How Do You Bill Your Customers? Is There A Better Way?

Do you have trouble when you bill your customers around the holidays?  Do all of your clients pay on time?  Does holiday collections make you stressed?

As a business owner that services other businesses, we never pick up new customers around the holidays, and have stopped marketing all together during that time.  The owners are either too busy, or on vacation depending on what kind of business they have.

You would think after 20 years of owning my own business, I would be used to this and the lack of income wouldn't bother me.

This year I didn’t even go over my gift budget, so I should be feeling better.  If I didn’t spend all of the money I planned to spend on gifts why would I be stressed about money.  The simple answer is “annual bills”, and a 40 foot palm tree that snapped and landed on my neighbors roof.  That was a dozen or so Benjamin's I didn't plan on spending this week.

This time of year, many major organizations send out invoices, I have an entire list.  For example, as an investor I have a Real Estate License simply because the good and experienced realtors don't have the time to dig for the deals I want and the new ones don't have the experience to get it done.   Every week for the last three weeks, I have been sent a gentle reminder that I owe my Realtor "board dues", local association dues, computer access dues, Supra Key dues and oh by the way, they would like another $80 for the political action fund.  

Note to the National Association of Realtors.  You might save a ton of money on the reminders if you didn’t have January 1st as your due date and made it more sensible like June 1st. Why?  April 1st, everyone is worried about taxes, that is out, May they are booking vacations, that is out, October, the holiday plans start, November and December the holiday spending begins.

The Realtor associations aren’t the only ones.  Every group I belong to wants money on January 1st.  It feels like the day after Christmas I have to clean out my accounts and send checks to everyone at once, never mind every charity I ever donated too has also sent a request for money.   In fact, I am going to write more checks this week then I wrote the rest of the year because I won’t let any of these groups “auto bill”.  

The one that got it right was the Vail Corp.  In order to get the best guaranteed price on Ski Passes, I am on auto renewal with them.  They took the deposit in June, good, and then charged me for the rest in late October, pretty good. By the time the slopes opened, my annual pass was paid for and I wasn’t having to stand in a long line to pay nearly twice as much for my new pass.

I think at our board meeting we are going to try and figure out how to change our customers plans so that January 1st, there isn’t an invoice, Maybe even May 1st to let them recover from their tax bill.  

What do you think.  Would you rather get billed 10% more each month and not have an invoice in December that is due January 1st?

Is There A Right And Wrong To Social Marketing on Social Media?

Can you do Social Marketing wrong?  Can anyone do it right?  Is Social Media a must for small business?

These are three big and related questions that have some long answers and short answers.  In marketing, metrics are everything, or at least that is what the big companies want you to think.

The only metric that matters is Sales Per Marketing Dollar spent.  The rest is marketing smoke and mirrors to get more money out of your pocket.  

So how does social media and social marketing fit into this mix?  Basically your only expense is your time unless you hire someone to do it for you.  My company used to offer the service, but the evolution of social media has made it ineffective for a third party to take over social media marketing.  

What we do now is monitor your marketing and send reminders to someone inside your company.  If the information doesn't come from within your business it lacks the authenticity that social media requires.  We can start a program and coach you through it, and that is about it.

Why hire a coach?  Reminders and accountability.  90% of the time people just need to be accountable to someone.

Social media and Social Marketing isn't any different.  

Recently I took a class from someone who nailed all of the rules, and didn't follow a one of them.  It was great because her lack of traction said it all.

Some simple keys? 

First, make sure you know your customer.   Think about your best customers.  The top 1% in total dollars and the top 1% in profitability.  When you write a tweet or Facebook post, write to them.  Don't write to everyone.

Second make sure you post.  Some good minimum rules, One blog post per month, One Facebook per week, three tweets per week.  If you have nothing new, find something that helps them even if it isn't related to your business but something they trust you with.

Third, Listen and learn from them.  See what they like and what they skip.  Post more of what people like.

That is all you need to do.  If you want a little more, try my book, "The Easy Guide To Internet Marketing"

Are You Spending Right For Your Business?

Spending right for your business is a tougher challenge than most people can imagine.  If everyone could do it, then we would all be in business for ourselves.   I have to admit this bit of wisdom was passed on to me by a friend and mentor, it isn't something I understood on my own.

Business itself is a very different animal.  Owning one takes a special person who is willing to sacrifice everything in order to serve someone else's wants and needs.  Let's face it, building a business that only serves the owner is a waste of time and money.  Regrettably, I know this because I did it and ate my lunch and seven figures doing it.

