Episode Transcript
[00:00:00] Speaker A: Welcome to the Independence by Design podcast where we discuss what it means to be a business owner and ways to get unstuck from the day to day so we can design a business that gives us a life of independence.
We are going to brute force our way into selling more.
So many people approach revenue of just do harder stuff, spend more money, make more calls.
That's not the best way to have a predictable revenue forecast. Kim Clark, my dear friend, is on the podcast today. She is the third part of this series. If you have not checked out the other two episodes, I highly recommend doing so. Her dad and her were on the first one where we were kicking off thinking about the economy. Then Pat was on the My old partner and CFO was on the podcast last week where we were walking through the financial model and I did it in this order because once you look at Pat's model last week and we have a financial model, we're gonna have to double click on the revenue buildup and actually go through some like intense thinking of each product and service line. What are we going to do? What activities are we going to do? What are the conversion rates? How much is it going to cost? When are they going to land on the income statement to recognize revenue and then how often do you know, what do we have to ladder that, recognize revenue over a couple of months? How do we think about the economy, the business, the business cycle?
Top down, bottom up? Kim's got a 12 point process that she's put together where she reverse engineered what she was doing at ITR Economics to help scale them from a couple million dollars to an eight figure sale. And we also do a screen share in this so we're talking through it so you don't have to watch it if you don't want. It's less intense as the financial model review last week with Pat. But my goal is to help you come up with a playbook for you and your leadership team and your sales team to actually go through and have a thoughtful process to accumulate data in order to actually forecast out predictable revenue for next year. Because as you heard from Pat, nice podcast last week, everything starts with revenue and we want a 5050 chance of hitting it. And the level of thinking that we put behind it gives us the confidence on how to build out our cost of goods, our overhead and understand our working capital and cash positions. And everything starts with revenue. So I really hope you enjoy this podcast with Kim.
All right Kim, very excited. We are going to be diving into more revenue forecasting. I published the podcast with you And I and Alan the week before this and you know, we're gonna have a working session for everybody listening. We're gonna have a working session. Kim's been working on a lot of really cool stuff and you can give us a container around like what you've been working on before we actually pull up and do some screen sharing. So we'll be talking through this so that way the people listening in can just actually understand us. But also if you want to go check out the Spotify or YouTube, we'll have plenty of stuff there. So here's my insights and why this is so important for me, Kim, and for my clients is when I look at the owner's playbook and we're building out, you know, it's budgeting season as we're kicking this all off, which is why we're doing this. And you know, Pat was on my group and we are working on building out the whole three statement model.
People looking at their 20, 26 plan and it's line by line, by line, month by month by month for 26. And they need to have all three statements. And people go, great. Now you know, if they do that, they're already in the 1%.
But the question is like, how and why is that revenue landing on your income statement? And you know, maybe you and I can talk just like interesting like epiphanies that we've had as we've been doing this for others and then talk about how we both used to do it in our own firms because that's what you're going to be showing where it's, it's fascinating to me coming from a sales led organization, how few people do the, do the like very intense revenue buildup to predict what's going to land, you know, product and service by product and service line, month by month throughout next year. Because if we're trying to predict cash in the middle of June, like actual cash after working capital, debt and taxes or at the end of the next year, everything starts with revenue.
And so many people are looking at last year, they take a 5%, they're not looking at economic cycles, they're not looking at their customers, what they're going through. And it's just fascinating to me because I've realized it's more common and it's worked for a lot of people for a long time. And I think as you and I talk about the paradigm shift of happening with, you know, the 2000 and 30s coming up and all this, that it's going to be more imperative than ever that people are designing predictable revenue through thought processes. And there's a couple different ways that you and I have talked about this of like the ground up. Like for me it was like in my old company was 20 some salespeople.
Everybody would have 400 phone calls, 15 appointments, seven net news, five proposals, three closes, 40 grand in revenue. And we could take a third of that to the bank every single month.
But then there's also, we didn't do a lot of marketing, you know, 15 years ago.
But then you throw on the marketing customer journey of whether it's paid ads or trade shows or whatever your customer journey is, there's gonna be a conversion rate to revenue. Right. And then we have to think about what everybody's got going on in the economy. So all that said, I just find it fascinating that maybe what you and I have experienced is not common. So I've watched you over the recent, recent past go. I should probably just document what I've been doing and integrated in all my coaching. And so you've been putting a lot of thought behind it. So I don't know where you want to pick up off, off of that, but I think it's helpful just hearing like why you're doing this, what you've realized and then we'll, we'll be able.
[00:05:40] Speaker B: To jump in 100%. And I agree with you, I have been shocked over the last, we'll call it half a year how uncommon it is to forecast your revenue. Just coming from a background of working at an economic forecasting firm. That's what everybody did. So it was a mandatory, it was mandatory that I know how to do so because I was the head of the sales team and I had to let it would inform expenses in our budgets and everything that we had going on for the following year. So that's really where it's become very apparent to me. Okay, then we need to teach this to all these other business owners because it's not magic, it's just math. It's all just math and research. It's all just awareness, math and thinking.
[00:06:28] Speaker A: Right? It's the thinking and then putting math behind it. Right?
[00:06:31] Speaker B: Yep, Exactly. Yep.
[00:06:33] Speaker A: And you know, you have. And before we pull up, you know you've got these 12 chapters you've been working on. So like we're going to have a working session as like I keep saying to everybody is, you know, maybe I'll start with like when I. Because I just got off a board meeting and we're talking about revenue build up and it's there's kind of two. And the CFO is new and he's brilliant. I absolutely love him. And it's taking the big picture of last year historicals, making some assumptions. You know, bigger growth rates. We talked about itr. We're like, hey, we need to put, we need to layer on the cycles to have that better, bigger assumptions with more refined thinking that's more accurate. But then at the same time you're kind of doing a ground up. And then he, he, it was almost like you and him had talked because he goes, we want to do both those to see how freaking far off we are. Because then like something's way off. But if we do the ground up and the top down and we're within 10%, we know that we're are, we're trying to triangulate our thinking is kind of how I've put it. But any comments to kind of how the, the two different approaches are like in general how you're approaching it.
[00:07:36] Speaker B: I think you stated it very well. Where it is that top down, bottom up approach. And then it's also looking for opportunities and risk part of that analysis too. Because I can see from the top down approach what's going on in the world around me that's impacting my customers, that's impacting me and how I fit in that whole picture. And then the bottom up I can look at the. Everything's a timing relationship between my leads to my closed one sales, to my recognized revenue. All of it has a timing relationship by product service, product line. And so you can do that math and figure out what is potential for future activity. And then I like what you said, like how far off are the two and understanding why they're that far off, but then also knowing there's opportunity in both areas. So even if you say, well the facts are this for the top down and the facts are this for the bottom up, that was never good enough for me because you always want to reach for the moon and get more. So it's okay, well, where are other opportunities that I'm not capitalizing on? And that's really where you can start joining the two together and taking business to that next level consistently, regardless of the current economics around us.
[00:08:50] Speaker A: Yeah, and I love how you said that too because my client has a new high powered CFO for the first time. And we, he was like, what was the first brush at the, at the budget? He's like, that's not good enough. We're like, this is not, this is not it. Like this is the starting place.
And I think what was, what I want to highlight for the listeners is top down, bottom up. But then when you say like then what do we do? You had a couple of interesting examples and this will probably, it'll probably be flushed out as we're going through your, your bullet points.
What else do we do? Is it different industries? Do we have to look at an acquisition? That's where the higher level strategy comes into play. Figuring out exactly how you're going to actually get to your goal. And then that should be put into context for like my clients. What's the valuation target you want in 2030 and the distribution. So it's all back to then the financials of the ownership group and then you're just constantly reconciling all of these together. So that way when we actually lock one in for 2026, we feel good and then we can just do budget to actual on the monthlies and then have the higher level on the quarterlies and it's just this constant refinement. But it's all of those activities that you have put a process around. Right. And I'm really excited to hear what you've been.
There's a, I'll digress for a second. There's a really interesting comment that Jordan Peterson made.
Regardless of what you think about him, I thought it was fascinating that he talks about human beings.
They act things out first before they then map out what they did. And so that's kind of what I'm watching with you. You're like, I've done this for so long, what did I actually do consistently? Which allows us to then go back and then see how to actually systematize it. And that's what I've heard that you've done to say, okay, like what are the actual steps that I went through? Because at the end of the day, the, the outcome that we're looking FOR is a 12 column income statement on a spreadsheet that has product and service line by product and service line with thought of like, how are all of those going to land in each of those months?
