Customer Experience Design

innovation and the blind spot

Learn From Amazon’s Innovations and Walmart’s Blind Spot

innovation and the blind spotAmazon (NASDAQ: AMZN) should be concerned. Walmart’s (NYSE: WMT) resources are enormous. That gives Walmart time to work on their blind spot. Does Walmart leadership understand what makes Amazon so strong? Probably not. If they do, can they adopt it?

Walmart is changing quickly.  We’ve all seen all their ecommerce acquisitions and a lot of new initiatives they’ve launched and tested in the last few months. These included Bossa Nova robot in stores, Mobile, Express Returns, Scan & Go, Check Out With Me, and JetBlack premium membership.

Walmart is still the largest retailer by volume. Walmart has stores within 20 miles of 90% of Americans. Yet, they correctly perceive Amazon, and others as a threat.

This image from their shareholder meeting that was shared by Lauren Thomas from CNBC summarizes their concern:

walmart top 10 US Retailers 1970 now

 

Walmart doesn’t want to end up like Sears. However it might.

For all Walmart’s “digital transformation”, their ecommerce growth slowed down this quarter. Amazon continues to outperform expectations.

Let’s look at two similar initiatives from Amazon and Walmart to understand the differences.

Testing Walmart’s Scan & Go vs. Amazon’s Amazon Go

Cashier-less checkout was a big theme at ShopTalk. Nordstrom, Macy’s and other retailers are focusing resources to reduce this friction point.

Walmart executives presented their Scan & Go initiative at ShopTalk this year. Amazon launched Amazon Go in Seattle and is expanding. In e-commerce, retailers can either help customers increase their motivation or decrease the friction they encounter during a purchase. In retail, checkout has always been a significant source of friction. No one likes to wait.

Walmart’s Scan & Go Test

In January 2018, Walmart announced the expansion of their Scan & Go cashier-less checkout experiment to 100 stores.

Their promotional video looked promising:

This is how it actually worked.

The demo was “smoother” than the actual experience. During the test shoppers could use their phones with a mobile app or a separate device Walmart provided. As you walked through the store you scan the items added to your physical shopping cart. Then shoppers advanced checkout at a special lane near their current self service checkout.

The Scan & Go initiative was cancelled.  Walmart executives said they did learn from it.

What did Walmart learn? It seems like they were asking: If you reduce the friction in checkout will you sell more? No surprise! They likely weren’t impressed with the results of their test.

Walmart essentially moved an already not super popular self checkout scanner onto a mobile device. Self-checkout is an extra job for the customer no matter what part of the store they do it in.  They tested the same concept but moved it to a different location in the store.

Walmart tested a variation of what they were already doing. Tweaking, improving and optimizing variations leads to a local maxima, a dead end.

Let’s examine how Amazon approaches tests to see what we can learn about innovation and testing.

Amazon Go didn’t waste time and resources testing variations. They tested a variable first.

Amazon knows that customers don’t like to wait. It’s something that will never change.

“ I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. … [I]n our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.” ― Jeff Bezos

Amazon innovates with a central purpose – making things better for the customer.

Amazon, and anyone who visited a store with cashier-less checkout knows, that people aren’t excited about taking over the cashier’s job.  You can see that in every grocery store, Walmart, Lowes and Home Depot that have longs cashiered lines and a handful of people struggling at the self checkout. For stores with higher margins sales people can take over the cashier’s job for the convenience of customers.

Amazon, understood that “checkout” is a lousy experience. Checkout is the variable to test.

Amazon didn’t ask how to improve checkout. They asked: would people buy more if they didn’t have to use checkout at all?

Amazon decided to innovate around replacing the checkout experience. Ironically, it was so successful that there were lines of people to try the experience for themselves.

Amazon proved that customers love their no checkout innovation. Only now will Amazon will test many variations to improve on the concept.

Walmart has a serious blind spot

Walmart focused on optimizing store operations with technology.

Amazon focused on innovating on behalf of their customers.

Walmart doesn’t understand that they don’t have an ecommerce channel problem, Walmart’s problem isn’t Amazon. It isn’t even technology.  Walmart’s problem is a blind spot, a lack of interest in who its customers are. Walmart is struggling to transform from being experts in products, inventory management, supply chain, and logistics to becoming experts about their customers.

To succeed in retail today you need to start with the customer, not the product.

Amazon is beating Walmart, and others, because it knows its customers and takes as an article of faith that if they do right by customers they will succeed.

How about you? Every successful business has a blind spot!

Here’s what often happens:

A business has a unique approach, or a special emphasis that separates them from competitors so they commit to it. It makes them successful.

They eventually reach a plateau.

Most businesses double-down on what brought them success.

They do what they know how to do and improve on the margins. They press down harder on the accelerator..

They get stuck in that gear.

At first their innovation gave them momentum.

And then things began to level off.

They believe in first gear. First gear is where they feel comfortable.

Metaphorically, Walmart is accelerating in first gear.

Businesses don’t have automatic transmissions!  All you have to do is look at the top retailers slide at the beginning of this post.

Few companies ever find second gear.

Let us know if we can help you eliminate your blind spot. Let us work with you to innovate your way to success by reducing customers’ friction and increasing customers’ motivations.

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Watch now! [Webinar] How to Provide Consistent and Extraordinary Customer Experiences

Smart entrepreneurs know that in order to grow a business you must keep an eye on both being productive and being innovative. How do you continue to be reliable and efficient with your existing customers while trying to push the boundaries on providing the best customer experiences? What are the technologies, philosophies, and systems you need to have in place to keep pace with your competitors and best serve your customers?

After all, reliable service typically equals loyal customers.

In this on-demand webinar, presented by Comcast Business and EntrepreneurNew York Times bestselling author and customer experience expert Bryan Eisenberg, and Teresa Ward-Maupin, vice president of customer and digital experience for Comcast Business, uncover the best practices for improving productivity and reliability, while striving for innovation and growth.

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Personas for innovation

Empathy Propels Marketing Past “Optimization” to Innovation

Personas for innovationAre Personas Dead? According to a recent blog post  on the Convince & Convert blog, they would have you believe they are.

