One Number That Will Predict the Future of Your Business

ID-10067808 (1)According to research this one question can predict the difference between consistent sustainable growth and working harder and harder to just make a living:

“Are your clients likely to recommend you (your business) to their friends and colleges?”

Every business owner knows the “best” way to get new business is by referrals. Current clients have already experienced the quality and value of your work and should be shouting your praises.  It makes perfect sense right?  You do a great job for your clients.  They like you.  They trust you.  They should be referring people to you all of the time.  Yet when I coach business owners most are not happy with the quantity or quality of the referrals they receive.

Obviously happy satisfied clients are most likely to refer business to you.  Not only are satisfied clients more likely to refer people to you they are also more likely to stay with you and repurchase from you.  Buying additional services and referring others to you are two great ways to grow your business.  How happy and satisfied are your clients with your services?  How do you find out?

Survey Says

Typically to find the answer to the “how happy and satisfied” question you would survey your clients.  You could easily send out a satisfaction survey using a physical letter, or an email, or even conduct the survey by phone.  Even better, you could utilize one of the many web-based survey tools (Survey Monkey is probably the best known, but there are others).  A web-based survey is nice because they usually automatically provide the data for easy analysis.

At first glance, it seems like a fairly easy process. You don’t have that many clients to survey, and if you were to focus only on your top clients, the ones you would like to replicate, you are probably talking about 100 or less.  The harder part is creating the questions you will ask.  Who will create the questions?  Do you know what to ask?  Do you know how to ask, in a way that will not distort the truth about how your clients really feel?  How many questions do you need?  If there are “too many” questions how will that affect the responses? What do you do with the results?

An Easier and Better Way to Survey Your Clients

Before you do your survey, I highly recommend you read the book The Ultimate Question by Fred Reichheld.  He found that most customer satisfaction surveys do a poor job of predicting the likelihood of a customer either repurchasing from you or referring your company.  He decided there had to be a better way to quantify how well a company is serving its customers.  He developed the Net Promoter Score (NPS) methodology.

It is radically simple, yet has proved a useful way for determining satisfaction and loyalty.  It has become very popular among the Fortune 500.  Companies like GE, Southwest, Apple, Intuit and Schwab (to name a few) have all been using the NPS methodology; so you may be familiar with the concept.  It is based around asking customers a single question that is predictive of both repurchase and referral:

“On a scale of zero to 10, how likely are you to refer a friend or colleague?”

When customers answered this question with a 9 or 10, Reichheld discovered that they were statistically more likely to refer and/or repurchase.  He also found that the companies that score well on their NPS were more likely to grow than were lower-scoring companies.

Determining Your NPS
The scoring system is easy and straight forward.  It uses this scale:

  • 9 or 10 = Promoter
  • 7 or 8 = Passive
  • 6 and below = Detractor

Your “Promoters” are much more likely to repurchase and refer you to others.  Whereas the “Passives” are satisfied to the point they are not leaving, but they are more neutral toward your service and are not likely to refer you.  Your “Detractors” are the clients who are probably looking for another provider.


To calculate your NPS, take the percentage of your customers who are “Promoters” and subtract the percentage of “Detractors”.

What Does the Score Mean?

Reichheld did something rarely undertaken with traditional surveys: match responses from individuals to their actual behavior — repeat purchase and referral patterns — over time.  The NPS has proven to be a good predictor of future growth.   A single number, based on research that is a better indicator as to whether clients will promote you appears to be a great tool for all business owners.

When implementing the NPS method with my coaching clients, I have them add two follow up questions to create actionable ways to improve their score:

  1. Why did you give the score you gave?
  2. What can we do to increase our score?

As important and as predictive as the number is, as long as we were going to survey some clients, I thought the answers to the other two questions would help us understand where improvement work was required.  With just three questions you can know where to focus your attention.

Why NPS is For You

Just because the Net Promoter Score has become very popular among the Fortune 500, I do not think it is a theoretical exercise for MBA students.  I think this methodology is even better suited for small businesses with limited time and limited resources because it is:

  1. Simple and easy.  You can create a questionnaire and ask the question in just a few minutes.  Utilizing a web-based survey tool you should see a high response rate and quick turnaround time.
  2. Not expensive – The survey can be created, deployed and the data analyzed in house for the internal cost of labor.
  3. Easy to delegate – It can easily be done by your assistant or another team member.
  4. Predictive – Unlike most surveys, which ask respondents a litany of time-consuming questions that render interesting but often irrelevant data, the NPS methodology asks the question that has been proven to predict the likelihood a client will repurchase or refer you—the two things that fuel growth of any business.


Companies spend lots of time and money on complex tools to assess customer satisfaction. It turns out they’re measuring the wrong thing. The best predictor of growth can be captured by the question: How likely are you to recommend us to a friend?  This question is based on research in which a variety of survey questions were tested by linking the responses with actual customer behavior–purchasing patterns and referrals–and ultimately with company growth.