So that way we can actually predict the cash. And you said something interesting that I want you to expand on and maybe it's part of the bullet points you can walk through. But you talked about the timing, so there's a customer journey and the leading indicators of the conversion rates to then close a deal.
But then you even talk about like the timing of recognizing that revenue. So you want to maybe explain because if we're trying to forecast out 12 months of 12 columns.
I think the thought process that you have in there is like even more practical. Like we have to actually think about the full cycle of the product or service. You want to expand on that?
[00:11:27] Speaker B: Sure. And again, it all just comes back to. It's all just data points and math. So we all hear things when we're talking about business like conversion rates that I go to a trade show and I want to bring in five solid leads and I know I'm going to convert two of those leads. And those two leads, my average closed sales price from a trade show is typically $20,000 each. So my goal is $40,000 worth of closed 1 sales from each trade show that I go to.
So we're going to take that as just a very specific instance and not make it more complicated than that. So then I say I need to, to increase my, recognize my revenue or I'm going to start with sales because I'm not going to bring it forward to revenue, my revenue by $40,000 in the month of March.
So I'm going to plan a trade show and look for trade shows in October, knowing that my sales cycle average length is eight weeks or yeah, eight weeks. And that's going to bring me through into January, so on and so forth. And so it's just all looking at the timing of your sales cycle, your conversion rate, your average deal closed and then from there how do you recognize the revenue? So if I know that I am likely, I often sell this type of service when I go to this type of trade show because I'm obviously marketing something specific while I'm there. That's how I can also look at average deal close size. Then I can say, well, I know the business recognizes revenue.
We'll say 10% each month or whatever just to throw something out there. Then that's going to inform me if I expect to close that $40,000 in the February time frame, then I know that I can increase my recognized revenue by 10% throughout the remainder of whatever that program is. So it's all just the timing that they all have with each other. And then you can backfill when you need to do different marketing things.
[00:13:18] Speaker A: And that's where you know, on the finance side, the revenue recognition and the matching of the revenue to the cost of goods is absolutely imperative because whether you're selling like, you know, I got clients where they sell big projects and they do exactly what you're talking about percent complete or they're project based. And then so they're like recognizing the revenue and the costs as milestones happen. And you're actually doing that level of thinking through the income of the revenue and the cost of goods. Cash will be different, which is why we need to forecast all this stuff out. But to your point, you're doing that on the revenue side and actually the product or service based on how you're actually recognizing that. So then we can look at the income statement and say we're going to do a million dollars in May of what and why? And then how did it get there? And then what did we do prior?
Because all we want to do is more of what works.
[00:14:09] Speaker B: Yeah, no, I agree. And it really, it informs the very beginning of the funnel. Right. If you work your way backwards all that way, then you can get a very predictable ongoing machine where I say, all right, sales rep, you're going to go to a trade show conference. And sticking with the same example, I need you to do two in September, one in October, and I can tell them that back in January of that year. So they're looking ahead, head and planning ahead that far in advance and knowing, okay, I'm going to do this and here's what Kim needs as my outcome from taking this action because then that I can Turn on, tell Mr. CEO, six months from now, that's going to translate into this for your business data.
[00:14:51] Speaker A: And you even do that too with the messaging on the marketing side too, where like you're looking at the ITR economics business cycles to say, okay, well what would my clients be dealing with and what, what are their industries growing through? So that way, if I'm not all chipper if they're going to downswing or I'm in the upswing, I mean, you're just, you're meeting the messaging and the media, the medium of that message, whether it's a trade show or you know, ads or if it's, you know, online social media posting or blogs or whatever it is to what's happening at the right cycle and the right timing to then anticipate the revenue. I mean, it's just.
[00:15:29] Speaker B: And I.
[00:15:29] Speaker A: You said something I think is really important where, you know, you and I have lived in sales for decades. People that are, you know, it's the same thing I realized with finance, Kim.
It's not that complicated. It's just thoughtful, hard work that has to go into it. So I, you said something. It's not rock and science. And I want to really encourage everybody. And as we unpack your, the 12 chapters or the modules that you've got going on, like we're just trying to help people better understand what needs to be done. And, you know, if people are, what would you say to the person before we jump in that hasn't done anything? And they're gonna have a freaking panic attack because of, like, how detailed this could be? Like, how would you. How would you say? Like, what's the best way to think about what we're gonna unpack so that way they don't get overwhelmed, Take it.
[00:16:15] Speaker B: In nuggets and steps, and don't try to do everything all at once. And something is better than nothing. And if you follow it in a certain order of operations, you're going to get gains along the way. So it doesn't have to be a jump into the deep end of the pool. You can wait your way in.
[00:16:30] Speaker A: Yeah, because I think people have a, like, allergic reaction, and then they don't do anything. It's like, no. Like, there's, you know, just something is better than not forecasting out with thought. Anyway. So what do you think the best approach is on how to. Because I got a lot of questions because I haven't seen it yet either, so I'm super pumped. Do you want to just start jumping in? Because I think that was a good, you know, entry point, definitely.
[00:16:53] Speaker B: So for all listening in, this is still very much a draft and work in progress. I just started on this, and I'll actually, before jumping in, a little bit of the background. I know you gave some Ryan, but this kind of came to me from the most recent meeting you and I had where I joined your group session to go over rates of change and just seeing how new the concept was to some of the people that were on the call, and then also working with my clients and. And stuff. And I keep telling everybody, all right, we're in budget season, and we got to start planning for the budgets. And then I realized there is no clear process anyone's following to form a budget. And talking with you and every. I'm like, this is crazy. I did the same thing the same way every single year and was very accurate at the end of the following year as to where we came in. And it was intentional, on purpose, with purpose. It wasn't, hey, we just happened to hit our goals. It was. We knew why we hit our goals. And so that just started me down the journey of talking with my only coworker these days, Mr. Co Pilot, and explaining to him everything that I do or did at ITR at this point in time of the year. And that's where these 12 chapters came into play. So this is very early on. I don't have it all built out and I'm just still kind of putting framework around everything right now.
[00:18:09] Speaker A: Super helpful. And I, and I want to reiterate to the listeners that you have done this. So you're just documenting what you've done. And then for everybody listening in too, how what Kim is going to unpack fits into the owner's playbook is after the phase plan, where we're thinking about our understanding valuations, understanding our clear ownership goals of time, cash flow and wealth, and then understanding how to have the owner's rhythm. Then the next module is finance. And so when I help people or I don't do it, but like when they're, when my clients, through the guidance and through the education are building out their financial model, like let's say they'll plug in all the historicals, finally get the 3 statement, you know, historicals, then they'll work on building even a budget. So like what Pat did in our session was walk through how to build up the budget of a three statement model. So every single column is a full 12 months of all three statements and what he said, and I think it tees up so well. What you're doing, Kim, is that he kind of put a plug in for revenue. Because as a cfo, if, if someone that's listening and has a cfo, the CFO is guiding this entire process and synthesizing it into an actual financial model. So when you, you and I, Kim, are talking about a budget, there's the total budget, which is the whole three statement model, and then the forecast.
But what happens is we have everything starts with revenue with a 50, 50 chance of hitting it. Because even on the call I was just talking with the board meeting I was on in order to figure out how much inventory we should buy and what kind of staff level. So the, if we're looking at the ground up of the cost of goods and then the overhead, we have to do that in light of the revenue. So Pat was walking through in like one of the tabs, Kim, like he had an entire spreadsheet for payroll. Like each person, when do you hire the person, the fully burdened costs and all that stuff. So you could see when the payroll would hit, you know, cost of goods you can go through and exactly figure out what your margins need to be and what kind of, you know, what kind of costs you're going to have to have to deliver at what kind of margins. So there's all of this work that is it kind of falls into place once you have the revenue. So, like, he's got the whole template. There's the whole financial, like, landscape of doing this, but then there's a. You have to go through the process to figure out what the freaking revenue is going to be every single month. So just to kind of reconcile your word of budgeting and mine is there's the model, the cost of goods, and then the overhead, and all the three statements, but then we have to figure out what revenue is going to land every single month. And that's what you've honed in on. What's the process to actually feel comfortable that you can submit that to the CFO and then actually lock that into the budget as a whole? Is that a fair way of putting it?
[00:20:53] Speaker B: It is. And be able to defend it. I mean, that was me every year submitting it to senior leadership and being able to defend why that was going to happen and potentially, in return, if they wanted to see something else, why that wouldn't happen and how I would have to go back to the drawing board and look for more pockets of opportunity and such to. To add on.
