I’m sure you will agree from the last post that measurement is essential for a successful small business. There are many things that can be measured, but they tend to fly under the radar because we are “too busy”.

I always remember the story told by Jim Rohn, sadly departed but one of the world’s best ever business coaches and mentors. He would paint the picture of the sales manager talking to a salesperson, and asking the salesperson how many sales calls he had made this week. The salesperson began with a reply “well…” And Jim would butt in and say “John, I don’t need a story, that’s why I made the box so small, so a story wouldn’t fit, I just need a number”.

I always get a giggle when remembering that story, and when I tell it to others you can bet any money they start to think that I should use that to measure my people’s performance. And that’s okay you can, but what if you were to use it for yourself.

As the leader of an organisation no matter how big or small, you should be leading from the front, and having your own scorecard, to ensure that you perform the essential daily, weekly and monthly tasks. It is of course significantly more effective in encouraging your team members to measure their performance, when you do it first

How do you measure and test in your business?

I suspect that the majority of people reading this post, would not have formal measurement processes for many parts of their business. In fact in my experience, very few businesses measure anything at all, other than the level of the bank account.

The more I delve into this space, the more it seems essential to begin to formally measure various parts of the business. It turns out that many things, for example, parts of a marketing strategy, don’t work the way we think they should. And strangely enough, when things are tested the results are often the exact opposite of both what we thought and our personal preferences.

As an example of this, a number of the world’s top Internet marketers have done extensive measurement and testing on “ugly” websites that sell product versus “pretty” websites that sell product. And of course there are exceptions to the rule, but in the main, ugly websites, ugly sales letters and ugly video sales letters significantly outperform the prettier and more professionally produced websites, sales letters and video sales letters.

The challenging thing for most Business owners is that their ego gets in the way and they choose a website, for example, that they prefer themselves rather than testing and measuring to see which performs better.

This is just one example, but there are many areas of the small business that could and should be tested and measured to improve performance. A focus in these areas can often add thousands of dollars to the bottom line very quickly and with little to no expense. By just knowing your metrics and making a few simple tweaks and changes.

If it’s not measured, it won’t be managed.

I want to tell you about a recent study I was reading about. The study was measuring the value of tips left by a restaurant patron. The 1st thing that was compared was the difference between delivering the bill to the patron, and delivering the bill along with a chocolate. The bill that included chocolate, increased the level of tip by 3%.

Interestingly enough, adding a 2nd chocolate, increased the level of tip to 14% higher than the Bill delivered by itself. The 3rd experiment had the waiter deliver the bill with a chocolate, then turn away from the table and begin to walk away, but then after a few steps, stop, return to the table and reach into their pocket, and add a 2nd chocolate for each patron. With the addition of this way of delivering the 2nd chocolate, tips increased by 23% compared to the Bill delivered with no chocolate.

So what can we glean from this study for your business?

This whole study reflects the power and strength of “the law of reciprocity”. It shows that not only working out ways to thank and appreciate your customers with simple small gifts will enhance the customer experience, but also the way that those gifts are delivered can increase the perceived value considerably.

Take action and brainstorm with your team a number of ways to show your appreciation to your customers. Test each method to see which ones get the best response and use that as the control. Then make it a regular part of your team discussions to come up with new and better ways to show your appreciation to your customer for choosing you to do business with over your competition.

You have probably heard the saying “givers gain”. The basic premise of the law of reciprocity is, we tend to get back in life, what we give out.

It seems to be very common within most small businesses, that most of the decisions on how the customer is treated is based on what it will either cost or make for the business. Rather than what the customers experience will be, that will cause them return over and over, or walk away never to return.

There are many ways in small business that the law reciprocity can be used to build the customer base as well as profits. Get a team together and brainstorm as many ways as possible that we can create little gifts and/or positive experiences for the customers when ever they come in contact with the business. A great way to positively impact the customer is to create a series of high perceived value surprise bonuses, that I never talked about before the sale, but are just delivered as a surprise after the sale is made. This will come as a very unexpected positive experience to the customer, and because it is such a rare thing to happen, it will most definitely differentiate your business from your competitors.

So, should we use pain or pleasure in our marketing message?

Well clearly the answer is both. It would be wise to remember that the majority of people are twice as likely to take action to avoid pain, than they are to gain pleasure. Effective marketing messages will always aggravate the problem the target market is already thinking about. But it can actually be counter-productive to your sales if you simply create additional fear with your marketing message, without giving a clear and concise, spelled-out, step-by-step process of actions to take for your customer to eliminate the fear or pain, or fix their problem.

Studies have shown that the majority of people, when presented with a message about imminent danger, will often block out that message, or consider it not about applicable to them, in the absence of the clearly spelled out steps to take to avoid the danger.

So remember to always include clearly defined action steps in any of your marketing messages that include a call to action.

Is it better to give your customers more or less choice?

In previous posts I have mentioned that it is far more profitable to find new products for existing customers, than it is to find new customers for existing products. If you follow this line, you will obviously end up with extensive numbers of products. The challenge here is to make sure that you don’t offer your customers all of these products at once through any of your marketing and advertising strategies.

It seems many business owners feel that it is better to offer their customers, or potential customers many choices, in an attempt to get them across the line and make a sale. The truth of the matter is, the more choices you offer the less sales you will make. People are funny animals, when presented with multiple choices, the predominant choice tends to be doing nothing at all.

Check out these numbers from a study done in a supermarket on a jam display. Tests were conducted over different times of the day, and different days of the week, where the display was changed from displaying either 6 Jams to taste test, or 24 Jams to taste test. The results were clear and astonishing. Whenever there were 24 jams on the display, only 3% of people made a purchase. When the display contained only 6 jams, 30% of taste testers purchased.

So whilst it is a good idea to be continually looking for new products for your existing customers, it is important that through your marketing and advertising messages you do not muddy the waters with too many choices.