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my last newsletter, I mentioned a lecture given by Bob Kierlin, Founder
and Chairman of Minnesota based Fastenal (Nasdaq:FAST). The Fastenal
Company offers bolts, nuts, screws, studs, and related products though
its 2,000+ stores. Mr. Kierlin started Fastenal in 1964 with five
investors each putting in $7,000 a piece. The company does more than
1.2 billion in sales. Mr. Kierlin discussed how his company continues
to innovate and he offered the group several simple lessons that made
his business successful.
I want to share with you his second lesson, which is to "Listen To Your Business."
And
it was certainly evident by Mr. Kierlin's responses to follow up
questions that the meaning of "Listening" to him was all about
measuring the important things in his business.
It was
inspirational to hear Mr. Kierlin's speak about Measuring because
I/Direct Contact has been talking with clients about business metrics
for years. We are also passionate about setting up Balanced Scorecards
that deliver the "Listening Tools" that company innovation is built
upon. Measuring, Balanced Scorecards and Listening Tools are the
platform for measuring RESULTS.
So was it a coincidence that I
recently came across an article written by Ken Magill for DirectMag.com
about measuring business success?
In the article, Ken
discusses innovation and defends his opinions by suggesting innovative
growth is tightly tied to measuring. Ken further supports his position
with additional research conducted by Jupiter Research.
Ken
writes, "Ahh---measuring. Yes the quantifiable, unemotional, accurate
attempt at measuring business things. Actually what we are supposed to
be accountable for in our businesses. You know---Results."
So
here is my "KISS" question ---What are you measuring? And I am not
speaking about getting a broad-brush answer or guesses. Do you know
what it costs your company to acquire a customer or piece of business?
Do you know what it costs your company to measure the important stuff?
In
fact, will it surprise you to learn Jupiter Research determined that
when given a series of fairly obvious success-gauging metrics to choose
from-such as revenue per customer, average order size, customer
acquisition and conversion rate, sales per book and costs per book -
and further when asked which of these metrics are used on used on a
monthly basis 50% of business-to-consumer marketers and 56% of
business-to-business marketers, picked "none of the above."
As Ken says---"let's just let those facts just sink in for a moment" ---
Yes,
can you imagine --- none of the above and unfortunately --- yes ---
this is very consistent with our/Direct Contact findings when we begin
a client engagements.
So here is a conversation that must be taking place between managers and Chief Marketing Officers (CMO's) across the country:
CMO: How's the e-mail marketing going, Bob?
Manager: Really great, Susan.
CMO: That's great. What's our revenue per subscriber these days?
Manager: High. It's very high.
CMO: Wonderful! How high? Can you peg a dollar figure to it?
Manager: Well, not really. We don't measure our campaigns that way.
CMO: Oh, well that's OK, I guess. What's our e-mail customers' average order size?
Manager: Average order size?
CMO: Yes, Bob, average order size: the average dollar amount our customers spend per order. What is it?
Manager:
Oh, right! That average order size! Of course! Well, it's about
average. You know, somewhere between high and low --- Right about ---
you know, um. --- in the middle.
CMO: Bob, you have no idea what our e-mail customers' average order size is, do you?
Manager [Bob now [pointing over the CMO's shoulder]:
Oh my god! Susan! Look out behind you!!
CMO [jerking her head around in fear]: What?! What is it?!
(A sole of a shoe is now heard running in the distance) [thump, thump, thump, thump, thump, thump, thump, thump, thump]
CMO Bob? --- Bob? Damn, he's gone again.
CMO How does he disappear like that?
But
to be fair to the CMO's and the Bob's out there, David Daniels, the
Juniper Research report's lead author, said the measurement problem
seems to mainly stem from a lack of resources rather than ignorance on
the part of business organizations.
Well that's good, better
to be under resourced than ignorant I guess --- but Mr. Daniels also
says --- "I think the big syndrome here is 'I've got to make the
donuts,'" referring to the 15-year Dunkin' Donuts television ad
campaign in which sleepy-eyed "Fred the Baker" says: "Time to make the
donuts."
Although I hear David, his excuse doesn't hold water.
And it doesn't hold water for ZOOM companies who have figured out how to Make the Donuts without excuses.
So
here is your second "KISS" test --- if you are finding and/or hearing
from your organization that your people do not have the time or
resources to "make the donuts",
I would suggest that you interpret
this as another signal your organization is headed away from the ZOOM
Loop and into the DOOM Loop.
Mr. Kierlin's said it best --- when
you listen to your business and you do not hear answers to the key
measurement questions --- it isn't time for Donuts! ---
it is time to get help now!
Till Next Time---
Onward---Upward---Believe---
Jeffery
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