So, yes, that did summarize it very well. And you're absolutely right in that this is what I did every single year for many years, and it's just never been taken out of my head.
Yeah, yeah, yeah.
[00:21:27] Speaker A: Which is why I'm excited to see it.
[00:21:30] Speaker B: And it was interesting because I actually remember the. And I just don't know why I didn't think of it before. I remember towards the end of my tenure at itr, was asked by somebody, you know, what is it that you do every year? Like, they wanted to get as much out of my head as they possibly could in that last interview. And so I actually walked through everything that's in these chapters and just had touched on the things that I did. And it just never dawned on me that that was an abnormal.
Like, not everybody's doing that.
[00:21:59] Speaker A: Like, it's good discipline that you've. That worked over and over. Yep.
[00:22:04] Speaker B: Yeah.
[00:22:05] Speaker A: Awesome. I'm excited to see this.
[00:22:07] Speaker B: All right. Like I said, it's not built out. These are just ideas. And I'm putting stuff together. Let me share.
[00:22:14] Speaker A: People listening. We'll. We'll. We'll talk through it. So that way you can not crash a car, run into it if you're running or whatever you're doing.
[00:22:25] Speaker B: Can you see my screen? Okay.
[00:22:27] Speaker A: Yep.
[00:22:28] Speaker B: Okay.
So when I put a bunch of information in these 12 chapters is what popped out. And the first chapter was what we did recently in your group session, where it's starting with the rates of change and understanding where your business is in the business cycle, that is the most simple way to start on this journey is with your rates of change. It's easy to calculate. There's a lot of free information out there online to learn how to calculate the different ways to look at the business. And then it's all real, actual data. It's not a forecast, it's not a projection, it's actual data and just looking at it in different ways that start to inform your story, informing where you are in the business cycle, which has a different psychology and thought process, which I'm sure you're going to want to touch on that and unpack that some. And then it also gives you a short term view into the future, usually a three to six month view into what's around the corner for your business. That's huge. And that gives you some confidence to know what decisions to be making.
It also shows you your seasonality so that way it better informs you when to time your different promotions again based upon that leading relationship. If I see I'm typically down in X period in time, I can back my way around to when I need to launch more to offset some of that seasonality.
And it also, this is the first step in being able to understand how you are impacted by the macroeconomic forces around you. So I'll pause there.
[00:24:03] Speaker A: So, and as we go through do you think we should go like one by one and then I provide some commentary questions or do you want to like do a flyby? I think, I think we go through one, one by one at a time. And you know, Mike, my, my commentary on the rates of change and I don't know how we, I don't think we have to get too much into this. We talked a little bit of this about with you and Alan, but the business cycle is the ABCD of where you're at in this, this cycle. You talked about the train on our last episode. So people go back and listen to that if you haven't. And it's so helpful because I watch people go, oh, I was planning on maybe expanding. But based on where I'm at in this cycle, you always talked about like if the front of the train goes around the corner, you just want to know when are you going to go around the corner? How long does it take?
So you're, you're taking the real thing going on in the economy which is based on the, this whole debt refinancing cycle that's going on that's very knowable. It's like waves in the ocean and then you're just trying to figure out where you're at in the. Whether it's the waves in the ocean or the train to then be able to then understand where you're at to then at least that's. Is this more what you consider like the top down where you're going? Okay. Instead of just saying I'm going to grow 5% next year, I want to know what's going on with my industry, where I'm at in that train?
[00:25:15] Speaker B: Yes. All of the first three sections of what I have down are all included in the top down approach. We don't get to the bottom up approach until section four.
And I agree that, yes, this is just a snapshot of using your data that you have access to. You're not paying for external sources or doing any crazy math. You don't have to be an economist to do this. I'm not an economist. I might play one on TV and be good at it, but I'm not actually really an economist.
But then the next section that I have that we didn't really get into, you keep going.
[00:25:47] Speaker A: I think the takeaway on section one would be is ITR Economics has a like, what is a $30 a month subscription or something like that that you don't have to overly complicate this. You can plug in your data so maybe some quick takeaways if people want to like check it out. We can put the link in the shownotes too.
[00:26:03] Speaker B: Yeah. Data cast essentials. I actually looked at $80 a month, but still it's well worth the value.
It saves you a lot of time. Actually in the episode I just did with my dad Ryan for the Growth Playbook, I had mentioned you because I was like, just use the software so that we can continue working on the business and because everybody's so busy working in the business and trying to get out of that. And this gives you a quick and easy tool to work on the business.
So yes, a very easy way of calculating it and showing you what you need to see. Cool.
The next section is where I start talking about economic indicators and what they mean.
And again, this is very, very rough. So you guys are all getting to see underneath the hood into an engine that's just being built. But the economic indicators, this is where you start layering on some of these outside forces. So the rates of change is just looking inside your own business. It's just looking at your own data.
And where you are in your own business cycle. So that's a very narrow minded view of what it's basically using the train analogy, you're basically getting an MRI done on your rail car but you have no idea what other rail cars around you are impacting you. And that's where you got to start coupling in this economic, the economic forces or as I have it layered in economic indicators.
There are key indicators to watch for different things. So if you know inflation really impacts your business, then there are certain indicators you're going to want to watch to be able to keep an eye on that like interest rates, if they. Let's see, as an example that I had here, interest rates, the insight the Federal Reserve may cut short term rates, but long term rates like the 10 year treasury yield are expected to remain around current levels into early 2026 with a slight uptick mid year. Why is that important?
You don't have to expect dramatic rate drops. Plan for stable or gradual rising borrowing costs. Long term rates like I go on and on. So it's like, it's what I find is everybody that I'm working with, they know their business, they know if like how inflation impacts their business. It's just, it's what do they do with that information?
And that's what this economic indicator section is for is write down like the five to seven things that you know, impact when you do good and when you don't do good in your business activity and then start tracking those five to seven things. So that way when they start signaling something's happening, you know, oh, in the future something's going to happen to me because I know typically when this happens, something good or bad happens to me. I like that a lot.
[00:28:48] Speaker A: How would people go about finding what the economic indicators are and other than interest rates, any other, you know, ones off the top of your head that are common ones?
[00:28:58] Speaker B: There are common ones. My dad was very hesitant in our podcast to actually list specific ones just because they're so different for each of the businesses. But that's because he's an expert economist. So I think I have more leniency than he does and I can give some of the comment head explodes.
[00:29:14] Speaker A: Come on, commit Alan, commit.
[00:29:17] Speaker B: Yes, so like we always said at itr, we used industrial production, U. S Industrial production as the benchmark for the overall U S economy. And that's because it tended to relate well to our clients because our clients were predominantly in manufacturing. Certainly if you are more heavy into like retail sales or like that B2C sector GDP is going to make more sense than US industrial production. That is just. I mean that's the overall economy. So some, some regard that Ellen said.
[00:29:46] Speaker A: There was like you non defense U.S.
[00:29:51] Speaker B: Non defense capital goods, new orders, excluding aircraft.
[00:29:55] Speaker A: You know, I just sell a shitload of aircrafts all the time.
Yeah, because you're trying to get to like we're, we're primarily a services economy, B2B economy besides retail. So you're just trying to figure out what kind of spend is going on inside of your space where people need money.
[00:30:10] Speaker B: Yeah, that's why I always petition for us to reword it instead of the actual title name that the data set has been given, which is a mouthful. Just rename it B2B activity.
[00:30:21] Speaker A: There you go.
[00:30:22] Speaker B: I love it. All that it's tracking is B2B activity. So that's another good one. Again, if you're B2B retail sales. If you're more B2C, they're just your typical macro economic indicators. You have your, the purchasing managers index, that's a common one that's used out there. Just don't look at the month to month, put it into that rate. All of these go into a rate of change.
[00:30:45] Speaker A: And what was the subscription that I had with ITR where you guys have a lot of those leading. These leading indicators as well. And then there's the ITR leading indicator. That's kind of like the summary of all these. But I can't remember. It was like a 20 or $30 a month subscription to actual monthly reports and like where things were at.
[00:31:01] Speaker B: Yeah, the ITR Trends Report.
Super handy, handy tool. You can gain access to the data history so that we can use it in your analyses and stuff. Data cast essentials that we talked about. That's what's hooked up to that. So that way that's where some of that leading indicator stuff is coming from. Is from the Trends Report. Sweet.