Here’s why that’s wrong:

If I tell you “the king died,” that’s a single-event data point. Information, if you will.
And if I tell you “the king died and then the queen died,” that’s two data points. It’s still information.

But if I tell you that “The king died and then the queen died of a broken heart,” that’s a story.
I’ve taken the two data points and connected them with causality, which makes the data meaningful.

What does this have to do with Personas and Big Data?

All data records events. Little factual tidbits of what happened. At best, sophisticated analytics can record chronological records or patterns of events.

The website visitor did this. Then this. Then that.

Or, patterns: male customers tended to buy this instead of that.

But notice that the reported chronologies and patterns are absent causality and intention. A series of events for a Web or store visit remain nothing more than an itinerary. And a pattern remains nothing but a correlation. There is no visible cause-and-effect relationship. There is no underlying shopper intention, and no meaning recorded by the data itself. That all remains for the marketer to provide via interpretation.

Humans cannot transform data points to insight about causality, intention, and meaning.  To do so they must turn the data into a story.

Stories with the buyer as the protagonist.

And “buyer as protagonist” is another way of saying “persona.”

Formal Vs. Informal Personas

Are we really saying that all marketers use personas and tell stories when interpreting data?

Yes.  

The data might be as straightforward as “the all-inclusive bundle is our most popular product,” combined with “A/B testing proves that a satisfaction guarantee boosted conversions by 30%”

And the story might be as simple as “this category of buyer chooses the satisfaction-guaranteed, all-inclusive bundled option because of its convenience and promise of risk reduction.”

Yet as simple as that interpretation of the data is, it still represents the creation of a story centered around a character in the form of a buyer.  

Unfortunately, because the creation of the buyer’s persona was implicit and ad-hoc, it was also under-developed.

And that’s where the problems come in.

The Downside of Implicit, Informal and /or Ad-Hoc Personas

So what’s wrong with letting one’s personas remain implicit or unconscious? After all, we process intuitively as we make sense of the data?

Short answer: Our Baked-In Cognitive Glitches.

We have two cognitive biases when we rely on ad-hoc implied personas:

1) We assume everyone is like us. They value what we value, they make decisions like we make decisions, and what appeals to us also appeals to them.

2) We work off of stereotypes and then engage in the fundamental attribution error.  When we see someone doing something, we tend to think it relates to their personality rather than the situation the person might be in.

Well-designed Personas help marketers avoid these cognitive biases. They show how a different temperament might engage in a different decision-making process. They look beyond stereotypical attributions to see the context.

The most important reason to use well-designed personas is prediction.

With a well-designed persona like a TV character, you can predict how they’ll behave.  Character explains a scenario better than demographic and even psychographic data.

For example, suppose a white, middle-aged, middle-classed, white-collar New Yorker found a lost wallet, stuffed with cash. What would you predict he’s likely to do?

Well, based on that, you’d have no clue, right?

There’s no way you can confidently predict behavior based on the demographics provided unless you assume that the person in question would do what you think a typical person would do. Which is to say what you’d do.

That’s exactly the situation with implicit personas that are usually drawn from demographics or based on our own intuitions of how we or typical person would behave.  

Now, if instead of giving you demographics, I told you that George Costanza found that wallet…

Now you can picture exactly what Costanza would do, even though it’s probably not anywhere near what you — or even a typical person — would do in the same situation.

That’s the kind of prediction those properly designed personas bring to the table.

And when it comes to crafting and optimizing customer experiences, that’s all the difference in the world.

Increased Data = Increased Need for (Better) Personas

Data and advanced analytics don’t and can’t change our hardwired need for a story as a sense-making tool.  

In fact, the more complex and unstructured our data sets become, the more robust our storytelling chops need to be to help us not only analyze, but make sense of that data.

The disadvantage of structured data is that the structure limits the answers you can pull from it. The advantage of structured data is that the structure suggests the questions the database is capable of answering.

So while unstructured Big Data presents greater opportunities for marketers, it also increases the burden of coming up with and framing the right questions to ask.

The better designed the persona, the easier it is to interpret the data as narrative. Personas help frame and ask questions about intent, motivation, and cause and effect.  These questions can then be posed to the data sets for not only answers but insights.

This is the only way to move from having data to being able to use that data to increase sales, market share, customer loyalty, etc.

Personas Increase Empathy and Move Marketing Past “Optimization” to Innovation

Without personas, marketers can certainly optimize what already exists to a local maximum. You don’t have to generate deep insight into the customer to run multivariate tests on different alternatives to the established patterns. Different color buttons. Slightly different calls to actions, hero images, page layouts, etc.

But you also can’t move past optimization to true innovation without thinking seriously about customer drives, frustrations, motivations, etc. Great customer experience design requires empathy.

And for empathy to be predictive, it requires fully fleshed out characters with which to work, just like you experienced with the Costanza example.

You can’t do customer design with just data alone and advanced analytical methods alone. In fact, neuroscientists have proven that analytical thinking inhibits empathy.

Your mind can do either one of these things, but it can only do one of them well at any given time. A marketers ability to generate customer insights come to live while in emotional storytelling mode, but fall dead while in number crunching analytics mode. And vice versa of course.

The point is, good marketers need both sets of skills, as well as advanced, rigorous processes for supporting and exercising those skill sets.

No one would ever argue that marketers don’t need or benefit from accurate and advanced customer data. Or sophisticated methods of statistical analysis aimed at sifting and sorting through that data, looking for patterns.

But that same level of rigor and defined tool sets also need to be brought to the storytelling side of the equation. Meaning that implicit and ad hoc personas just aren’t good enough.

And the more context-sensitive the situation, the more important simulation through storytelling and the use of formally developed personas becomes.

In other words, personas aren’t in opposition to data, they are the other half of the coin. Personas are a contextual tool for making data relevant and actionable. They are a bridge to understanding customers at a human level.

Without this, marketers are doomed. Without well-designed personas, it’s difficult to focus on customer experiences, rather than just products, price points, placement, and promotions.

So are personas still relevant in an age of data-driven companies?

Not only are they “relevant,” they’re becoming increasingly necessary for survival.

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What to believe about SEO in 2018 and beyond?

