tend to be poor communicators.

Seeds of doubt, disillusionment and divorce are planted when a woman thinks, “This is not the man I married. He doesn’t love me anymore.”

“Ladies, many of you will be fortunate enough this Christmas to find a small, but beautifully wrapped package under your tree bearing a simple gold seal that says Schiffman’s. Now you and I both know there’s jewelry in the box. But the man who put it there for you is trying desperately to tell you that you are more precious than diamonds, more valuable than gold, and very, very special. You see, he could have gone to a department store and bought department store jewelry or picked up something at the mall like all the other husbands. But the men who come to Schiffman’s aren’t trying to get off cheap or easy. Men who come to Schiffman’s believe their wives deserve the best. And whether they spend 99 dollars or 99 thousand, the message is the same: men who come to Schiffman’s are still very much in love… We just thought you should know.”  [Hard stop. No location tag.]

That ad on the radio said to men, “Buy a diamond from Schiffman’s and she’ll know that – unlike “other guys” – you are still very much in love. Now won’t THAT be grand!”

Jewelers today are intently focused on reaching engagement ring customers because there are slightly more than 2 million weddings in the US each year.

But there are currently 62.34 million married couples. Do the math. I did. And I quickly came to the conclusion that the jewelry business needed an objective way to categorize a diamond as an “Anniversary Diamond.”

So I made one up.

“You gave her an engagement ring at the beginning of your journey. You’ve come a long way together. Now it’s time to give her a big Anniversary Diamond.”

“What’s an Anniversary Diamond?”

“It’s a diamond that’s at least twice as big as the one in her engagement ring.”

“Why twice as big?”

“Because that’s how you say, ‘I love you twice as much today as the day I married you.'”

Do you remember what I said about relevance? If Mister “actions speak louder than words,” still loves her but can’t find the words to tell her, I’m confident he can still find his way to the jewelry store.

She wins, He wins, the jeweler wins, and I win.

The first rule of persuasion is this: you cannot take a person where you want them to go until you first meet them where they are.

When you enter the perceptual reality of the customer, you meet them where they are.

Now all you have to do is speak to the felt need – something that they already care about – and support your position with an objective fact.

Objective facts are always delighted to support you.

“Win the heart and the mind will follow.
The intellect can easily create logic to support
what the heart has already decided.”

If you’re interested in learning more about the best means for marketing your specific business, you can book a discovery call here.

You lead the world in client attraction, client acquisition, and client retention.
A prospective client has made an appointment with you.
I am invited to watch and take notes.
These are those notes:

1. In your first meeting with a prospective client, always have a white board or a pad of those giant “stickie notes” to write on. Bring your own colored markers.
2. If you are in their facility instead of your own, begin by asking if you can hang one of the 25 x 30 inch sheets somewhere so that you can make some notes and illustrate what you hope to achieve.
3. When the sheet is secure on the wall, say, “I appreciate that you took the time to meet with me today. I was once told that bad advertising is about you… your products and your services. Good advertising is about the customer, and how your products and services will make their lives better and happier. In that spirit, I want to NOT talk about me today. Instead, I want to answer, in plain language, all your questions and concerns about [INSERT THE NAME OF THE TOPIC IN WHICH YOU ARE EXPERT.] My goal isn’t to tell you what I can do for you. My goal is to demonstrate what I can do for you. I want to give you the solutions to every problem and every frustration you face. I want to give you the answers to every question you have about [INSERT THE NAME OF THE TOPIC IN WHICH YOU ARE EXPERT.] All I need you to do is name those questions for me.” And then write 1. in the upper left corner of your giant stickie note as you say, “Number one,” and then turn to the client, and smile, and wait.
4. Write down each thing they say and then read it back to them.
5. Resist the temptation to comment on what they say! Do not begin a discussion. Just write down each of their questions and say,
   “Awesome. Can you think of anything else?”
   “Thank you. Can you think of anything else?”
   “Excellent! Can you think of anything else?”
6. When they can think of nothing else they would like to know, turn and look at their list. Study it for a few moments.
7. With a different color marker cross out each of the numbers, “1. 2. 3. 4.” etc, and then write “1” next to the question that you have chosen to answer first. Write “2.” next to the question you want to answer second.
8. When you have renumbered their questions, tackle them in the order that you have chosen. When you feel you have answered a question sufficiently, ask “Shall we talk about this some more, or is it okay to move on?” When they tell you that it’s okay to move on, draw a line through that question to indicate that it has been dealt with.
9. As the prospective client sees each of their questions crossed off the list, they will have a strong feeling of “Organized Progress Toward Goal.” And if your answers were good, they will conclude that you are the most competent expert they have ever met.
10. When all their questions have been answered and you have explained exactly what they need to do to achieve all their goals and objectives, sit down at the table across from them and ask, “Where would you like to go from here? What would you like to talk about next?”