Yeah.
See I list some of them here where you can get them. Like the GDP that I mentioned. Interest rates comes from the Federal Reserve.
Unemployment comes to Bureau of Labor Statistics. It helps with talent planning and stuff like that.
Consumer confidence, we like the economists don't like that. It's junk as a leading indicator.
I only like it for the psychology perspective of being a marketeer. Being in sales and marketing, I have to know how the people are feeling regardless if the data is supporting that feeling. And so that's why I always like including that in my analysis.
[00:31:58] Speaker A: And you know, a lot of this stuff is to help us enhance our ability to predict the Future. So we don't take one data point or one thing and build everything off of that. Because I think, you know, one thing that I'm watching Kim, is with the, I mean the 10 year has decoupled from the interest rate. So we're, but we'll be able to spot to see the decoupling of certain indicators and that people, but if they're paying attention, they'll start to realize how much weight they should they put on. I guess Consumer sediment is going down. Stock market's at an all time high. Well, it's because of the debasement of the dollar. Right. So it's like we're probably going to see more of that.
But like if you're still like, I got a friend, he sells wedding dresses. It's like he, he literally was able to see when the student loans got kicked back in, people literally were like, well I can't buy dresses because I have to buy these things. So you're just, you're, you're just trying to point is we're trying to take all of the data points to just get us the full picture instead of just grabbing one puzzle piece.
[00:33:01] Speaker B: Exactly, exactly. I think it's in Brian and Allen's book for make your move to track the five to seven indicators. And it says something like when one indicator starts to shift, pay attention. When two to three start to move, start getting ready. When like three to four start turning, start getting excited because the economy is about to take you on a new, on a new ride. Something like that. So that's one of their pages.
[00:33:25] Speaker A: Fantastic. Yeah, fantastic. Very actionable takeaway. Because then in that make your move book, I mean, and how you guys have word of that. Yeah. You're like, it's, it's all the red or green light and then all of a sudden it becomes a little bit more obvious based on the 5 to 7 that are important to you.
[00:33:40] Speaker B: Yeah, exactly, exactly. All right, so then the next section, and this is the last section that I have somewhat built out so far in that other file that we were looking at. But this is looking at your market mix and customer psychology.
And so this is really to understand my current mix. This is not looking for diversifying and adjusting and changing my market mix. This is looking at my current mix. What is the psychology of my consumers in each of those different markets that I'm serving right now? And like I said that their confidence or their lack thereof and I worded it a certain way in here and just want to try to find it so I can Read it for there it was like emotional drivers are back. After years of reactive decision making, buyers are returning to aspirational thinking. They want to feel smart, secure and seen especially in B2B services.
If you don't look into the psychology of your customers and your different markets, you're not going to know that. And to me, when I read that, I'm like, that's gold. I'm going to use that in my messaging and in my copy and in my strategy in 2026 to capitalize on that trend.
So this is why it's just there's another one in here that was confidence is returning, but cautiously segment. And this is another one that I wrote in here that I really like. So why rebalancing your market mix is important. Important because you want to segment by mindset, not by industry. When you talk to anybody in a business, they're like, do you have segmented lists? Well, yes, I do. We look at it by manufacturing, distributing, whatever the case may be. And it's like, well, no, you want to segment the list by mindset because that's a certain language you're going to speak to those people. It's like speaking Spanish to one group, French to another group, because they operate differently. Yeah.
[00:35:27] Speaker A: And then so if you have different industries, so yeah, like very, maybe so practical, but like, do you have tags to with people in like your system to be able to say, okay, like this, like, how do you determine what industry or what client has what psychology?
[00:35:44] Speaker B: Your buyer Personas, and that's why they need to be updated every year is because in your target audience, you're going to put eye target folks in H vac and in residential construction and in flooring.
So those are my target audience, my industries that I'm targeting. And I'm going to build out their pain points, their stressors, their motivators, this, that and the other thing. And then each year when I look at H Vac, if I see that it's in phase A recovery, then I can put into AI that this buyer Persona is in phase A recovery and here's what their normal pain points is and that how would that be adjusted for next year knowing that they're going to be going through a recovery phase and all of a sudden, bam, you got a new mindset that you can start prepping someone.
[00:36:38] Speaker A: Got it, got it. Love it.
[00:36:41] Speaker B: So that is some examples for the market mix and the psychology.
There are the three main drivers for 2026. I'm giving some free insights here that I'm building into the Planning guide for 2026 Main Drivers Trust, value and belonging.
That came from some research that I did recently.
One of my call out sessions or call out notes here is in a tight market, your positioning is your leverage. If you don't clearly different, if you're not clearly different, you're just more noise.
And that's hugely important.
Now through, I mean 2000 and 30s we're talking into. You need to differentiate yourself in the marketplace. You need to have quantitative competitive advantages where you can clearly show with data and how you put together that statement that you're better than the competitor. Because if you're just competing on price, you're just going to need to the next substitute product is going to be taking your customers. Yep.
[00:37:46] Speaker A: Yeah, I love it. And yeah, it's so good it and then this is where you're to go back to the process is you're aggregating this information.
So that way when you're actually building out your campaigns and stuff like that, you're actually using what you've done as part of your planning and budgeting process. You're using that against the execution when you're actually rolling out a campaign or doing certain activities.
[00:38:11] Speaker B: Yeah. And it's all informing my forecast because if I'm from the market mix, I'm realizing, oh crap, like every one of my customers is in a negative mindset right now. And penny pinchers and keeping the wallet close to their vest and not opening it up. Like I'm going to have a tough year. Like how? And like then it's up to me as the strategist to come up with plans to convince them to open said wallets.
[00:38:35] Speaker A: Yeah, yeah, I love it.
[00:38:36] Speaker B: When I'm putting together my forecast, I'm going to, I'm going to have that intel to say, okay, I need to be modest in my expectations for next year. And that's why all of that is part of that top down approach that I recommend that I always did first.
And the next step is then the bottom up forecast.
[00:38:56] Speaker A: Love it.
[00:38:57] Speaker B: Now I've been well informed of what's going on around me. Now I need to look at what are just norms for my business. That's what you were saying before. Like the averages. On average, I close 100,000 new business a month on average. I my retention rate is 92%. Right. And I just figure out what I've done the last two years.
I forecast that quote unquote forward throughout 2026. Just applying my averages over the last two years and then I see where the two, align.
Is it close? Is it not close?
[00:39:28] Speaker A: And then what do we do about it?
[00:39:29] Speaker B: Exactly. And then what do we do about it? And that jumps right into the next section here where you start scenario planning with upper and lower bounds. And so I would always go through the mental exercise with myself to say, okay, my bottom up forecast was always my lower bound because that's like the lowest you can get, basically.
And then my upper forecast would be incorporating the understanding of everything that I had during the top down approach and saying, no, we can do better than that. So I'm going to increase it to be more in line with what I feel like what we have the potential to hit if we enact the right strategies. I'm going to pause there because one, I feel like I'm talking a lot. And two, because I'm excited. And two.
[00:40:17] Speaker A: Yeah, what was the last part?
[00:40:20] Speaker B: And two, my second thing that I was just thinking of was I got really excited on my last podcast with dad because I'm very much enjoying working with smaller businesses who have the agility to do exactly what we're talking about, right? Like where they can be more nimble and not have to sit in a conference room for 18 months talking about an idea before anybody can.
[00:40:46] Speaker A: If there's anything that I can reassure you with, I don't think the people that are stuck in bureaucratic nightmares are actually listening in because.
So your definition is small. I think it's the same as mine where we're, we're in the middle of the lower market. I had a panel debate with a guy recently where apparently we're working with the 2% of the owners who, you and I still call them nimble, but there's a lot of people that are just, you know, they're stuck in a job and it's a million dollars in revenue. But, like, this is where we have a. We have enough infrastructure. We, we have someone whether, yeah, everybody's in the same boat. Of that, I would say whether it's, you know, five to a couple hundred million bucks. I mean, they're privately held. They can just, you know, move fast, break shit. But let's do it. Let's do it the right way to be able to test. We want to increase the feedback loops. That's something like what I'm constantly trying to push across is we're just trying to iterate, but we want to come at it with the approach of, like, we have a framework to then iterate against.
And so the. I like the upper bound and lower bound and like, how I've seen that in. Once you. Once it's rolled into an actual financial model, you say, okay, because like, like the call I was just on, the owners got cash goals. They've got, you know, their own gut instinct of what they want for margins and net income and then what they feel good about. And it's like, well, if we take the upper, you know, the, the top down and then we kind of look at everything, we're like, well, we're off.