Search Engine Optimizers (#SEO) and Search Engine Marketers (#SEM)  like to throw around industry jargon. Ever feel like they are trying to make your head spin? Penguin, Panda, Possum, Hawk, these are names used for Google updates. Latent Semantic Indexing, Quality Score algorithms, schema, canonical, sitemaps, snippets, etc. It sure is easy to lose track of what really matters.

It is no surprise, we get a lot of questions about SEO. People ask us if something truly influences rankings after some SEO specializing in FUD (fear, uncertainty, and doubt) gets them worried. Large companies often have skilled SEO practitioners in-house but SMBs usually don’t.

We are not SEO practitioners. Jeffrey and I have always tried to optimize for the end searcher (relevance) not the search engine spiders. After all, search engine spiders don’t have credit cards. Our focus remains primarily on conversion rate optimization (#CRO) and customer experience since the late 1990s.

A few weeks ago I presented at my first search conference in several years, SMX Milan. The topic of relevance is again top of mind.

What do we know about relevance?  A few years ago Ping Jen, the head of Bing’s Quality Score team asked me to explain relevance to his team on a webinar. Google has also been a client, we helped their own SMB Adwords team to optimize what they do.

A new era in search engine history

Google has been working their way through the hierarchy of optimization since their founding in 1998. Any optimization hierarchy must prioritize visitors’ needs as they approach your site or Google you. You must do the same prioritization of your sales/ conversion goals:

I am going to keep this explanation as simple as possible.

Google made search Functional

Before Google, the search engine space was a mess. You would have to look through pages and pages of garbage results to find anything remotely relevant. Google launched with their PageRank algorithm that ranked results based on the links flowing to and from the page. That signal was used to make search engines truly functional for organizing the world’s information. It didn’t take long for SEO’s to start finding ways to game those results. Yet Google continued to enhance and optimize their algorithm.

Search becomes Accessible to the masses

As news of Google’s search quality spread more and more people started to use the search engine making content that was invisible previously more accessible. Google also wanted to index content that was largely unreachable and unreadable. Over time they enhanced their spiders to access different types of content (dynamic content, video, PDFs, scripts, etc.). Today you can use software like DeepCrawl to audit your site. That will determine what technical issues may be holding back your rankings.

Making 10 blue links more Usable

By the year 2000, Adwords launched and Google found a way to monetize the incredible value delivered to the public. Many of the signals they used to rank Adwords ads with their Quality Score algorithm evolved to be similar to those used to rank their SEO rankings. However, as Google kept on diving deeper into their results, they realized that 10 blue links were not a truly usable experience. So to enhance their usability, they added smarter widgets to their results pages.

The era of Intuitive search

By 2010, Google was already working on personalized search ranking. This is where the results based on personalization factors related to the individual. This was in an effort to make results more intuitive for the individual. Last time I checked, the largest set of Column Families in Google’s BigTable are related to Personalized Search (93 columns) versus only 18 column families for website crawling information. That is nearly 5x the amount of data used to personalize the experience.

Of course, you can see a similar pattern of optimization in the way Google leveraged their paid search Quality Score algorithm. When Adwords first launched it was whoever paid most, got ranked highest. By 2005, they realized this wasn’t the best experience for searchers so they added in Quality Score as a factor and it was initially based on click-through rate of the ads. How many searchers saw your ad and clicked on it? By 2007, they made Quality Score smarter by incorporating searchers behavior on Google’s own search engine results page. Did the user click and bounce right back to the result (assuming the ad was not of great quality)? Did the user come back and refine their query. Over the next few years they kept adding more and more searcher behavior signals. They had data from all the websites using Google Analytics, Android, and Chrome to leverage as additional “online” signals. They would know how your site performed for others based on all those signals and could rank it in organic and paid search based on those user experience signals. Over the last few years, they have encouraged “customers” to share and upload offline conversion data, and other data sources as well, to close the loop.

Search Intent and Persuasiveness go hand and hand

Former CEO of Google Eric Schmidt said that Google needs to replicate results from the real world. Basically indicating that links alone are not a great ranking signal because they can be gamed online.  Over the last few years, searcher behavior has evolved dramatically. We are now seeing more mobile and voice searches. Searches need to be more contextual and intuitive. Today we are finally seeing the next era of search results as Google enters the Persuasive phase of optimization. Recent reports from Wordstream and SEMRush confirm it.

These reports were so controversial, that they shocked the groups studying them. Wordstream who services over a million PPC advertisers and SEMrush, which is a must-have tool for search marketers, were actually surprised by their findings. They were trying to correlate what factors lead to higher rankings in the search engines. You should read the latest search engine ranking reports from SEMrush and Wordstream.

  “What we are seeing here is that people with stronger brand affinity have higher conversion rates than people without any, because people tend to buy from the companies they already heard of and begun to trust.” – Larry KimWordStream

“Direct visits are fueled by your brand awareness, so building a strong brand image should be an essential part of your promotion strategy.” – SEMrush, page 42 of 55

Amazon optimized retail product search before Google did. They focused early on how to leverage the “user” data and all their purchase history to bring them a better product search result than Google would. They have been focused on this for years.

This is why over 55% of retail product searches start on Amazon today. And they captured 55% percent of Black Friday online sales. You too can be like Amazon, even if you are a lemonade stand. All you have to do is consistently deliver the experience your customer wants.

SEO is simple if you understand the cognitive science behind it

If you recognize that what the SEMrush and WordStream reports mean by “strong brand image” and “affinity” means the same thing as “Reputation” and includes being “Remarkable” today,  that we have used to explain the 5 Rs of SEO for many years.

The 5 Rs of SEO are:  (1) Relevant, (2) build your Reputation, (3) Remarkable, (4) Readable, and (5) of sufficient Reach.

How search engines try to enhance Relevance:

Providing relevance to the individual is the #1 priority to the search engines. After all, they want to deliver a consistently excellent customer experience to searchers. If searchers are unhappy, traffic drops and  then advertiser revenues will fall.

Want some deep insights into Google’s Quality score calculations so that your ads show up higher and you pay a lower cost per click?

