Business Attitude: September 2015

September 29, 2015

A Tale of Two Cities - "It was the best of times, it was the worst of times..." Maybe it is Today

Updated Writing: Back in 1982, I was working for NCR in Dayton, Ohio and doing my grad work at the University of Dayton. My instructor was a financial VP at NCR which made the course immediately at tad easier for me. Early in the semester, this instructor took a liking to me. It was probably our third or fourth class when he became somewhat philosophical, and even emotional, about a topic - he discussed the misuse of economic power. He did not discuss this from a technical viewpoint, but from social endgame viewpoint (remember, this was the early 80s - late baby boomers were flourishing - being a Yuppie was the in thing - it was the Reagan years - Round One). After class, he asked me to come to his office. There was something he wanted me to have. He handed me his marked up old copy of A Tale of Two Cities and said, "Bob, make sure you read this". It was about two years later, after reading it – that I put the puzzle pieces together.

A Tale of Two Cities continued popularity is more about history repeating itself (IMO) than any economic theory or situation. Not enough people read, especially our youth, which is why we are destined to repeat our history again and again.

Below Originally Published September 2012

Original Writing modified and expanded: I very rarely express a political opinions, but I believe our politicians are tying our hands behind our backs and then holding us responsible for scratching our bellies and fining us if we don't... I fear that in our lifetimes we will experience not only what we saw in Greece, but as an extreme, what we saw in Egypt (Note: Originally written in September 2012). It will not be the fault of one group, class, corporation, or party, but what we, as a people, ignorantly chose and even voted for. Thus it’s what we wanted.

Someone will, in their documentation of history, say: "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only." ¹

From Wikipedia

In spite of what we learn, how smart we are, and the wisdom we have - history continues to repeat itself - Read about, (or even READ) A Tale of Two Cities.

¹ Wikisource: A Tale of Two Cities/Book the First/Chapter I

Bob Leonard
561-371-4113 (Call My Cell)
512-593-8830 (in Austin)

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September 20, 2015

How to Calculate your "Cost of Customer Acquisition" - The Most Common Question

Since writing a few articles about "Cost of Customer Acquisition" I have been asked several questions about it; the most common being, "How do I calculate my own Cost of Customer Acquisition?" Lets try to answer this.

First, there are both many different scenarios and many ways to calculate Cost of Customer Acquisition.

The simplest of the scenarios is the Commissioned Salesperson. Take all the out-of-pocket (OOP) costs you have in a year (or any other time period) and add it to the amount you want to make - your desired income. Then divide it by your new customers (or projected new customers); the result being your cost of customer acquisition.

Example: I want to make $95K/yr and I have $5K in miscellaneous OOP expenses totaling $100K in expenses (your income is an expense to the business even if it is just you). Take that total and divide it by your new customers - let's say 100 new customers - cost of customer acquisition - $1000. Two factors I did not consider here are 'cost of customer maintenance' and 'diminishing returns' as both come more into play when you transition from sales person to small business.

A second example would be of a small business large enough to have a few sales people. In this scenario, the owner will want to consider more of the costs as their will actually be more costs. Consider everything, from the cost or marketing, advertising, signage on the office, promotional pieces and lets not forget the base salaries, commissions and the costs of having salespeople employed as well. All these things, and potentially more, can be included in the cost side of Cost of Customer Acquisition. In reality, it's all up to the 'measurer' and his or her metrics and/or analytic desires. I have never seen two companies measure it the same way, but I have also never seen a company inconsistent in the way it measured this metric - this is good.

So no matter what size company - know this metric, and measure it in any way you want.

The objective in using this metric is to, over time, reduce the Cost of Customer Acquisition. This is accomplished, by either reducing costs or increasing the number of customers - if you know what I write about, you know where I lean. Marketing efforts, sales pushes and product mix changes will also affect this metric.

A few final notes:

Diminishing returns are important to at least think about, especially if this number is going into a business plan.
High margin / big ticket items have different metrics as does service businesses that may get clients who come back forever,
Cost of Customer Acquisition is much different than Cost of Lead Acquisition / Generation.

I believe it is one of the best metrics for any growing business.

Cost of Customer Acquisition

Bob Leonard
561-371-4113 (Call My Cell)
512-593-8830 (in Austin)

September 4, 2015

McPrint vs Local - Its no different than Big Box vs Local (Oldie but Goodie - Reposted)

This article was written back in January 2013. I chuckle every time I read this.
This is why you need to find and use your local printers and designers - The are the experts in your home town.

Buy Local and Preserve the Expertise

So this morning I went on continuing my research on "Local" and, in particular, "NetBetter" printing. I walked into Staples just to get up-to-date info on the McPrint business (Understanding the Changing Print Market). I have difficulty sounding anything but sarcastic in this article, but it's the epitome of Big Box and McPrint. Here is how my conversation went this morning (with some injected commentary).

Me: "Hi, I'd like to get some pricing on some business cards".
Staples: "Sure, we have several different types. You can order them online.
Me: "Wow".
Staples: "If you need them now, order the "Instant" cards, we do them here".
Me: "What size are these, I don't like the undersized business cards like from Vista".
Staples: "Our cards are all standard 2" x 3"."
Me: "You mean 2" x 3.5"." (thinking she just mis-spoke).
Staples: "No, our cards are standard size, 2" x 3" (at this point she looks at me and sighs (like saying, 'you see which side of the counter I am on')).
Me: "No, standard business cards are 2" x 3.5"."
Staples: "No they are not". (the 'your stupid' look continues).
Me: "Go grab one, let's measure it - I just want to make sure they are not undersized like Vista cards".
Staples: As she walks away with a frustrated look, grabs a card and measures - "Oops, we are both wrong, they are 2" x 3.25"." She tosses the card on the counter next to a sample I brought in.
Me: "That's 2" x 3.5"."
Staples: With frustration she remeasures and then humbly states: "Oh yea, these ones are 3.5" wide".
Me: "OK - I'll check the pricing online".
Staples: "Order the 'Instant ones' if you want them produced here".
Me: "Bye"

My morning - I must remind myself that this is McDonald's and not Morton's: "NetBetter" all !.

Bob Leonard
561-371-4113 (Call My Cell)
512-593-8830 (in Austin)