We're having those conversations in the boardroom first before we roll it out to all the other executives because we want to spare them with all the other, like, noise around it as we're synthesizing our expectations.
And then that. Then you'd have this kind of base case, which I don't know if you would correlate that to your lower bound. But, like, the. Here's what we want to do. But then the stretch goals, which are the different strategies of the different things, that's where we start implementing compensation plans tied to the gross profit, ties to sales, tied to net income, whatever it might be.
But we're bridging those two gaps with the thought that you're bringing at it. And then the financial insight and goals that the owner has to then actually use those two upper and lower bounds to put actionable compensation KPIs metrics that then should actually be rolled out to the rest of the organization.
[00:42:52] Speaker B: Yes, 100%. Yes. And best practice, set your budgets to your lower bound and then set your goals to your upper bound. So that way, at the end of the year, you're likely higher than you needed to be based on budget and what, what is.
[00:43:08] Speaker A: So back to. It's not rocket science, but if we do this work and if I'm sitting in a boardroom looking at a set of financials and we think we're going to do equipment sales of 2 million next month and we're going to do 3 million of service. But we want more. Like, all of the compensation for sales should be driven off of the more. Right. And then all of the gross profit targets should be, you know, for the operations department should be tied to that gross profit and holding that gross profit. So it becomes way easier to do compensation planning if we're doing this because we actually know how it ties to the strategies, ties to the sales, ties to the, you know, the conversion rates. I mean, everything is just so beautifully tied together.
[00:43:52] Speaker B: Yes. Yep. I agree. And that's another. I'm glad that you brought up that point. I hadn't even Thought of that either was the confidence compensation packages. So I would even build into my plans like monthly or quarterly competitions with certain, like a tied with a bonus or whatever to drive the focus on a certain product that I wanted to sell based upon its recognized revenue and where it would likely be closed in the year to know I was getting most of that revenue this year. So for example, if I know that a product typically has a, a short sales cycle, say two week sales cycle and it's recognized all at once upon receipt of closed order, I would launch those competitions in the end of the year to bring in as much more revenue as I possibly could to close out the year. Right. So using the comp plans and when, knowing when things are going to close and your conversion rates and all of that helps drive marketing campaigns in advance.
[00:44:53] Speaker A: Yeah, and it's, it's the marketing campaigns and the CRM and I'm back to, I mean I don't know how many people I've seen where like their serum and you know everybody wants their salespeople to have it. But like coming from a sales led organization, I mean if you actually use it and you're looking at the funnel and looking at the top of the funnel, bottom of the funnel, percent complete or percent probability and then the revenue tied to it, you're just adding all the compensation plans to all this stuff instead of just making it all up. And you know, back another comment back to the, the bottom up.
You talked a lot about the, the top down a lot of the other ways that you're looking at this. But you know, I've had coming from my sales side Kim, it was, we actually went through each sales team and then the sales manager would then go to the client or I'm sorry to the rep and you know, and then actually walk through what they're. We call it a 200% plan and like what activities they were planning on doing, whether it or calls or demos or you know, proposals sent, whatever those KPIs are.
And you know one thing that Pat used to do with his old organization was because it wasn't as much of a sales led organization, they would go and talk to their top 25 customers. And not everybody, I never had this luxury. But you, you know, he apparently did would go and say okay well what do you think you're going to spend next year? And so you're just having those thoughtful conversations to work on that, that build up and then tie all the KPIs to it and then then ties to the compensation plan which ties to the upper and lower bound. And it just, it can, it can be so fun once people do all that because everybody knows what they're doing.
[00:46:29] Speaker B: Yeah. And. And there's buy in. Right. So that makes a big difference too. Okay, so after scenario planning, that's where we start getting into how are we going to hit different strategies so we can hit that the bhag that we've put into place. And so that's really the rest of this all the way down to chapter 12 is the how.
[00:46:53] Speaker A: I'm fascinated. Just to interrupt here for a sec, so be. So you're.
I would sometimes think that the how comes before the upper and lower bound.
So why, why is the how next?
If you haven't refined your how, how could you land on the upper lower bound?
[00:47:14] Speaker B: Because I'm going to build a plan to get me to the numbers basically. And I'm going to actually build plans that get me to the numbers higher than my upper bound. So that way if things don't come through the right way. But the re. How I came up with my lower bound was my bottom up. And then how I came up with my upper bound was looking at my top down approach.
[00:47:37] Speaker A: Got it. Okay.
[00:47:38] Speaker B: And now I'm saying, okay, I know I have ever. I know I have all the plans in place to hit my lower bound. Okay, that's no problem. Like I've already, I have figured that out as part of building that forecast and that's what I'm budgeting to is that forecast. And now I'm saying, but how do I get up here to my upper bound based on where the economy is saying that there's pockets of opportunity and areas that I can capitalize on.
[00:48:01] Speaker A: So the top up is providing the opportunity of the gap and then the lower bound is what you think you can do just with thought or what doing some exercises like I just talked to. And then that once that gap is visible, then you're going into chapter six, which is the analysis and more of the how do you actually bridge that gap? Is that a fair way of putting it?
[00:48:21] Speaker B: Yep, exactly.
[00:48:22] Speaker A: Okay.
[00:48:23] Speaker B: Yep, exactly. Because the bottom up forecast is your norm. So that's. You continue to do everything that way that you've always done it, you're going to naturally hit this number, your upper bound.
Well, no, the economy is saying that there's opportunity to steal market share or the economy is saying that there's going to be a growth here in other areas and you're just lacking because you're not taking the opportunity to build a strategy to target it and bring in more money. So that's the rest of these. And so the competitive analysis. Everybody knows what a competitive analysis is. Everybody knows what a SWOT is. I don't know if everybody did it the same way that I did it, where I would look at competitors, I'd look at their websites and see, are they changing their language in any way to start diminishing the power my language has on my website?
Have they. Are they starting to put forward any new competitive advantage statements? Like, last year they said that their retention rate was 89%, and now they're saying that they're 90%. I know mine's 92%. Now all of a sudden, my advantage isn't seeming so great. I know that their pricing is cheaper than mine. I now need to find a better competitive advantage because they're starting to erode the value of my statement that I've had in place the last five years. Right. So, like, that's kind of the level of competitive analysis that I'm saying to see where.
And then where are areas that they're not talking about that I say, like I just said in the psychology section, you need to differentiate yourself. That's going to be huge in the coming years. What are they not talking about that I can't?
[00:49:51] Speaker A: Yeah, I like that.
[00:49:53] Speaker B: I just finished with one of my clients this week going through that exercise, and we found a bunch of areas that the clients, their competitors are not talking about. And you just saw the face, get excited.
[00:50:04] Speaker A: Oh, that's so cool.
[00:50:06] Speaker B: And they're like, well, we could put that metric together. And I know we're good in that area. All right, let's put it together and let's start getting it out there. So it's a really neat exercise to go through to say, I mean, and the other area, I know it's getting really into the weeds, but of a competitive analysis is even just looking at your competitors SEO, like, what keywords are they using to be found online? And then I would put together work with my team to come up with a keyword strategy. So we'd steal their searchability.
[00:50:33] Speaker A: I love it so much.
[00:50:36] Speaker B: So I know AI is kind of messing with that and making it less relevant, but just giving you examples of how you can use information you learn about your competitors to build stronger plans.
[00:50:47] Speaker A: It's way more sophisticated than what I used to do 15 years ago, which is interview every sales rep that was fired or quit. So I could just go get the information from what they're doing.
Way more work.
[00:51:02] Speaker B: It's it's, it's a way, it's, it's a message.
[00:51:06] Speaker A: Oh, nothing, nothing more fun than meeting with a bunch of, you know, B minus, C player, you know, ex washed up salespeople.
[00:51:13] Speaker B: Yeah, that's what I was just thinking. Like, I don't, I don't. That never occurred to me to do that.
[00:51:18] Speaker A: Yeah, no, moving on.
[00:51:22] Speaker B: The next one that I have on here is pricing strategy and pricing trends. I mean, the obvious ones here are if we're living in a period with a lot of inflation, margins are being squeezed, consumers are feeling constraints, so on and so forth. What other pricing strategies are there that exist? So that way we can justify increasing our prices to have that pressure not negatively impact the business while there is increasing the value perception. Right. And then it starts you down through the whole journey of, well, how do I increase the value perception of what I'm doing without adding a bunch of costs to what it is that I'm producing or that I'm selling? And that again gets you back into the psychology, well, what is it that people are valuing and what they're receiving from me and how can I message that to be even greater? So I can give you an example again from the speaking engagement stuff.