Surprisingly, the most effective question wasn’t about customer satisfaction or even loyalty per se.  In most of the industries studied the percentage of customers enthusiastic enough about a company to refer it to a friend or colleague directly correlated with growth rates.  Willingness to talk up your business to friends, family, and colleagues is one of the best indicators of loyalty. When clients act as references, they do more than indicate they’ve received good economic value from you; they put their own reputations on the line.  The NPS methodology is a simpler and more effective approach to understanding how your clients feel about your service.  If you would like a copy of our version of the NPS survey email me at and I will send you a copy.




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You Should Only Have One Ideal Client Type

5 Steps for Selecting Your Ideal Client

The majority of businesses, including yours, have a number of different types of clients.  You started out by taking on just about anyone who would agree to work with you. You may feel you are more selective now, but you still have difficulty turning away any business that comes your way. While it is great to have lots of clients, catering to too many different types of clients is the cause of multiple problems; it complicates both marketing and service delivery.

Different People

For example on the service side, you may:

  • Neglect your best clients by spending time with low value clients
  • Find it difficult to standardize and systematize your service model
  • Feel overwhelmed by trying to provide excellent service to everyone
  • Have capacity issues and adding new business means more work for you

On the marketing side, you may:

  • Get confused about the story you are telling each type of client
  • Struggle to craft a compelling marketing message that appeals to everyone
  • Lack focus and consistency in your marketing efforts
  • Not be getting the quantity or quality referrals you should

In my opinion, working with too many different types of clients leads directly to many of your time management issues.


Narrow Your Focus to Grow
By focusing on a single client type it is much easier to create a clear value proposition, a compelling marketing message, determine the right marketing channels for your target market, and create your repeatable client service model.

Talk to any successful business owner who focuses on their ideal client type and they will tell you that selecting, then defining their ideal client profile is the best thing they could have done. Why? Because trying to market to everyone, to create a message that resonates with everyone, to connect with everyone is not only extremely difficult, it is exhausting, ineffective, time-consuming and can be expensive. At the same time trying to service too many different types of clients makes it difficult to delegate work, is more labor intensive and leads to lower profits.


How do you choose your ideal client type?
Here are five simple steps to select your ideal client type and craft your ideal client profile:

1. Segment and analyze your client base – The best place to start when selecting who you want to work with going forward is your current clients. Review your current and past clients. List them in order based on who are the most valuable clients to you. I like to initially sort them by profit per client. During this analysis it is common to see the 80/20 rule in effect – 80% of your profits are coming from just 20% of your clients. Therefore, the 20% contain your most valuable clients – the type you would like to replicate.

While profitability is important when thinking about client value to your firm, I don’t believe it should be the only criteria. The great thing about owning your own business is you can work with whoever you choose. I also like to segment clients based on how enjoyable it is to work with them. We refer to this as physic income.  Other criteria I like to use are lifetime client value and potential for referrals and/or additional business. You should choose your criteria based on what you are trying to accomplish.

Once you have your criteria and have your initial segmentation, next look to see where there are common characteristics among your most valuable clients.  Characteristics like education, family status, employment status, and association memberships, to name a few.  Segment them into groups based on these characteristics. Each grouping or segment, has the potential to be your ideal client type and may become your target market going forward.

2. Describe your most valuable clients – For each segment of your current client base you think you might want to target you need to create a detailed description, known as a client profile. It is a clear representation of each client type in demographic, geographic and psychographic terms. Using our ideal client profiling tool you can also capture some information about their current situation, identity their biggest frustrations and aspirations. Creating this type of profile will help you “know” your clients.

3. Segment and analyze the marketplace – Now that you have an idea of who you might like to focus on, you need to look outside your business into the “market” to determine if there are enough similar buyers to achieve your business goals. Segmenting is the process of dividing a market into distinct groups of buyers that require different solutions, different messages and can be best reached using different channels.

A basic tenet underlying successful marketing strategy is that there are distinct market segments each of which has its own needs, wants, desires, and interests. Therefore your segmentation strategy will not only help you identify targeted opportunities, but may also identify sub-groups (or niches) that will respond to similar messages. List potential target market segments and analyze each based on potential. In some case you will have to estimate the target market size and for others you will be able to easily find data.

4. Select your future clients – This is the hardest part. Most owners find it difficult to decide on a target market (so they work with everyone). Based on what you learned from segmenting and analyzing your client base and your marketplace, you need to select who will be your future clients. This is where less is more. If you can narrow your focus to one type of client it will make your life easier and your business more profitable. Because you can create a systematize service model and one clear message that will resonate with your target market.