If you do this correctly, you will have talked only about their questions and their goals and their objectives. You will have said nothing about what makes you better than your competition.

Don’t talk about yourself. Talk about them, their needs, their questions, their goals and objectives. Don’t have a sales pitch. Have solutions.

The objective of this exercise is to gain a clear understanding of what the client wants, and then to make an honest evaluation about whether or not you are the right person to help them.

This is not a sales technique. You are just giving away a free sample of your advice.

If you are truly an expert, the customer will know.

And if you are not, the customer will know.

Book a call with Ryan Chute of Wizard of Ads® today.

Focus on Profit

As I mentioned earlier, the focus of my work and of this series is on improving the profitability of companies while also getting them to grow bigger. I’ve come to realize that the number of people willing to teach you how to increase your sales, sometimes at the expense of profits, is much greater than the number of consultants like myself who are focused on the money you keep. So for that reason, I encourage my clients to look at the bottom-line numbers rather than top-line sales numbers.

Maybe it is because sales numbers are used to measure the performance of a company more than profits, or that sales growth is considered more important, or maybe because without sales there can be no profit – clearly, the majority of focus is on sales. But consider this: even for companies that are growing rapidly and showing losses, the reason people invest in them is not because they want to lose money. They invest because of the future profit potential. Sure short-term investors may want to dump the stock on its way up before profits are realized, but the ultimate end game for all companies is their ability to generate profits, not just revenue.

For the small business, profits are what allow the owner to enjoy the fruit of their labor without having to sell the business. Let’s explore a real-world example: Would you rather own a company that did $7.5mm in sales with profits of $520k or one that did $5.5mm with profits of $1.25mm? Oh, and in case you are wondering, it’s the same company, and the lower sales year followed the higher sales year. What changed? In the second year, the company managed to optimize profitability – thus, the owner was able to both enjoy increased profits and reinvest the money for the next year. Now, imagine once sales are grown back to $7.5mm level, with all the efficiencies in place, what kind of profit would be generated? Something in the $2mm range is likely.

So how do you ensure that your company is both profitable and growing revenues? Well, you have to start with the product!

Whether it’s a physical, digital, or service product, the margin on the product needs to be better than 4:1. Or another way to say it is the cost of delivering the product (not including sales and marketing costs) needs to be less than 25% of the price that it will be sold for. By the way, I don’t mean 25% of retail price, I mean of the real average price you are able to sell the product – that might be the wholesale price if you rely on retailers. If your product costs more than 25%, then you are facing an uphill battle in generating profit with it.

Of course, even if you do keep the product cost at less than 25% of the sales price, you still have to deal with costs of sales and marketing as well as with costs of scaling. It is not unusual for every last gross profit dollar to be spent, leaving nothing for net profit. If you can find a product to sell that costs 10% of the sale price, then you are hedging your bet against the costs associated with sales.

So before you pick or develop a product to sell, do a reality check to figure out what your gross profit on it could be, and don’t be afraid to decide that selling something doesn’t make financial sense.

Next, I want to discuss the top line number and how it relates to the bottom line number.

Focus on Sales

Profits allow you to reinvest money in the company, have a nice lifestyle, and possibly take time off – but without sales, there can be no profit. This is probably why the majority of business consulting literature is focused on improving sales. I have to admit as well that sales needs to be the first measure of a business. I even subtitled my book to reflect a ceiling at a sales figure of $5mm, not as a profit of $500k. So let’s talk about sales for just a moment.

When expenses were low, and the business was just starting out, sales and profits were much closer together. Ok, sometimes profit may have been a negative number, but even then, it was probably closer to the sales number than the profit is today. So can you increase sales without increasing expenses? Can you get the numbers to be closer again? To some extent, you can. In fact, the preferred method of increasing profit is to hold expenses relatively steady while increasing sales. This both grows the business and increases profit. This is the first path I recommend to increased profits. I’m happy to leave the actual details of how to grow sales to people much better qualified than me to answer such questions.