At one point, our speaking engagements, we'll call it 15,000. And our webinars, same content, same speaker, same duration, was going out the door. We'll call it for $3,000. Well, why? Because it's virtual versus on site.
And then so that mess that pricing was messaging that the value is being in person versus the content.
[00:52:52] Speaker A: Oh, I like it.
[00:52:53] Speaker B: And so what we did was we put together, I mean, it took probably about three to four months of very strategic educating the sales staff, training them on how to speak to things, changing our copy on our website, changing our communications and our marketing strategy. But I'd say within about four months we were charging the same fee for virtual versus on site.
[00:53:16] Speaker A: No shit.
[00:53:17] Speaker B: Yeah.
[00:53:17] Speaker A: Wow, that's super cool.
[00:53:19] Speaker B: But it's all just by identifying what is it that people are focused on for the value. And then if that's not the appropriate thing because you need to do X, Y and Z, how can you shift their value perception to something else?
[00:53:31] Speaker A: Over here, there's so much underneath what you just said. Because I can think of so many horrific decisions that I have made in the past where it was like, I think, insert idea that not sound, not tested and like the copier. And it business was so like, should we charge for assessments or not? Should we charge for training or not? I Mean, like, and you just. Just make shit up instead of like actually going through and, you know, flat. Right. Flat rate pricing, project pricing versus time material. I mean, like, you know, what are.
What are different things that you've seen of, like, how you actually extract that information from your clients and from the marketplace?
[00:54:12] Speaker B: So how did I know?
[00:54:13] Speaker A: Yeah, how did you know that? Like what, what the actual.
[00:54:16] Speaker B: Yeah, a lot of it's from conversations with clients. And then you can see the evidence of it when.
In the results.
So if you all of a sudden try to say, tried to charge a new customer who's never bought a webinar from me before, and I just went to charge them $10,000 and I didn't change anything in the messaging and the sales process and any. Didn't change anything, and I started losing all those new business deals. I would immediately know that the pricing was too high, it was above what the market could bear, and it wasn't an appropriate strategy. So it's either it's above what the market can bear, or I need to adjust what the market's willing to bear because I'm going to adjust the value perception.
[00:54:58] Speaker A: And then the value perception was through understanding why you lost those deals, what they were saying, and, you know, getting that feedback from your sales team.
[00:55:07] Speaker B: Yes, exactly. Yeah. And again, that CRM, super important so you can track loss, deal reason, run reports and analytics on it. I used to look at that all the time. Ever again, once a year, every year when I was doing my planning, I would do by product. Why are we losing customers by product?
Bake that into my understanding.
[00:55:27] Speaker A: If people have the data with AI, it can be so much easier. I mean, like, like data, data, data. Data is more. It's more valuable than gold. I swear to God. Like, anything we can do to get that data. Because I can only imagine in the past how much long. How long that would take you versus you. You know, you export it and you plug it all in and you go, what the hell is the trends? I mean, I had a friend that, the guy that sells wedding dresses, he. He like, somehow I think you can export or whatever all of your Google reviews and then all of the customer comments, and he's like, he was like drooling. He's like, this is more valuable than the casino because you have all of these insights right there. But you don't get that. That value if you don't have the data.
[00:56:12] Speaker B: I'm gonna take a quick note, please.
[00:56:16] Speaker A: Yeah, yeah. If you want. Jimmy Fritz has been on the podcast. I mean, he like, he is a freaking machine as far as marketing and like data. And I mean, his, his marketing funnel is like, he's a data scientist. I mean, you would geek out with him.
[00:56:31] Speaker B: That's awesome. Well, it's so true, though. And when people don't use data, they're just, well, it's a common practice to do this, or marketing says you do that, or it's just, no, you're shooting in the dark and you're hoping for a win.
[00:56:47] Speaker A: And you, before we hit record, you're like, can I get the transcript for this so I can help refine my playbook? For sure.
[00:56:55] Speaker B: Exactly. Well, and that's again, I appreciate my background being from an economic firm because it really did teach me how to analyze data.
But my masters, that was in market research and stuff like that too. So that kind of helped a little bit.
I was just thinking, I got so sidetracked when I said that, so. Because a lot of people hear that I'm in marketing, so they think design, they think I make things look pretty.
And like, I don't know.
[00:57:26] Speaker A: I'm convinced because of all of our conversations. Like, I actually reworded my, my module. So to predictive revenue. Like, that's all we're trying to do. Because I am convinced at this moment, until something is better to prove me otherwise, that strategic planning, sales, and marketing are all the three legs of the stool to get the revenue every single freaking month on the income statement, like, you have to do all of those, which is what you've packaged together. So. And that's why I even said when I first met you, I was like, marketing doesn't do it justice at all. It's predictable. It's predictable revenue. It's what we want.
[00:58:00] Speaker B: Yeah, exactly. Marketing almost feels like a dirty word now. The more that I think through, like, sales is like the dirty word or has been for a long time. And now it feels like almost like marketing is too, because it's just, it's so watered down.
[00:58:12] Speaker A: Oh, people got hoes. I mean, like, hosed beyond belief from marketing firms, sales firms, because, you know, I think a good gold nugget for everybody listening is that if you don't do this holistic planning, it's randomly doing that has not. I mean, and you're assuming, like, why I teed it up before we started sharing screen here, all of this will be integrated into the financials and then it has to integrate into, you know, the cost of goods and the margins and then the overhead and then the cash. Like, it all has to be tied to together and there are three buckets of the income statement and revenue is the leading driver of it. And you've just built a process around making sure that we can actually tie everything together.
[00:58:56] Speaker B: Yeah, exactly. Exactly. The next one is innovation and trend spotting. There's always something new going on. So how can I get the most out of that new. So for example, years ago, when all of a sudden podcasts really started taking off, it's like, all right, let's launch a podcast. And then all of a sudden, all right, let's launch a second podcast. Because that first one's doing really well and getting us a lot of leads. And so there's just. There's always something new going on and just looking for how you can capitalize on that. So there was another trend where. And I don't know if this ever got implemented or not, but there's another trend where a lot of folks are enjoying the subscription pricing model, where it's a monthly fee and you can actually structure it in such a way so that way they lock you in for 12 months. Then your monthly fee is X, you lock you in for 24 months, your fee is X minus Y.
And so it can actually create a predictable customer for pretty far out into the future if you structure them in this way. And it adds benefit to the customer because the longer that they're a customer, the more cost savings that they receive.
And so that.
[01:00:10] Speaker A: So it could be innovation and trend spotting. On what I heard was like how people are consuming material or marketing material or your. How they're engaging with your brand could. I'm assuming there's also like, is there something in your industry that's different that's going on? Or if they're trying to buy your, you know, the whole IT comp. Or IT industry went from time and material to, you know, price per user.
But so it's. Is it combination of business, business model, clients, industries and marketing consumption. I mean, how would you bucket or how would you.
Am I on track with that?
[01:00:46] Speaker B: You are and I. The list is long. So it's like, what new products and services are coming out in your space?
What new products and services are coming out that may not be in your space, but have relationship of some kind that you can explore further, Maybe be at the forefront of something.
What pricing norms are coming out that consumers seem to be purchasing more of and getting good feedback on? What are, like you said, business models? And then how are people consuming information? Where are people going to consume information that changes. You'll get different Things, things that will sprout up. And people go through cycles too where they like to be in person, they don't like to be in person, they like to be on Facebook, they don't like to be on Facebook. So just keeping up with trend spotting, all of those things. So that way you can incorporate that into your, your plans too.
[01:01:42] Speaker A: Love it.
[01:01:44] Speaker B: So that's just trend spotting. Then the next step is exploring new vertical markets. So if you remember I said the market mix back in chapter three where we're just looking at the top down, that's your current market mix.
What new markets might I want to consider starting to target and try to get some customers in. So for example, the2030s, serious economic decline. What are the pockets? That's a common question. Well, what are the markets that may be more resistant like health care.
So I have been targeting health care probably since before this decade started to start getting more clients in the healthcare industry.