If you find it too difficult to select just one type, then please limit yourself to 2 or 3 for now. Create an ideal client profile for each. It is the key to unlock the door to communicating at a much higher level with much greater clarity. Without the profile, you’re guessing. Document it. Share with staff and strategic partners.

5. Refine over time – The world, your clients and your target markets are dynamic and constantly changing; not to mention your competitors. A key differentiator is your ability to know your ideal client. Selecting your ideal client type is an ongoing process at the best-managed businesses. Continue to gather data and information about them and at least annually analyze your client base and marketplace, and select or re-select your ideal client type.


Every business, not matter the size, has limited resources. How you use your resources to both attract and retain clients is critical to your growth and success. Chasing too many different types of clients (opportunities) is actually a barrier to sustainable growth, due to the time-consuming nature to service and find clients.

Your target market is the center of your marketing bull’s-eye. They’re the people or companies you have in mind when you create and develop your product or service and when you create your marketing communications. Your ideal client will shape the future of your business.



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Five Strategies to Improve Employee Motivation

Happy, motivated employees are something every business owner wants because those employees are more productive.  Job performance is a function of ability plus motivation.  Assuming your people have the ability, what motivates your employees?  Do you know?  If not, how can you motivate them?Motivated People

Motivating employees is a core component of most management training.  If you’ve had any type of training in management and motivation theory, it may have, in part, been based on the work of Frederick Herzberg.  He was a pioneer and a thought leader on the subject of employee motivation from the 1960′s through the 1980′s.  His theory asserts that the most powerful motivator in our lives isn’t money.  It’s the opportunity to learn, grow in responsibilities, contribute to others and be recognized for achievements.

These are important and fundamental concepts to understand if you want to improve your team’s productivity and performance.  Why?  Because now you know where to start when thinking about how to help motivate your people.  Your first job as a manager of people is to help them be more successful.  You do that by having clear goals and accountabilities, documented systems and ongoing training and development.  Then, utilizing behavioral coaching, you deliver positive feedback to recognize good work and habits.  In just a very short time, you’ll see your employees’ motivation and performance improve.

A contemporary, Daniel H. Pink, has written several books on the topic of motivation. One I would recommend is his book titled Drive: The Surprising Truth About What Motivates Us.  You can also watch the video of his TED talk right here (about 18 minutes) to get a brief overview of this theory:


Pink’s research shows that intrinsic motivation – doing things we enjoy, things that matter, things that are interesting or part of something important – is more motivating than extrinsic motivation. Extrinsic motivation is the carrot vs. stick approach – reward or punishment.  He cites the three most important intrinsic elements of motivation are autonomy, mastery and purpose.

Based the concepts outlined by these two experts, here are 5 strategies you can start to apply in your business to motivate your people:

  1. Achievement – put your people in a position to achieve their goals; nothing breeds success, like success.
  2. Positive feedback – recognize your people when they do things right.
  3. Autonomy – understand their need to direct their own work and determine how to leverage that in your business
  4. Mastery – provide opportunities for your people to learn and encourage their desire to improve.
  5. Purpose – connect your business purpose with each individual’s work and their own personal purpose and desire to contribute to something beyond just a job.

Just by employing these strategies, you have the basis of your operating system for managing and motivating employees.  Now, you have to put it into practice.  Make applying these five strategies part of your personal weekly goals and activities and you will see improved employee performance because your people are happy and motivated.

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How to Work ON Your Business

Chances are you’ve heard the phrase “Work on your business rather than in your business.”  One of the questions that I’m most often asked is “How do I find the time to work ON my business, when I am not able to keep up with all of the things I currently have to do?”

Running Out of Time

Working on your business means doing the strategic work of building a business – thinking, setting the direction, planning, and asking the right questions about your business and the future.  The other type of work in a business is tactical work.  It is making the sales calls, doing client work, paying the bills, supervising employees, attending meetings, returning calls, etc. – you know that endless list of things that comes up every day and prevents you from doing the strategic work.

If you spend all of your day focused on doing things inside your business, rather focusing on the outside, how can you ever move your company forward?

A lot of business owners feel that if you are making the sales calls, its business development and you are moving forward.  Yes, it is possible to grow your top line revenues by just focusing on tactical work, but as your business grows, so does its complexity.  If you’re not prepared for the added complexity, you won’t truly prosper long-term from that top line growth and profitability will suffer. You’ll never reach your entrepreneurial dream, but you will work harder and harder every day to just keep up.

Assuming that you want to build a business that does not depend upon you, then you have do more strategic work, which leads us right back to where we started, “How do you find the time to work ON my business?”

First, understand you can’t find the time to work ON your business.  There is no extra time just hiding or sitting idle in your already over-scheduled, over-committed calendar.  You have to make the time.  You’ll only make the time when you decide that it is absolutely essential for you to reach your goals.