However, sometimes it is not possible to ramp up sales, perhaps due to lack of funds needed, or a shrinking market, or some other reason. In that scenario, it is often still possible to improve profits through reductions in operating expenses.

If you can’t grow sales, let’s see if we can keep the same level of sales while reducing some of the costs of the business. This can be done by reviewing supplier and vendor contracts and renegotiating them to more favorable terms. It may be a reduction of overall staff size by eliminating positions that do not require a full-time person, given the volume of sales. It may be by moving the office to a cheaper location or shrinking the office by having more staff working from home. The last one is usually very popular with employees because it saves them commute time while also saving the company rent and overhead money. Changing vendors, such as credit card processors or ad agencies, is another good way to use competition to reduce spending and improve profitability. Using these methods, I increased profits by over 65% for a client who, at the same time, saw a sales decrease of 35%. Not bad if you are facing shrinking sales. You might as well be sure you keep more of your money than you did before.

Sometimes, no matter the savings achieved, decreases in sales will take away everything you have managed to save. So for that reason, I explain to clients that what we are doing is akin to changing tires on a moving car. If we could stop the car, we could make the tire change go much faster, but I have yet to meet a company willing to shut down for 6 months and have no sales at all while it is being retooled to grow larger. While the car is moving, changing tires means taking fewer risks on the road or, in your case, taking fewer risks with customers. It also means that, at least for a little while, the company is going to have to pay for several sets of tires, not just the ones on the car right now. This is why it is doubly important to try and increase sales while changes to the operating environment of the company are being made. The extra revenues will be used for temporary costs during this change period, after which profit should start to increase substantially.

So to summarize, don’t neglect sales while spending time and money retooling the company operations. You need one to support the other during the process, and when the company is ready for growth to the next level, you will be poised to grow very rapidly.

Focus on Growth

In a bonus chapter I discuss the different kinds of business models that your business may be right now. This series assumes that you want to grow the business from about $5mm to $20mm or more, and so there will be a focus on growth moving forward. This means that while the efficiency of the company can be improved by removing the roadblocks that are discussed, to really grow to the next level means reinvesting much of the profits back into the business. To get to the next level, a new type of employee – an expert – will need to be hired. Up to this point, the business could have been grown without any experts other than the founders.

Moving forward, experts will be needed, as well as contractors and outsourced roles discussed in previous posts. The process of retooling a company for growth will also incur some one-off costs. Standardized process and procedure creation, for instance, takes a considerable amount of time and may require specialized positions like a project manager, which may not have existed before. In the end, these expenses will allow the company to grow well beyond the current size, and efficiencies will kick in increasing profit potential, but I want to be very clear that if growth is the goal, then prepare for an increase in costs and a deferred payout to the stockholders. A company focused on growth can not at the same time be a lifestyle business with an ever-increasing profit ready for the owner to pull out of the business.

If you're ready to improve your website traffic, let us show you how we can help. Book a call today!

Entrepreneurs start businesses for many reasons. Some want to grow a business and sell it for millions, others want the freedom to run a business and control their own destinies, while others still want to create an annuity that will be within their family for generations. Whatever reason you started the business, it’s important to have an end game in mind. The end game doesn’t need to happen when you get old! For many business owners, the faster they get to the sale of the business, the sooner they can start to enjoy life more and work less. Of course, for some it actually means the sooner they sell this business, the sooner they can be back in startup territory with their new business opportunities.

Regardless of what the ideal end scenario looks like, it’s important to plan it out because the shortest path to each possible end game may very well follow a different route. A company that is built to sell will focus a lot more on fast growth and EBITDA. While a company that is built to provide freedom, both financial and creative, to the owner may grow much slower, but allow greater profits to be taken out by the owners.

Having a goal and, more importantly, a business plan that defines milestones for the company on its path to the goal helps to keep focus on the most important aspects of running a business. Quite often, it may feel like the owners may be working 60-hour weeks just to keep the business afloat.

Succession Plan

While we’re on the topic of planning, a succession plan is something that most small business owners don’t have. It may not be as important to a small business because the business is so dependent on the owner’s involvement for its existence, that without the owner, there is no business. However, once the business grows past $5mm, and certainly over $25mm, the dependence on any single person, including the founder or owner, should be greatly reduced. So a succession plan is not only nice to have once the business grows, but is very much needed for the future success of the business and the well-deserved payout of dividends or buyout payments to the founder.