Government spending areas like your defense spending, law enforcement it so your cybersecurity, your data centers, your energy like just knowing where these pockets of opportunity are and then developing an actual step by step. I'm going to do this in the first six months of next year and I'm going to do this in the second half of next year. My expected results from each are out. Yes. And why and then that's going to set me up for success in 2027 because I'll have some forward momentum. Like you can't just say I'm going to target healthcare and then bam, all of a sudden you're making half of your business now coming from healthcare. So it has to be a stepped plan. But that's a part of this Chapter nine is building out what are the markets and then what are those plans going to be to go after them.
[01:03:11] Speaker A: Love it. And I think it's helpful.
What I watched you with one of the group calls is using then like the business cycles to understand the different markets, what's up swing, what's downswing and you know, where are those pockets that to use your word that you keep saying where's the government spending their money?
Yeah, like that's there's all. There's a big rule of thumb that I think is worth paying attention to there.
[01:03:36] Speaker B: Yeah. Yep, exactly. And then just putting the plans together, the next one is putting into place. I had mentioned earlier like the seasonal strategy and promotions and so actually just building out what could those be? What do those need to be? And tying a dollar amount you do so by looking at past again your Average performance. If I've done something similar in the past, what was my performance? And then what I'm going to do differently this year to give me a better outcome than I got before. And documenting all of that.
And then this one is like I said, you're doing your trend spotting but this is actually building out the plans. What is my product cycle going to be to go after those trends that I spotted and I want to target.
And then finally it's the execution of just bringing it all together. What do I need to make it all happen? Team technology money and just putting it all together to put a budget together that says if I have this budget I will hit my above mentioned goals.
[01:04:35] Speaker A: That's why rolling it and that's why the CFO that's leading this synthesizing. Okay, well how much are those trade shows going to cost? How much ad spend do we need? Like and you know, I think it's even I love you know the whole Jim Collins bullets and cannonballs. You know we want to you know, shoot a couple bullets to try out a new market, try out a new service offer and try out a new pricing strategy. See if it works instead of just you know, randomly taking something and then if it shows up on the income statement and the gross for revenue and gross profit and it works, then you can do more of it. So cool.
I think there's so much to be said about what you were saying where it's the whole revenue forecasting, right? Like this is like I, it has blown my mind and it has made me beyond frustrated people's like sales and marketing or like strategic planning over here. I just like the, it just. It's a holistic system. I mean it's one income statement, right? I mean it just to do it out of like out of in pockets and silos just is just insanity to me. I think.
I mean even comp plans. Do you have any two cents on comp plans? I mean maybe that because like this is all of these KPIs and all of these, you know, activities and thoughts will roll into sales and marketing comp plans. I mean any, any thoughts about how you've. What you've seen that works, works and doesn't work.
[01:05:57] Speaker B: What I've seen works is the current structure that I left. We've tried and failed in many other areas or many other structures over the years. So I can start with some of the failures. We had hunters and farmers.
So you have your group that are going out after new business. Once new business is closed, you hand them over to a farmer and the farmer then owns that relationship for the life of the customer. Didn't work because it doesn't allow you to truly reach the trusted advisor role right from the beginning. It gives you that interim step and unless you execute on the trusted advisor role really well as a hunter. But then when you hand over to the farmer it diminishes the relationship from the customer's per perspective.
And so we ended up moving to a hybrid position where it's you do the hunting and the farming. So you're going to trade shows, you're doing outbound efforts on LinkedIn, you're doing cold calls, you're sending, you're enrolling in email sequences and you're owning a book of business and you're in charge of growing that book of business and you're handling any inbound leads that are coming in the door. So it was a much higher skilled position that was needed. But in doing so they became the trusted advisors, the face of the company and could answer any questions the customer ever had. Because they had so many different experiences working with the economist. So working side by side and hearing the economist talk with clients every day gave them a lot of benefits. Benefit talking to new business that had never talked to an economist because they sound like an economist when they're talking with them. They're smart enough but they translate it in a way that it makes sense to the, to somebody who's not an economist. So there's, there's a lot of benefit to working close with the subject matter experts or production team and having them be the face of your company.
[01:07:51] Speaker A: I've seen, I've seen some challenges with that when then all of a sudden the book gets too big and then you don't have as much outbound. Did you ever experience that?
[01:07:59] Speaker B: Yes. And we'd have to slice off chunks of the book of business. And so that was usually an annual thing and how we handled that was that our commission was greater for new business than it is renewals. So that way they were enticed to want to hand off some of their old business to create more room for that more closing of new business. But they were still commissioned on their existing business. So that way they were just is enticed to grow their book of business while they, while they own that. We had also tried product specific where okay, you then own subscriptions, you own consulting and you own speaking. That totally destroys cross selling opportunity and creates such.
[01:08:39] Speaker A: Amen to that.
If you want to create a culture of enemies.
Oh my God, totally.
[01:08:49] Speaker B: Yeah. It was such a mess. Yeah, such a mess.
[01:08:53] Speaker A: Oh man, we've both been through that. Fascinating. A couple comments and I'm gonna make sure I don't forget one of these. So I have a comment about. I want to come back to. If someone isn't a sales led organization or they've always like had referrals that are coming and how to become and start like getting acclimated to this kind of thinking and this kind of discipline. Before we go to that, to speak to what you were saying, we had different vertical reps, you know, healthcare, government or something like that. I've seen that work.
Okay. You know, versus like geographic zip code. And one thing that we did in order to get rid of that, you know, because I tried that whole verdict, the product line and then it was just like everyone's fighting. We went to profit per customer.
It was really interesting. So it was like we wanted, we, we, we shifted the comp plan from gross profit. I mean there's revenue, there was a revenue driver, a gross profit target. But then it was contract value.
So we had reps that were signing seven year contracts because it was like we want to make, we would commit, we would comp you on everything to the first out of the contract.
So then people were driving then like longer and bundling things together. But how we handled it because we, it was primarily a hunter organization. There were some like major accounts and stuff like that. But sales engineers, I've had really good success with that. So my definition of a sales engineer, Kim, is that you're bringing the expert out with you but they're not the account rep.
So it's like, you know, we would have like if with those, you know, different product or service lines, the sales engineer would be coming out to do the demo or to help explain or the technical, you know, or you know, blueprint or whatever it might be.
And then integrating sales training with that because I agree with you, like the more they can actually speak to the actual problems. Like it doesn't work when you got a monkey out there going hi, I set the meeting.
It's like the customer then starts looking at the person that they're going to be actually working with. But there's some success I had in the, in the sales engineer based on the product or service line and then integrating sales training into making sure that they're like continuing to elevate themselves and how things work. I don't know if there's any takeaways in there, but I resonate with what you said.
[01:11:06] Speaker B: Well, and I Agree with the sales engineer approach. I'd say that's a lot. What we did with new hires is we would tag team them up with an economist when they first started. So that way that was part of their training. And then they actually went through a lot of the econ onboarding training where they had to learn basically the first like same two months of kind of information. I don't know if it's two months exactly, but just as an example, they had to go through that same training course as an on as if they were an economist being onboarded so that way they could become more specialized in it. So there is merit to that concept for sure.
[01:11:40] Speaker A: So this topic, trying to think how to frame it up.
I've worked with a lot of people because again, given the fact that I think our experiences from sales led organizations are more unique and a lot of founders were a specialist often and then, and a lot of times it's not in sales. Right. There are certain industries that are that I know are like primarily sales focused. Whether it's telecom or like you know, Northwestern Mutual or insurance or copiers or whatever it is. But then there's a lot of professional services or home services or B2B that it's just referral engines.
And I think what there's a fundamental belief that I have that, that some organization can start doing this stuff to have more predictable revenue without blowing up their culture.
I really, I, I really do believe that. And then you know, let's take, you know, there's a couple new clients that I've referred over to you that are in this boat. How do you start to like, how do you think about how to start integrating these disciplines and these concepts when an organization or an owner founder has an allergic reaction to the word sales and you know, pressuring people in or like, like how do you start thinking about that?
[01:13:02] Speaker B: Well, advice that I have given in scenarios where I'm coaching and they seem to have an allergic reaction to start talking about sales is that I don't. I pick up on that usually before it ever even gets to the point of them having allergic reaction. Because I'm not going to say something that positions it in that way and it's all in the messaging.
So for example, instead of calling it a sales process, nurturing process, how do you nurture your relationship? Instead of calling it sales expectations, it's client engagement expectations.
[01:13:32] Speaker A: Now you have some nice kid gloves.
[01:13:36] Speaker B: It's all coming to the dark side. Well, you don't know you're coming to the dark side.
[01:13:41] Speaker A: I Love it.
