[Side Note: If you are spending money wildly, you must be new here. People familiar with C.A.K.E. know that we’re all about being resourceful. So if you’re new, welcome. After you’re done here, read up on the resources listed in this post.]
Despite what “the experts” may say, EVERYTHING has an ROI. The returns on your investments don’t have to be immediately tied to money, but they should eventually lead back to money in your pocket. For example, spending money on methods to improve customer satisfaction won’t necessarily increase your bank account today, but satisfied customers come back and often times they bring their friends.
Spend Money that Creates Value
When you are starting out in business, you need to carefully measure the ROI on everything you do. If you’ve followed us long enough, you’ll know that we preach that you should test everything, measure the results of those tests, and adjust accordingly. This isn’t a new concept, it’s the core philosophies of the lean movement of entrepreneurship. Books like the Lean Startup, Running Lean, and The Lean Entrepreneur teach to reduce waste and uncertainty by adding pieces to your business that are going to create value for your customer.
You can quickly spend a lot of money on social media strategies, Google Adwords, business cards, print ads, video production… (the list goes on). Do any of those activities really create value for your customers? In the end you’ll just end up as another voice in a mass of chatter, not gaining any more attention than the competitor next to you.
Remember that It’s Not About You
If given the choice, we always choose to spend extra money or time on making sure clients and customers have the best experience possible. Perhaps that means spending an hour longer than estimated making finishing touches on a project or having comfy towels and tea awaiting them after a float. Whatever you do, give them more than you promised.
Spending money on fancy countertops makes you look good, but your customers don’t care if what they’re being served tastes like crap. Developing a ton of features trying to be everything to everyone makes you seem like the total package, but do those extras solve tough problems or are they just there to fluff you up?
Telling the world about every little detail that you’re capable of is just going to confuse them. You should worry about implementing and measuring functions of your business that solve your customers’ problems. Too many times business owners get wrapped up in all of the possibilities and miss out on the business staring them right in the face.
Get Real, Ditch the Vanity
Once you’ve determined how you can create value for others, make sure you’re measuring the right things. This is especially true when hiring contractors, marketers, and consultants to help you accomplish some of the work. Set the metrics that they are reporting to you to be key indicators that drive business and increase revenue.
For example: If you hire a social media guru and the only metrics they report to you are the number of “Likes” and “Followers” they got you, fire them post-haste. These numbers are known as vanity metrics. They look nice on paper, but don’t provide any real value. Value that should be going to benefit your customer. What they should report to you is how their efforts increased customers through the door and how they helped foster an environment that nurtures word of mouth.
Next time when you set out to measure the results of your investments, remember to keep track of data that will generate feedback that you’re increasing value for your customers and driving revenue. Doing these two things will greatly increase your business allowing you opportunities grow to the next level where you have a whole new series of problems…
But we’ll save that for another time 🙂
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