One of my "success keys" is to "Be careful who you listen to."   I seek out people who make at least twice as much money, or have twice as big a home or at least appear to make at least twice as much money as I do.  Why?  Simply put, why do I want to take financial advice from someone who makes less money, business advice from someone with a smaller business or real estate advice from someone with less property?   If I am doing better than they are I should advise them shouldn't I?

My friend owns a company that is well over ten times the size of my business.  We were living about three streets apart at the time we had the conversation.  He lived in a stunning golf course mansion, and I lived on a huge lot with a Sears Craftsman catalog home a few blocks over.  We met through a neighbor at a party.

Sitting on his back patio enjoying a beer, he turns and says, "Scott, I think you can appreciate my day today.  Today is a great example of how I make all of my money.  Margins are so thin nowadays that you have to guard every penny with your life."  Keep in mind this is a guy running a business easily 10 times bigger than mine in employee count and income.

He recounted his day covering everything from an employee that wanted an undeserved pay raise to a truck dealer trying to hit him up for a $1000 repair bill.  He talked about how he showed the employee how much they needed to do to earn what they were asking for, and continued with the story of the truck dealer who tried to charge $1000 for a transmission that was just three days out of warranty.  His company had over 100 employees and 20 trucks at that time.

When he added up all of the money he was able to not save for the day it was nearly $2500.  He says do that 3 days a week, and spend the other two on the shop floor, and you are saving well over your salary.   I did the math, 50 weeks at $7500 a week is $375,000.  I can't verify his salary, but that looks like a number that would pay for his house.

In my personal blog, I have discussed the problems with IT overselling you on solutions.  You have to know your business and what it really needs, otherwise you will just spend money without knowing where or why it is going somewhere else.

When you look at the financials of a successful business, the owner is taking home just a small percentage of the gross income, usually 5% or so.  Think about that carefully.  On a business doing $1,000,000 a year in sales the owner is really making only $50,000 for their investment.  Anything else is income from the labor just like an employee.  If they spend too much time in the business working on the job, they miss the opportunity to keep an eye on where the money is going.

That difference of just 2 or 3% can be the difference between success and failure.  That fine line can make or break a small business.  Building a business to sell creates an even bigger challenge when it comes to watching the outflow of cash.  Buyers like money coming in, not going out.

Do you spend the time each month to understand where all of your money goes?  How about each week?  Where can you save that critical few hundred dollars each week?

What is your customer really worth?

Lately I have had more than one discussion on the lifetime value of a customer.  While there a few businesses that are one shot programs like wrongful death attorney’s, most other businesses have a long term value and benefit if they can maintain a customer relationship.  

Every owner I talked to wanted more customers, and agreed that the customers they have are the most profitable.  So when I wanted to add a customer relationship program to the mix, why do they hesitate?

It is a very interesting phenomenon and attitude among business owners.  All of them will track how many customers are added to their “list” but they rarely track how many leave.  Online marketing is an interesting field because the total list is always a moving target.  If we forget about the existing customers for even a minute, they fall off the list faster than we can hit the refresh key.

So why is it that an owner will spend a small fortune on online advertising and not a penny to engage the existing list and make sure they don’t go anywhere else?  I don’t know.  The Harvard Business School has a pretty cool calculator to estimate the lifetime value of a customer. 

Who Are You Marketing Too?

Marketing to the right customer is critical to your success.  If you own a cupcake store, and don't have sugar free or gluten free, marketing to diabetics and people with celiac disease is a waste of time and money isn't it?

So who are you marketing too?

Jeff Walker taught me a great little exercise.  It is a two part exercise that I do every time I create an ad or copy for a client.  First I define the business and then I define the customers.  I only write to the things that overlap the two.

Within that overlapping area is the image of the perfect customer.  I grab a photo from the internet of someone who I might or might not know, and imagine they fit this profile.  I then start writing. I write as if we are talking to each other at my desk.

For each customer I have two phrases or keywords.  For GetTheBugOut.com I have Termite Tenting and Termite Repair.  As I write for them I look at the article or ad and ask, "Does this help the you (the person in the picture) decide on a Termite Tenting or Termite Repair company?

If not, I keep writing, until it does.

The picture is the perfect customer, the who of your ad and your marketing.  The keywords are your why.  If there isn't a who and a why there isn't anything to market.

Figure out your who and why before you write or buy any advertising, and you'll find your returns are a lot better.