[01:13:43] Speaker B: So, and it makes sense and I can prove that things work. And so you can even role play some. Like, I can give examples of, well, if put yourself in the customer's shoes and I'm going to put myself in your shoes and then I'll enact something, giving some examples and they're like, well, that was actually really pleasant and that wasn't bad. I'm just like, yes. Like it's, it's not, it's not economists selling.
[01:14:07] Speaker A: Like, if you can get economists to sell.
I don't like, I mean, come on, everybody. What, how about maybe just get. I'll give you a couple examples of current clients that I have that we're working through.
Starting to like, instead of just guessing, starting to do some of the things that we're talking about here, there's this process of just start to think about what's currently happening. So let's say it's 85 or 90% referral based. It's like, well, there's still stuff that's driving it. Whether like your project manager or engineer is having how many client meetings or like you're, you know, a subcontractor and you're out like having lunches with general contractors how many times? Or you go like, how did you start, like just grabbing on to data. Like, like, what are some, you know, do you have any thoughts about that? Because I, I like, do you think that I'm saying the right things? Or like, how would you think about if someone is like mainly referral based, how do you start figuring out what those KPIs are in your customer journey and like at least trying to give it a beginner's shot.
[01:15:13] Speaker B: I think you're right on track. What activities are they taking that turn into those referrals? And then what are those conversion rates? I mean a referral is going to have a higher conversion rate than other things anyway. So. But it's just start by documenting what activities you're taking and then what, what in what goal of outcome do you want from that activity? Right. So that's why we always say like on purpose, with purpose. So like I'm going to post on social media this, my goal is that this happens. I'm going to go to lunch with this person.
My goal is a referral for this person. I'm going to post a direct message on LinkedIn. My goal is this and to just know what your goals are. So that way you can be tracking if you're hitting your goals and then noting what the activities are and then measuring the success. So if you say, all right, last month, my goal, I did five meetings, which meant my goal was five referrals. I only got two. So my conversion rate was this. And then you can start to track your month to month conversion rates. You can also see that maybe six months from now those other three people became referral, like gave me the referrals. And you can start to see what is your referral cycle cycle between your activity and when the referrals come in.
[01:16:29] Speaker A: Do you like, do you like data?
[01:16:31] Speaker B: I love data.
I'm such a nerd. I. I've been called a nerd my whole life and I will, do not deny it.
[01:16:39] Speaker A: Yeah, well, it's. Because then you can do something with it. It's.
[01:16:43] Speaker B: I like informed decisions as we're, as.
[01:16:47] Speaker A: We'Re sliding into home here. I'm curious on what some of the trends are that you're seeing in the, like, marketing sales world. And maybe I'll start and, and I want you to. Either I want you to push back on what, Because I don't know if these are just like, you know, bubble echo chamber thoughts, but obviously AI is like sw, you know, flooding and swamping everything.
Like, I believe that real relationships matter and being real really matters. And how we get that across can be a lot of different mediums, whether it's real sales meetings or whether it's webinars or podcasts or whatever it is.
I am so sick and tired of the regurgitated bullshit. And what I usually think about Kim is like, I'm, I'm. I try to do a very good job observing my thoughts and I'm like, well, if I feel like I'm sick and effing tired of everyone being a talking head telling me what to do on LinkedIn or on social media, I'm assuming other people do too. And, you know, or like noticing that there's AI regurgitation everywhere.
But it's super noisy and I only believe it's going to get more noisy. And, you know, there's all these, you know, assumptions people have that I don't know are some of them are warranted, some are not. I hear another thing of like, sales doesn't work. And I'm sitting there going, I see sales working more than ever because people are looking for real human beings.
So it's like this.
I think it's very similar to, like, when you look at the business cycles, it's almost the inverse of what people think because by the time people feel something, the trend's changing. Where I was watching. I mean there's a lot of chatter now that people are just like thirsty for in person stuff again. So like, any thoughts of like, you know, what you see as far as like the overall trends of like how people are consuming brands, you know, how they're sales, marketing. Any kind of 2 cents on what I'm saying?
[01:18:45] Speaker B: I think you're spot on with everything that you're saying per usual. So I don't have to push back. Come on.
[01:18:50] Speaker A: I thought you're going to call me crazy. I just want you to tell me.
[01:18:55] Speaker B: But I would say, I mean you're spot on. I'm seeing a lot of people wanting more human interaction. They want to be, they want to be able to relate. They don't want. No, but this is not new. But people don't want to read anymore. The phone call activity is picking up versus email. They'd rather just have a phone call. The virtual age people don't mind as much as they used to. People used to hate virtual meetings. But some people would rather just call you really quickly, virtually than send you an email at this point. I think as far as other trends that people probably aren't capitalizing on as much what you and I are doing right now with our note takers, huge opportunity there that I don't think a lot of account reps are doing when they're actually having meetings with people. But now you have to like fathom. I don't know if you got the email too that I got. Fathom now syncs with project management tools like Asana and stuff like that. Like there's so many efficiency gains to be had. So I think there's a lot of operational things people could be implementing to streamline and be more efficient.
[01:19:59] Speaker A: Yeah, yeah. Could you think about the data? If you have a bunch of sales people or customer service people and you're grabbing that data back to them, what's the messaging? How do you plug that into your CRM or like building out proposals that are customized or. Yeah, fascinating. I like that.
[01:20:15] Speaker B: Yeah. So I think if I were to focus in on one area of trends right now, I think it would be more how do I make my team and my business more efficient operationally with the different tools and less focused on.
I'm worried that people aren't resonating with my content on LinkedIn. Yeah.
[01:20:34] Speaker A: And one other thing that I'm, I have this belief on because of like what we're doing today is I, I was talking to another business owner and I'm just like, give it all away.
Like, I, I see this trust recession because of AI and because people been bamboozled from advisors and consultants that don't know how to do shit. But they promise the world, prove that you can do it by like having a podcast or having a YouTube video. And as long as those downloads are the right people, like, I'm never going to be the top podcast and I'm just totally cool with that. But like, if the people listening in are like, that was really effing valuable and I really appreciate it. I believe that Kim can do this. And so I was talking to this, this guy. I'm like, go on, on YouTube, create a video and show them how you implemented a document management process and what the client's problems were, what you did, how you went through it. I'm like, people aren't going to do it themselves. They're just trying to figure out how to bridge that trust. Because I think people are so sick and tired of wasting time without getting the results, they're being more hesitant. So I think people who will open up their pocketbooks if they believe the person will be able to actually help them make progress, but they don't know how. Like, I get emails all the time.
[01:21:53] Speaker B: I don't know.
[01:21:53] Speaker A: If you do, it's like, meet me. And I'm like, like, what do you do? Send me a freaking link of what you did. Show me a video. But I don't have time to have another meeting if I can't see what the outcome is.
[01:22:05] Speaker B: Yeah, I get so many spam emails. I'm not obviously a fan. I am very careful with what I recommend to clients on what to email, what not to email, what to post, what not to post. I think you're absolutely right, is that people need to be more direct in their communication.
Get rid of the jargon and the fluff.
[01:22:24] Speaker A: Solutions and integration. Kim.
[01:22:26] Speaker B: Yes, yes. Like, no more fluff, no more jargon. Make it quantifiable. Like, we go back to the competitive advantages. Tell me what you do and why you're better than somebody else and why I should take. Like, I'm basically giving you my time. Like you're. Yep, I'm spending my time with you and that's pretty valuable as far as I'm concerned. I'd rather probably be spending it sometimes with like my kids. So it's like, tell me why I need to spend my time time with you. I think that's a mentality of a lot of a lot of the consumers these days.
[01:22:54] Speaker A: This was a blast.
Where can people reach you at my.
[01:23:01] Speaker B: Website, which is v as in Victor2A is in Alpha Marketing and. Or email me Kimberly2AMarketing.com. Or just talk to Rock, because he talks to me every week and he knows.
[01:23:16] Speaker A: Yeah. LinkedIn, email, text. Check out your growth playbook with you and your dad. A lot of fun. I've been on it a couple times, you guys. It's a lot of fun. And so fun. Kim, I. This is. I'm very happy that we did this.
[01:23:29] Speaker B: Yeah. It's been a feisty Friday afternoon, and.
[01:23:32] Speaker A: You don't normally take meetings on Fridays, so I got in the lucky camp.
[01:23:37] Speaker B: Now it's off to boxing.
[01:23:40] Speaker A: All right. I love it. Thanks.
[01:23:45] Speaker B: Sam.