“Google has tons of additional data to help them decide which ad is most likely to elicit a click from that particular user based on the time of day, previous searches and many other factors. It’s a “Big Data” prediction algorithm and advertisers would do well to apply some of these same methodologies for picking successful ads to ensure users get value from their ads, Google is kept happy, and more sales are generated.” ~ Frederick Vallaeys, Co-founder Optymyzr Former Adwords Evangelist at Google

Google claims that they use over 200 different signals for their ranking factors. I don’t doubt that, do you? I took the liberty, with Frederick’s permission to bold a couple of phrases in his quote that highlight the secret to great rankings. What he is talking about is massive personalization and leveraging multiple data sets and signals in real time to deliver what Google thinks will be the best results.

Google’s Big Dataset

Google is now using more of their Chrome browser, Google Analytics, scanning Gmail and Android (location and app) data augmented with 3rd party purchase data. Purchase data is unconfirmed but we know Facebook uses that kind of data. These are becoming their primary factors because those factors cannot be gamed by SEOs. They provide a much better picture of what people do in the real world.

I encourage you to step back and think much bigger and more broadly about Big Data before taking an SEO’s advice about rankings to heart. While there are many great SEOs out there, many have not evolved since the early days of keyword stuffing and meta tags. They also count on you not keeping up with all the constant optimization tweaks Google does to their algorithms to keep you in FUD.

One of our clients, a $50+ million traditional retailer, recently realized that the agency they used for SEO were ripping them off. Martin MacDonald wrote about that time in My Secret SEO Strategy Guarantees Results… To summarize, he concluded that “If your business model requires that you hide techniques you are using to achieve results, you’re not selling SEO services, you’re selling snake-oil.”

Here is what you need to stay on top of the game:

What do you think Google knows about you from all the signals you might provide it based on your search query, map queries, click-through, Gmail account and other factors? If you think about all the types of datasets you can get access to when want to target ads on Facebook, do you think Google might have access to some of those or similar data sets? There is a lot of data available. I recommend you follow the links I’ve provided and familiarize yourself with offerings from Data.WorldEnigma & Acxiom. What kind of data sources would you want to use if you were Google to deliver the best most relevant results for your searching customers?

What is Readable for a search engine?

This is one area the search engines have excelled in over the last number of years. They can now index and rank all kinds of content they could not do in the early days. In fact, they are even coming a long way in computer image recognition as well. There are still ways a good SEO can enhance complicated websites.

 What traffic will you Reach?

You know those scammy SEO offers you get to rank #1 for a keyword. It is very similar to those “best selling” authors who pick a new category on Amazon and dump 20 sales through in a 3 minute period to be the best selling book of an obscure category for a moment in time. You do not need to rank #1 for keywords that no one is looking for!

Brand Reputation and being Remarkable is where it is at today & for the Future.

As Roy Williams wrote about the report’s results:

 SEMrush was one of the big names in online marketing who concluded that “direct website visits” are the single most important factor in determining your SERP [Search Engine Results Page] position. In other words, they announced that Google is impressed – and will reward you with higher SERP placement – when people go directly to your web page instead of merely choosing your name from a list of search results.

It makes sense, doesn’t it? Google is effectively saying, “If this is the company people think of immediately – and feel best about – in this category, then they must be the category leader.”

It seems the key is building awareness for your brand online and offline so that when they go to their browser they type in your URL. This can be done with a combination of great advertising, strong public relations, remarkable social media and an exceptional customer experience.

Advertising is a tax we pay for not being remarkable.

Many people reading the ranking reports will make the decision that they need to ramp up their advertising to type in their website directly. However. if all those people do is find a less than remarkable experience then the signals the search engines receive are that you are less than remarkable. Sorry, advertising only accelerate the inevitable.

Win the SEO game and earn the love of customers

The type of company that is going to win at the top of the search engines is one that drives a lot of people directly to their website because the search engine is detecting all these relevant signals:

  • People typing in “yourdomain.com” directly into the address bar
  • They’ll get there because they either heard of you from one of your offline ads or…
  • They heard and have seen great reviews and shares on social media about your business or…
  • Because you built such a remarkable customer experience that they heard about you from other people.
  • People share their experience with your brand through PR, review sites and social media.
  • People engage a whole bunch with your website and your email marketing.

We hope you will you be creating the types of experiences that enhance or detract from your being remarkable and enjoying a great reputation in the eyes of the search engines and your customers. Your customers do have credit cards, you know?

So if you are looking to get great results in 2018 and beyond, focus on building a great brand experience. Remember Be Like Amazon: a lemonade stand can do it.

This post originally appeared on LinkedIn Pulse.

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Caring As a High Growth Strategy

Conversion optimization is a growth strategy, but it’s been handicapped. We all know what a sales conversion rate is, it’s the ratio of sales opportunities to closed sales. So if you close 3 of 100 opportunities your conversion rate is 3%. Sadly, this too simple understanding is holding businesses back, and not just online.

To increase sales conversion rates you can do one of two things:

  1. Decrease Friction – remove the obstacles that slow, block or confuse buyers while they are engaged in the buying process
  2. Increase Motivation – help the buyers gain confidence that this is the right purchase, at the right time in the right place and from the right people

Decreasing friction is much easier and more immediate than increasing motivation. I’m certain that’s why in 2017 the average US eCommerce conversion rate is approximately 3%. The top performers convert closer to 15% and Amazon Prime Members convert at 74%. Funny, in 2003 it was controversial when we asked people to consider why their online conversion rates were below 10%. We still ask.

Decreasing friction can be accomplished short-term, with a cross-functional team and a modicum of intra-company cooperation. That’s hard to accomplish. It’s worthwhile. Please don’t stop there!

Increasing motivation requires empathy for the customer across the organization and a cross-functional team. It also needs a leader who advocates for the customer, irrespective of silo or department. That leader needs enough authority to influence buy-in so it’s probably not the head of a department like marketing or sales. This so much harder to accomplish. It requires a leader who cares more about the customers than the particular internal structure of their organization. It’s the juiciest part of optimization and it’s a long-term growth strategy.

Caring about customers is what stimulates agile innovation and optimization. Optimization creates a virtuous cycle of high growth. It primarily requires caring about the quality of the experience of customers and potential customers. We wrote about Amazon’s Four Pillars of Success and how customer-centricity is the first push on the flywheel in Be Like Amazon: Even A Lemonade Stand Can Do It.