You should at least go through a yearly exercise to determine what constitutes your role. Who would have to pick up each piece of your role, and what changes in the organizational structure would benefit the company if you were to suddenly disappear? This is a great exercise to do both for the what-if scenario of being incapacitated as well as for a planned exit.

The ultimate goal for most entrepreneurs when they are starting a business is hoping that their business, whether it’s a family business or sold to an investor, can outlive them. I’ve only met one person who didn’t agree with that sentiment in all my years. I suspect they saw their business as a pharaoh saw his kingdom, starting with him and ending with him! For everyone else, it’s vital not to neglect to have a succession plan.

Retirement Plan

Transition out of your business while you are still young enough to enjoy life if you can and start another one if you must.

While the topic of business succession is worth an entire book, I will say that most business owners are not comfortable with this topic and generally delay even conversations about it for years and years. It is important to remember that while the business is successful, employees are willing to follow management, and they in turn, the CEO or owner. However, if the owner waits too long in making retirement plans, the employees – including management – may lose confidence and take the matter into their own hands. I saw this unfortunate turn of events happen firsthand 20 years ago.

One of my clients was a $25mm+ company still run by the man who founded it 30 years earlier. He kept putting off retirement, and when he finally decided to retire, he expected that his management would happily buy him out to continue the business. Unfortunately for him, they realized that his only contribution in the last few years to the business was his name, and that in the end, his name was not worth the millions he wanted for the buyout. They didn’t see a value in the company other than the name, and so they left together, founded a company with a different name, and took almost all his clients with them. If you think about it, the less risky thing for a client to do is to go along with where the majority of the employees end up.

Of course, they were able to do this and circumvent non-compete agreements because by refusing his buyout offer, they effectively had to be laid off from a company that was shutting down, thereby avoiding contractual requirements. This is a real-world example of a retirement scenario going badly. The original owner, now in his late 60s, had to start from scratch with just his name and a couple of clients who were faithful to him. He had no staff, and more importantly, very little cashflow. Instead of living off the fruits of his success in Florida, he had to work harder than he had in many years. Don’t let that be you.

One related topic I want to bring up: Knowing when to let go. Once you’ve broken through $5mm and whether you are at $8mm, $15mm, or $25mm, you’ve now made it into a fairly exclusive club of successful business owners. So how long should you keep piloting the ship? Well, first off, congratulations! Your company has now grown to that size. You need to take a step back, pat yourself and your other founders on the back, and just be happy at the fact that you managed to do something most people can’t. That’s a good thing.

Now, ask yourself: Do you want to do the same thing that you just demonstrated you’re actually good at doing, again?

Meaning you sell off your stock to the other partners, or you start becoming a silent partner in this business, and you start up a new business. Or do you want to transition your role into something that you’ve not done, maybe you’re not very good at, and that is being a very high level, 50,000 foot view, “don’t stick your nose into operations” guy who only focuses on strategic investments and capitalization of the business, which not everyone is cut out to do.

Like I previously said about your employees, you may now be asking yourself to practice a whole different set of skills. There’s no shame in saying, “What I like to do is start companies. I got it to $25 million. I’m just going to walk away, get some money out of it, and I’m going to start up another one that’s again going to be this big.” That is a great way to look at using your best skills without having to take on responsibilities that have little to do with what you proved to be good at!

To learn more about how we can help you, book a call with Ryan Chute of Wizard of Ads® today.

Your bumper sticker reads, “tailgating won’t make me drive any faster.”

Yet, as you slam the car door behind your laboring wife, you realize… the only way we’re going to make it is if I floor it…

When we feel the weight of desperate situations, we’re prone to bend rules we’ve always held to.

Heads of Marketing feel this weight daily.

For decades, MBA programs have taught about the importance of building the brand perception of your potential client base, but the relationship between the CEO and CMO has scarcely changed.

CEOs solve problems, so when they don’t see marketing results within the month, quarter, or year, they feel the need to spring into action, sometimes by replacing the head of Marketing. Even though we all know it takes longer than 12 months to meaningfully build a brand, CEOs are accountable to Venture Capitalists, boards, etc. who are understandably anxious to ensure their money isn’t lost.