Here are three strategies to help you increase the amount of time you spend working on your business:

1. Plan all of your work
2. Develop a routine schedule
3. Use a “Stop Doing” list



Have you ever reached the end of your day, you know you were busy all day, yet you feel like you have not accomplished a thing? Most people determine what work they do each day based on what “pops up” that day. You drift aimlessly from one situation that requires your attention to the next, without any real purpose. You react to client calls. You get distracted by e-mail. Your employee has an issue that must be discussed right away. You react and respond…you might say you spend most of your day “putting out fires”.

Why not plan all of your work – plan when you are going to meet with clients, staff, vendors, strategic partners, etc. so you can give each of them attention in a proactive manner. This also means planning when you will be doing your strategic work (a.k.a. – working ON your business). We create a master annual plan, a quarterly priority plan, a monthly activity plan and we each have a daily plan.

I plan my work each day. Each morning, I set aside approximately 15 minutes for what I call “Daily Focus”. I use that time to adjust and map out my day on paper using a simple tool, my Daily Prioritizer.

You might be thinking how does that Daily Prioritizer differ from a typical “To-Do” list? My Daily Prioritizer is both a tool and a philosophy. It is what I use to think about and proactively plan my day. The difference is, I’m scheduling and making strategic work my top priority. Strategic work first. After that is added to my daily schedule, then I add my tactical to-do list. I keep that list to my top three to six tasks for that day.


One thing almost all successful entrepreneurs and executives have in common is that they have a routine – they do the same things at the same time each day, consistently. They are creatures of habit. As we just covered, one such habit is they plan all of the work they do in advance.

To help facilitate that routine they set aside, specific blocks of time to work on specific activities. They arrive at the office the same time every day. They conduct daily and weekly meetings at the same time. They set aside time to work on specific strategic areas of the business. They get into a rhythm. This discipline is a strong habit that they develop over time. It allows them to get the important things done and move their company forward.

Developing the discipline to pre-plan your work and maintain a routine schedule will not only enhance your productivity, but also increase your free time.


Let’s face it, there is work you do every day that you should not be doing. It is very easy in your business to be extremely busy doing the wrong things. You have work that can easily be delegated to staff or outsourced.

Every day, you probably have at least one task or activity that drains and zaps your energy. Now, I want you to begin to keep a list of activities that you would love to stop doing = your stop doing list.

This stop doing list is just the starting point. You then need a strategy and plan to get that work off your desk. You will either delegate that work to staff, outsource it or just not do it. Something’s have such minimal impact on your business that they can be eliminated altogether.


One of my favorite quotes is from Marcel Proust: “The voyage of discovery lies not in finding new landscapes, but in having new eyes” or in other words, having a new perspective.

If you’re ever to become free of your tactical work and grow as an entrepreneur, something has to change, and what has to change is your perspective of how you view yourself and the work that you do in your business.

Reacting to what happens each day is not the way to reach your goals – use some of these ideas and make working ON your business a habit for your firm, and you will be amazed at the results.

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Why Do I Need a Plan?

Most business owners do not plan very often or very effectively. You have seen more than one study which proves that companies that plan are more successful than those that don’t. I know you already know planning works. Yet you don’t plan.

I am not trying to lecture or scold you, but rather point out the reasons why most business owners do not plan. Because when you understand the reasons you can then choose to do something about it. Here are the common reasons I hear:ID-100143639

  • Too small to plan
  • Do not have the time to plan
  • We are already successful, why do we need a plan now
  • Do not see the benefit of planning
  • Things change too fast to have plan
  • I don’t like planning
  • I do not know how to do business planning


Why Plan?
It doesn’t matter if you’re stuck, already in your comfort zone, or you desire additional growth, there are multiple benefits to strategic business planning. Here are four fundamental reasons why planning is not just necessary, but essential:

  1. Clarity – it compels you to focus on the long term.
  2. Working ON It – it allows you to recognize the need for and manage change.
  3. Prevents Commoditization – it helps you find and keep a competitive differentiation.
  4. Engages and Inspires – it enables you to communicate and involve your team in setting the direction and building of the business.


Planning is a Critical Strategic Process
Your strategic business plan is the plan you use as a road-map to execute your strategy and reach your envisioned future. This is not the business plan you would put together for financing. This type of plan is something you will actually use to run and grow your business.

It doesn’t matter if you prefer to call this type of plan a business plan, a strategic plan or a growth plan. Documenting your plan is extremely important, but understand the physical plan itself is not the most important part of planning. The real critical activity is the process of planning – the way you and your team create, discuss and update your strategic business plan.

The real value is in the ongoing process and not the physical document. Of all the tools available to the business owner, strategic business planning is perhaps the most powerful for moving your company forward and giving you the feeling you’re in control. There is an opportunity for every business owner to grow more effectively and more strategically by making strategic business planning a standard process in your business.


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