What stops businesses from extracting the juiciest parts of optimization?

  1. Internal teams focused inwardly instead of on the customer. They need a leader to help them see the bigger picture.
  2. Internal teams don’t think they have to change. Nobody likes change. They need a leader who knows when it’s necessary.
  3. Internal teams see themselves relative to competitors but not relative to the gap in customer expectations. They need a leader with a different reference point.
  4. Internal teams perform against a benchmark. However, often that data doesn’t reflect the customer’s reality. They need a leader who is focused on optimizable qualitative inputs instead of quantitative outputs.

Not caring enough about customers is what stands in the way of dramatic growth. It takes courage and vision to do what it takes to help customers buy from you. If you’re not the CEO or an owner you probably can’t pull it off without their full support. If you are the CEO or owner we’d love to hear from you.  Do you have the courage and vision to sustain a long term high growth strategy?

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El Ascenso Empresarial A Largo Plazo

Crecimiento Empresarial – primero un resumen de los conceptos básicos.

El departamento de marketing y ventas son los responsables de la adquisición de clientes, pero no la experiencia del cliente. La responsabilidad es de persuadir a los clientes potenciales para comprar productos y / o servicios. Aquí es donde la mayoría de las empresas se centran en el crecimiento de su negocio. Es un error.

El Costo de Adquisición es crítico. Añada todos los costos de adquisición de clientes. A continuación, dividir por el número de clientes adquiridos en ese período. Por ejemplo, si ABC S.A. gastó $ 100,000 en marketing en un año y adquirió 1,000 clientes su Costo de Adquisición es $ 100.

Margen Bruto es el porcentaje de beneficio que queda después de pagar los costos. Si el margen bruto es de 40% y la venta promedio de ABC S.A. es de $500, su beneficio bruto es de $200,000. Les cuesta $100,000 para generar $200,000 en nuevas ventas.

Cada empresario responsable y ejecutivo se preocupa por Costo de Adquisición y Margen Bruto.

Peter F. Drucker fue considerado el mayor filósofo de la administración (también conocida como management) del siglo XX. Fue autor de más de 35 libros, y sus ideas fueron decisivas en la creación de la Corporación Moderna. El escribió: “El propósito del negocio es crear y mantener un cliente“.

Crear un nuevo cliente es fundamental. Es sexy.

Y mantener un cliente también es fundamental. No es sexy.

La retención de clientes, el mantenimiento y servicio a los clientes, siempre reciben menos atención. Las acciones que toman las empresas para reducir el número de defecciones de los clientes no se celebran.

El valor de la vida del cliente, es abreviado a menudo como LTV, es Life Time Value en inglés. LTV predice los beneficios de la futura relación con un cliente. La retención del cliente afecta directamente a los valores de por vida. Si la ABC S.A. gasta $100 para atraer a un nuevo cliente, obtiene un beneficio bruto de $100 en la primera transacción. Si ganan $100 cada mes durante cinco años ganan $6,000. Cuanto más larga sea la relación, mejor será el retorno de la inversión (es abreviado a menudo como ROI).

El patrimonio del cliente es el total de los valores de por vida de todos sus clientes actuales y futuros. Es la suma total de todo el valor que jamás se dará cuenta de los clientes. Los clientes crean todo el valor. El patrimonio de los clientes es el mismo que el valor de “Negocio En Marcha” de su negocio.

Valor de un Negocio = Patrimonio del Cliente + (Activos – Pasivos)

Compradores Transaccionales Versus Compradores Relacionales

Cada persona tiene un modo transaccional y un modo relacional de hacer compras. Los compradores transaccionales son aquellos cuyo mayor temor es pagar demasiado por algo. Les encanta la experiencia de compra. Van a comprar muchas empresas y sitios en busca de gangas.

No son leales a ninguna marca o negocio, buscan sólo el mejor precio.

El miedo más grande de los compradores relacionales es comprar la cosa incorrecta. Ellos ven las compras como parte del costo de la compra.

Buscan ayuda de expertos y pagan una prima por la guía de confianza. Confían en las relaciones, con marcas y personas, para ayudarles a tomar decisiones.

Cada persona tiene un modo transaccional y un modo relacional de hacer compras. Así que no se sorprenda cuando se vea en ambas descripciones. Usted es extremadamente transaccional en ciertas categorías de productos y servicios. Usted también es totalmente relacional en otros. En cualquier momento dado y en cualquier categoría dada, aproximadamente la mitad de todos los compradores estarán en modo transaccional. La otra mitad estará en modo relacional.

Los compradores en modo transaccional irán de compras por todas partes. Les encanta negociar. Las empresas a menudo concluyen, equivocadamente, que la mayoría de los compradores están en modo transaccional, porque son mucho más visibles y vocales. Pero en verdad, más compras son realizadas en silencio por los clientes en el modo relacional.

Esta equivocación es una de la las fallas que más dañan al emprendedor.

El Costo De Adquisición Del Cliente Depende De La Retención Del Cliente

Las empresas tienen un 60- 70% de probabilidad de vender a un cliente existente. La probabilidad de vender a un nuevo cliente potencial es sólo de 5-20%. – de acuerdo al libro Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance,,

Tenga en cuenta los datos públicos de Amazon. Las visitas de los clientes de Amazon Prime (ellos que pagan una suscripción anual por el privilegio de ser miembros  se convierten en ventas el 74% del tiempo. Gastan 300-500% más que los miembros no pri- meros. Aproximadamente el 60% de los hogares norteamericanos son miembros de Prime de Amazon.

¿Puede ver el impacto que el enfoque en la retención puede tener sobre los costos de adquisición?

Enfoque En La Experiencia Del Cliente Para El Crecimiento Sostenible

El estudio de Rockefeller Corporation encontró que el 68% de los clientes se van porque creen que las empresas no se preocupan por ellos.

Bain & Company encuestó a 362 empresas. Encontraron que el 80% cree que entregan una “experiencia superior” a los clientes. Cuando le preguntaron a los clientes, informan que sólo el 8% están realmente entregando. Bain & Co. llamo a este resultado la “brecha de entrega”. ¡Yo lo llamamos trágico!