Defending against this tends to lead marketing heads down similar spirals:

Since brand building likely won’t show results (at least not trackable results) within the timeline they’ll be evaluated, Marketing Heads “drink the Kool-Aid” of sales activation marketing. They resort to using special promotions, sales, and product updates in an effort to receive an immediate, direct response from customers. This causes your customers to depend on only using your product/service when there is a discount or sale (depleting your profit). In essence, your tactics become less and less effective over time. Marketing Heads insist “it’s a numbers game” and expand their prospect list. To reach more people, they begin standardizing campaigns, therefore neutering any creativity in the process. During performance reviews, Marketing Heads assure there’s always something exciting on the horizon… at least, until they are left looking for the silver lining.

While it doesn’t have to be this way, stopping this spiral requires everyone on your team share a realistic, honest perspective.

Marketing Heads need to clarify during the interview process whether they’re being hired to build the brand for years to come, or if the CEO is stuck measuring results in the short term. CEOs and Boards need to understand that brand building takes time AND often cannot be tracked accurately in the near term. CEOs therefore need to hire Marketing Heads they believe in, and then make it their job to run interference for them so that they can work without worrying about the Board. The Head of Marketing needs to spend a comparable amount of time with the business’s potential customers as they do with peers. To expound on this last point… it is the job of your Marketing Head to build your company’s brand image TO THE POTENTIAL CUSTOMER.

When your Marketing Head spends more time with their peers than with customers, they begin marketing in a way that appeals to peers rather than customers.

So ask yourself, have I “drank the Kool-Aid” of sales activation marketing? Who am I marketing to? Future customers? Or the boss/board/peers?

At Wizard of Ads, we are all about being creative, entertaining, and telling your story in a way that makes your potential customers excited to do business with you. We refuse to drink the Kool-Aid!

Ready to stop drinking the Kool-Aid and start standing out with your marketing?

Book a call with Ryan Chute of Wizard of Ads®, and we’ll hook you up.

Last year, I predicted three things that all came true for residential home service companies. 

• Customers will be more cautious. 
• Replacement opportunities will not change. 
• Customers will be more price-sensitive. 

‍

We saw customers looking for repair solutions over replacement more often. Buyers were more inclined to leave the repair to the bitter end, sometimes to their own detriment. 

We also saw many customers look to DIY and handymen solutions as many residential home service companies struggled to shift to a repair mindset. 

We saw finance options used more often, more shopping around, and more customers trying to squeeze out every last drop from their home's equipment. 

‍

In 2024, we are walking into one of the toughest years in your company's history. 

With household debt DOUBLE that of the 2009 housing crisis, even people with good credit will struggle to get approved on finance terms this coming year as they run out of runway.  

With inflation persisting, people simply don’t have any more money and are not earning enough to catch up with the cost of living.  

And a looming election year always causes uncertainty, lowering consumer confidence. 

Companies who’ve not invested in a strong mass media brand story to build and grow trust, will face a tumultuous year of lead generation. 

If you're thinking of cutting your marketing budget in 2024, be sure to cut your revenue expectations in league with that decision. 

For those companies who haven't worked on their efficiencies and productivity, will face razor-thin margins or simply fail to close the sale. 

And for those companies who haven't shifted to a repair-first mindset, will face the inevitability of lower replacement conversions and, thus, revenues. 

Now, this doesn't mean that you won't have replacement opportunities. It just means that chasing replacement opportunities in your advertising is going to have you fishing from a small pool with small fish. 

‍

2024 Action Steps: Slow down your sales process and love the customers you are with. 

Don't try to smash your database too heavily. Be a farmer, not a miner. 

Look for opportunities to buy mass media. As your competitors retract, there will be deals to be had in speaking to the masses in a less noisy market. 

Build trust BEFORE they need you, and win the game before the game has even started in Google search results. 

You don't need more leads this year. You need more good leads to run your limited resources out to. 

A powerful brand campaign will get more people to know, like, and trust you BEFORE they need you. 

With rising costs of acquisition, a mass media campaign will eventually 4X your marketing spend. All you have to do is deliver on the promises made in your advertising. 

If you need help growing your business in a shrinking economy or improving your marketing efficiency for a higher Net EBITDA, give me a call. I specialize in helping residential home service companies become BIG brands. 

‍

To learn more about how we can help you, book a call with Ryan Chute of Wizard of Ads™ today