Ahora fíjese en este dato bien conocido: que los líderes de la experiencia del cliente superan las valoraciones del mercado de acciones de los rezagados de la experiencia del cliente:

Cuando se trata de crecimiento, la experiencia del cliente claramente importa!

Ahora, yo quiero ser generosos y darles a los 80% de los ejecutivos el beneficio de la duda. Ellos realmente creen que sus empresas están centradas en el cliente Nadie discute cuando explicamos los cuatro pilares del crecimiento de Amazon.

Estos son los cuatro principios unificadores de Amazon:

UNO. Centricidad en el cliente.
DOS. Optimización Constante.
TRES. Cultura de Innovación.
CUATRO. Agilidad Corporativa.

¿Qué es lo que impide en el camino? Piense en lo siguiente como los cuatro principios disunificantes.

UNO. Un enfoque organizacional: los impide centrarse en el cliente. Los equipos internos se centran en el “rendimiento” de su propio equipo, no en la realidad del cliente

DOS. La aversión al riesgo: mantener el status quo, los impide de la optimización continua. La gente no percibe su proceso como roto y no ven el beneficio de optimización.

TRES. Un enfoque en los competidores – observan a los líderes de su industria – es lo que les impide tener una cultura de innovación. Las empresas se ven en relación con los competidores, pero no en relación con las lagunas en las expectativas de los clientes

CUATRO. La imputabilidad errónea -la necesidad de culpar a alguien- los mantiene fuera de la agilidad corporativa. Los equipos internos cumplen o exceden sus puntos de referencia internos, pero esos datos no reflejan la realidad del cliente

Las Intenciones Son Importantes, Pero Las Acciones Hablan Más Que Las Palabras

Nos juzgamos por nuestras intenciones, pero los clientes nos juzgan por nuestras acciones. Juzgarte por sus intenciones no es un peligro entre amigos. Un amigo conoce su corazón. Pero es un peligro muy real en los negocios. ¿Qué sucede cuando un posible cliente hace contacto con su empresa? ¿Conoce a su mejor empleado en el mejor día de ese empleado? Por supuesto no. Reúnen a un empleado promedio en promedio

O peor aún, se encuentran con un empleado por debajo del promedio en un día por debajo del promedio. Y entonces usted está confundido por esas críticas negativas.

Triste, ¿no? Sus intenciones, motivaciones y compromisos personales nunca llegaron a la fiesta.

En Resumen: Usted Tiene Un Negocio En Crecimiento. Pero Podría Crecer Más Rápidamente.

Usted necesita conocer mejor a sus clientes. Reconocer que los clientes tienen sus expectativas establecidas por las empresas ni siquiera en su categoría de negocio.

Como líder, hay muchas demandas en usted. Es difícil priorizar y mantener un enfoque a largo plazo cuando lo urgente interrumpe lo importante.

En lugar de centrarse sólo en el crecimiento de las ventas, los competidores, la tecnología o todos los cambios en su mercado, nos gustaría ayudarle a centrarse en las cosas que no cambiarán. Usted puede construir un crecimiento sostenible y saludable si se centra en las prioridades de sus clientes. Por favor creame. Si usted entrega una gran experiencia, mantiene un margen razonable, y permanece enfocado en sus prioridades entonces el crecimiento es inevitable.

En mis próximos artículos voy a hacerle un seguimiento de cómo uno se enfoca en el cliente y los fundamentales que los impacta.

Mientras tanto, por favor, lea Triunfar como Amazon: Hasta un puesto de limonada puede lograrlo. Hay muchos ejemplos de los cuales puede aprender. También siéntase libre de contactarnos si tiene alguna pregunta.

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Scaling Growth. A Gift To An Entrepreneur

 
I met you last week, at a conference. I decided to write this for you. You’re not alone. It’s not only you who will benefit. My gift to you is a top-to-bottom analysis of how growth is misunderstood. It’s not a generic gift. Most of us can tell the difference between a gift that meets an obligation and a carefully thought out gift that was meant especially for you.
 
Business Growth 101
Marketing and sales are responsible for customer acquisition but not customer experience. They persuade prospective customers to buy products and/or services. This is where most companies focus on growing their business. It’s a mistake.
 
The Cost of Acquisition (CAC) is critical. Add all the costs spent on acquiring customers. Then divide by the number of customers acquired in that period. For example, if ABC Company spent $100,000 on marketing in a year and acquired 1,000 customers their CAC is $100.
 
Gross Margin is the percentage of profit that remains after paying costs. If gross margin is 40% and ABC Company’s average sale is $500 their gross profit is $200,000. It costs them $100,000 to generate $200,000 in new sales.
 
Every responsible business owner and executive worries about CAC and Gross Margin.
 
Peter F. Drucker wrote, “The purpose of business is to create and keep a customer.”
 
Creating a new customer is fundamental. It’s sexy.
 
And keeping a customer is also fundamental. It’s not sexy.
 
Customer retention, keeping a customer, gets less attention. The actions companies take to reduce the number of customer defections aren’t celebrated.
 
Customer lifetime value (LTV) predicts the profits of the future relationship with a customer. Customer retention directly affects lifetime values. If ABC Company spends $100 to attract a new customer it makes a $100 in gross profit on the first transaction. If they make $100 every month for five years they make $6,000. The longer the relationship continues the better the Return On Investment (ROI).
 
Customer equity is the total of lifetime values of all your current and future customers. It’s the sum total of all the value you’ll ever realize from customers. Customers create all value. Customer Equity is the same as the “going concern” value of your business.
Value of a Business = Customer Equity + (Assets – Liabilities)
 
Transactional vs. Relational Buyers
 
Every person has a transactional mode and a relational mode of shopping. Transactional buyers are those whose greatest fear is paying too much for something. They love the shopping experience. They will shop many companies and sites in search of bargains.
 
They aren’t loyal to any brand or business, they seek only the best price.
 
Relational Buyers’ greatest fear is buying the wrong thing. They see shopping as part of the cost of the purchase.
 
They seek out expert help and pay a premium for trusted guidance. They rely on relationships, with brands and people, to help them make choices.
 
Every person has a transactional mode and a relational mode of shopping. So don’t be surprised when you see yourself in both descriptions. You are extremely transactional in certain product and service categories. You’re also wholly relational in others. At any given time and in any given category, about one-half of all shoppers will be in transactional mode. The other half will be in relational mode.
 
Shoppers in transactional mode will shop everywhere. They love to negotiate. Businesses often conclude that most shoppers are in transactional mode, because they are so much more visible and vocal. But in truth, more purchases are quietly made by customers in relational mode.
 
Customer Acquisition Cost is dependent on Customer Retention
 
Businesses have a 60 – 70% chance of selling to an existing customer. The probability of selling to a new prospective customer is only 5% to 20%. – Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance,
 
Consider that Amazon Prime customer visits convert to sales 74% of the time. They spend 3-5x more than non-Prime members. Approximately 60% of North American households are Amazon Prime members.
 
Can you see the impact that focusing on retention can have on acquisition costs?
 
Focus On Customer Experience For Sustainable Growth
 
The Rockefeller Corporation study found that 68% of customers leave because they believe that companies don’t care about them.
Bain & Company surveyed 362 firms. They found that 80% believe that they deliver a “superior experience” to customers. When they asked customers, they report that only 8% are really delivering.Bain & Co. calls that the “delivery gap”. We call that tragic!
 
 Now take a look at this:
 
When it comes to growth, customer experience clearly matters!
 
Now, let’s be generous and give that 80% of executives the benefit of the doubt. They genuinely believe that their companies are customer-centric Nobody ever argues when we explain the Four Pillars Of Amazon’s Growth.
These are Amazon’s four unifying principles.:
1. Customer Centricity,
2. Continuous Optimization,
3. a Culture of Innovation and
4. Corporate Agility.

What Gets In The Way? Think of the following as the four disunifying principles.

  1. An Organizational Focus–  keeps them from Customer Centricity. Internal teams are focused on their own team’s “performance”, not the customer’s reality
  2. Risk aversion—maintaining the Status Quo— keeps them from Continuous Optimization. People don’t  perceive their process as broken
  3. A Competitor Focus—watching the industry leaders—keeps them from having a Culture of Innovation. Companies see themselves relative to competitors but not relative to the gaps in customer expectations
  4. Misplaced Accountability—the need to place blame—keeps them from Corporate Agility. Internal teams meet or exceed their internal benchmarks but that data doesn’t reflect the customer’s’ reality
Intentions Matter, But Actions Speak Louder Than Words
We judge ourselves by our intentions, but customers judge us by our actions. Judging yourself by your intentions isn’t a danger among friends. A friend knows your heart. But it’s a very real danger in business. What happens when a prospective customer makes contact with your company? Do they meet your best employee on that employee’s best day? Of course not. They meet an average employee on an average
Or worse, they meet a below-average employee on a below-average day. And then you are confused by those negative reviews.
 
Sad, isn’t it? Your intentions and motivations and personal commitments never quite made it to the party.

You have a growing business. But it could grow more quickly.

You need to know your customers better. Recognize that customers have their expectations set by companies not even in your category.

As a leader, there are a lot of demands on you. It’s hard to prioritize and maintain a long-term focus when the urgent disrupts the important.

Instead of focusing on only on growing sales,  competitors, technology or all the changes in your marketplace we’d like to help you focus on the things that won’t change. You can build healthy sustainable growth if you focus on your customers’ priorities. Please believe me. If you deliver a great experience, maintain a reasonable margin, stay focused on your priorities then growth is inevitable.

Please read Be Like Amazon: Even A Lemonade Stand Can Do It. There are many examples you can learn from.  Also feel free to reach out if you have any questions,

 
 
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A Disturbance In The Force Of Customer Centricity #CX #CRO #GROWTH

The sales team is having a hissy fit. They proclaim we’re 11% ahead of goal and we’re in the slow season!  Why are you making life more difficult for the sales team? This change project is unrealistic! None of our competitors do better than us!  It’s not broken, why fix it?

There’s a disturbance in The Force.

Ten seconds into our call I hear that Chuck, our client who owns a thriving $28 million business, is shaken up. We’ve been working together for almost three years. It’s not the first time we’ve met resistance to what the organization calls The Customer Rules Initiative.

In almost three years we’ve rolled out eleven important changes and dozens of small improvements. The Customer Rules Initiative has helped our client grow beyond their expectations.

Chuck is second guessing his twelfth change. The pushback on this change project is almost as hard as the first project where we decided to put all the information a customer needed on the website. The sales team was in open rebellion. They couldn’t imagine why anyone would call if we answered all their questions online. They were wrong then, they’re wrong now. Being wrong is human, acknowledging it and pushing beyond it is hard.

How Do You Stay On Track?

My job is to remind Chuck why the Customer Rules Initiative matters. First I listen. I listen for about half an hour. This has the desired calming effect.

I remind him of his favorite quote: “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” – Sam Walton

Chuck is listening, that’s good. The problem is real. We have to fix it.

Chuck is committed to what we teach as The Four Pillars of Amazon’s Success:

  1. Customer Centricity
  2. Continuous Optimization
  3. Culture of Innovation
  4. Corporate Agility

If you’re a growing company it’s hard to argue with any of them. Intuitively every business owner knows they need all four pillars, they are unifying principles.

Funny thing is that Chuck was the first client we drew the flywheel for. We published that flywheel in Be Like Amazon: Even A Lemonade Stand Can Do It

Chuck’s the guy that pointed out that The Force that propels this flywheel is Customer Centricity. The gap between customer expectations and customer reality is what needs to inform change.

The Force = Customer Centricity = Caring about the customer’s perspective

What Caused The Disturbance In The Force?

After almost three years of continuous improvements, why don’t they just trust us? If it were only that simple.

We came up with the twelfth change the first month we engaged. We’ve been putting off taking action on it since then.

A few months ago while visiting with Chuck and his senior executives at an offsite retreat we needed to print out several documents. The hotel couldn’t accommodate us. Bryan, my business partner, ordered a printer using Amazon’s Prime Now. Less than an hour later we were printing.

Bryan decided to point at the elephant in the room. We can get a printer here in an under an hour, why exactly can’t the sales team always respond to an inquiry within two business days? What do your customers expect?

Sales Team Response Time

In our first draft of our Buyer Legend, the narrative originally read that the customer was delighted because sales team responded in four minutes. That draft was abandoned. Two business days was substituted. They didn’t know their actual response time but anecdotally we estimated it averaged 2-4 days. We didn’t win this battle but we did insist on compliance with updating Salesforce. We now know that they respond to 87% of leads within two days. Of course, there are automated emails that are intended to follow up.

Yet, customers are human. Humans want what they want now. Not later, not even in five minutes. We want it now!

A New Goal –  5 Minute Response Time

After a long discussion, we agreed to tackle the twelfth change. We agreed that customer expectations could be unrealistic but we could meet that challenge. It helped that this time we had internal data to back us up. Leads that were reached by phone the same day closed a little over 3x the leads that took more than a day to respond to. Leads are expensive! We also reminded them of The Lead Response Management Study by Professor Oldroyd, a Faculty Fellow at MIT.

The new buyer legend says: “John (the prospective customer) is delighted because the inquiry was responded to immediately. John says “if they respond that quickly to an inquiry I bet they do that for customers too.”

Let’s examine why this change makes sense based on the unifying principles of Amazon’s Four Pillars Of Success:

  1. Customer Centricity – immediate response is what the customer wants and expects
  2. Continuous Optimization – be better today than yesterday is always the way towards our new goal
  3. Culture of Innovation – find solutions and embrace change to improve customer experience
  4. Corporate Agility – work to become more nimble and react to changing customer expectations

The Sales Team Rebels

This change is what the sales team was up in arms about. They missed the part where the sales coordinator, a new position, made the call answered a few questions, asked a few questions to qualify the prospective customer and scheduled a follow up with a sales person.

What we had was a failure to communicate. Chuck assumed the sales team reread the Buyer Legend carefully. The did not. Crisis averted.

Publishing a new Buyer Legend means employees scan quickly for changes. There are always minor changes highlighted but major ones are deliberately not. That is supposed to encourage careful reading.

Disturbance In The Force A Post Mortem

There are four forces that pull against the unifying principles of Amazon’s Four Pillars of Success:

  1. Organizational Focus
  2. Maintaining Status Quo
  3. Competitor Focus
  4. Misplaced Accountability

We could call them disunifying principles.

Let’s examine how they almost derailed the twelfth change:

  1. Organizational Focus – the sales team metrics were focused on their own team’s “performance”, not the customer
  2. Maintaining Status Quo – the sales team didn’t perceive their process as broken
  3. Competitor Focus – the sales team saw themselves relative to competitors but not relative to the  gap in customer expectations
  4. Misplaced Accountability – the sales team was exceeding sales goals, an internal benchmark, but that data didn’t reflect the customer’s reality

Happily Ever After?

The sales team was asked to reread the Buyer Legend and some minor edits were made and agreed upon. The twelfth change is underway and initial results are positive. We’re nowhere near the 5-minute goal but our motto is #BeBetterToday. Nearly every lead is having a conversation within the same day as their inquiry. The hero of a Buyer Legend is always the customer. Chuck is unshaken in his faith that when he takes the customer’s perspective things work out well in the long term.

Do you have faith in The Force?

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The Red Screw & the Four Pillars of Amazon Success

This week we talk about the incredible business impact of a red screw.

Hopefully, you will find ways to apply Amazon’s Four Pillars of Success to your business and accelerate your business model’s flywheel. Check out the flywheel in  Be Like Amazon: Even a Lemonade Stand Can Do It.

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Bryan Eisenberg Tells Shep Hyken The Secrets of Amazon’s Success [audio]

How can your business be more like Amazon?

Shep Hyken interviews Bryan Eisenberg co-author of the book, Be Like Amazon: Even a Lemonade Stand Can Do It.

First Up:

Shep Hyken’s opening comments focus on how any company can improve their customer service, by thinking about how they can become more convenient for their customers. The reason that Amazon has become so successful is that they have developed a way to create customer convenience. Shep gives an example of how, in areas where Amazon offers two-hour delivery, a product could arrive at your home faster than the time it would take you to drive to the mall to purchase it.

Featured Interview:

Shep begins the interview by asking Bryan Eisenberg about the four secret ingredients to making a great presentation, which are:
1. Provide entertainment – tell a story.
2. Present a Big Idea.
3. Give the “How to’s.”
4. Give the audience or the reader the hope that they, too, can do it.

Bryan continues his “rule of four” by telling you exactly how you “can do it,” by discussing the four unifying principles of how to successfully run your business:

1. You must be customer-centric.
2. You must have a culture of innovation.
3. You must be agile. Execute, test and fail quickly, so you can keep learning.
4. You must continually optimize by shaving costs and adding value.

Top Takeaways:

• Don’t “water the soup.” Putting a little water in the soup may give you more soup, but it takes away from the great taste. It’s not smart to do things that produce an immediate profit if what you are doing isn’t in the best interest of the customer.
• Don’t think short term. An example Bryan gives is when Starbucks payment system went down, they gave away the coffee. Most coffee shops would have shut down until they could take payment for their coffee. But, not Starbucks. They knew the cost of free coffee was better than losing customers – and it showed how committed Starbucks is to taking care of their customers.

About:
Bryan Eisenberg is the co-founder of BuyerLegends. He is the co-author of the Wall Street Journal, Business Week, USA Today and New York Times bestselling books “Call to Action”, “Waiting for Your Cat to Bark?”, “Always Be Testing” and “Buyer Legends.”. Bryan is also a professional marketing keynote speaker.

Shep Hyken is a customer service and experience expert, best-selling author and your host of Amazing Business Radio.

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What we can offer you

Four Pillars Ongoing Support

After our workshops, we work with only a few select clients. Your business must be committed to the Four Pillars (as described in Be Like Amazon) on a long-term basis .

Workshops

We kick-off the workshop with a two-day onsite visit. We help you create the Four Pillar foundation for your organization. The entire process takes between 4-8 weeks and the typical investment is $30,000 – $100,000.

Speak at Your Event

We can speak at your event. Our fees are $20,000 in North America, and that includes travel. International fees are $20,000 plus business class travel, from Austin, and lodging. Contact us to discuss your event