Avoid Costly Mistakes and Bad Decisions that Make Recessions Worse

Let’s face it, executives don't make bad business decisions because they want less traffic, sales, and profit. Most bad decisions have good intentions, but many business leaders lack the structure and processes to let data guide their choices.

Most business leaders assume we are heading into a significant recession. Recessions can be a massive opportunity because most business leaders make bad decisions during recessions that cost them market share that they never get back. It’s a lot easier to lose market share than to gain it.

The super rich get wealthier during recessions because they gobble up market share.

Me personally, I don’t participate in recessions (but that’s another story ?? ). You don’t have to participate in this upcoming recession either.

The key to growth during a recession is making intelligent decisions. But, odds are slim you'll make the correct decisions without good data. Without good data, you make decisions based on your gut and fear. Fear can make us do things we would normally never do in the right mindset.

You can produce better marketing results consistently with the following tips:

Commit to testing, and ensure you test one variable at a time. Testing one variable at a time is the scientific principle of control. In addition, isolating variables allows you to be certain of the source that caused a different result.

Companies with razor-thin margins have tremendous pressure on their bottom line. These companies will need to become more efficient in every area of their business.

Testing is critical because it’s the only way to maximize your performance in all the key areas of your business. However, most companies never test any aspect of their marketing or their sales pitches, etc. They bet their fortune on chance.

Gambling your time, effort, and money on what you believe the marketplace wants, is a sure-fire way to waste it. That time, effort, and money could be used to provide a steady stream of high-quality leads to you, your business, and your employees.

Why wouldn’t you put every important question to a vote by the only people whose ballots count… your prospects and clients?

They vote with their time and money!

How can you put your questions to a vote?

By testing one sales initiative against another. One price against another. One ad concept against another. One headline against another. One follow-up or upselling process against another.

When you isolate down to a single variable, and analyze the results, you'll discover that many times one approach outproduces another – maybe even by large margins.

Often you underperform in a lot of areas because you’re depending on the wrong actions or approaches for your success. You can right that wrong and never make those mistakes again.

For example, most email programs allow you to test one email subject line against another to the first 10% of your list. Once a winning email subject line is determined the rest of the list automatically receives the better performing ad.

Another example, if each of your salespeople averages 20 calls a day, shouldn’t you find the one sales 'pitch' or 'offer' that lets them close twice as many sales and increase their average order by 50% to 100%, with the same amount of effort?

So, tomorrow, have your sales team try different pitches, different hot-buttons, different packages, different “price offers”, different 'bumps', upgrades, or different follow-up offers. Review the performance of each new approach, then analyze the data.

When a specific new twist on your basic sales method out closes the old approach, doesn't it make sense for every salesperson to start using this new approach?

Remember, test one variable at a time. You can’t have each salesperson testing a different pitch because some salespeople are better than others. You want one variable which means everyone tests the same approach – analyze the performance and then move on to the next test.

Test every sales variable. If you do, you can easily achieve immediate increases in sales and profits. Good data will help you improve your sales efforts quickly.

Make specific offers and analyze the number of…

• Responses
• Traffic
• Prospects
• Resulting sales for each specific ad
• Cost-per-prospect
• Cost-per-sale
• Average sale-per-prospect
• Average conversion-per-prospect
• Average profit-per-sale against your control ad or sales pitch.

This reveals your obvious winner, the new control that you will keep running until a better control beats it.

You shouldn’t limit your testing to sales efforts. Every situation is unique, so test everything – especially your marketing and advertising.

The days when marketers made decisions based on their gut instinct are over – or at least they should be

Today, you have the luxury of letting hundreds decide what the thousands will do. Better yet, you can let thousands decide what the millions will do. Make a small venture, and watch your cost and result. When you learn what a thousand customers cost, you’ll know what a million will cost you. When you learn what thousands will buy, you’ll know what a million will buy.

Establish averages on a small scale. and those averages almost always hold.

• Know your cost.
• Know your sales.
• Know our profit or loss.
• Know how soon you’ll recoup your cost.

Prove your campaigns will be successful so your marketing investments are safe. Prove that the new process improves your team’s efficiency and your client’s experience so your time and effort are justified. Prove your new sales model is more productive so your sales and profits are safe.

Small, inexpensive tests can generate valuable insights that will lead to significantly better results in multiple areas of your business.

Most business leaders consider their Google Adwords account one of their most important marketing channels. Testing has never been more important than it is today because the market changes on a dime. You have to be able to recognize with certainty where the best use of your ad spend should go - and you have to be able to adjust those dollars instantly.

You can’t maximize your sales and profits unless you know how to make the best use of your time, opportunities, efforts, and investments. The only way to guarantee you optimize your results is to systematically evaluate all the different approaches you have available in your company's activities.

My definition of a great operator- a real professional - is someone who has the ability to get the maximum result with minimum effort – not the person or company with the most creative imagination.

You’re a real pro in business if you understand that one approach to getting clients may produce three times the results of another – so, logically, you stick with the approach that can get you the best results.

A real business genius, is someone who is both logical and practical. I move towards people or strategies that produce the highest and best results for the time, money, and effort.

The best part…

Anyone can become a business genius by doing one simple thing – testing.

When I started J&L Marketing 31 years ago, my marketing knowledge was no better than what I learned in school or in books. I made a key decision that changed everything for my company, my employees, and me personally.

We created a program to track, test, measure, and report all activities from our campaigns. I didn't do this because I had brilliant ideas and was smarter than everyone else. Initially, I did it as a defense mechanism.

Thirty one years ago, all J&L Marketing did was create private sale events with direct mail. I was new in the business and I got tired of calling clients after their event was over, going back and forth on whether the ad campaign was successful or not.

I wanted something I could point to like a data report. This gave me the opportunity to have intelligent conversations.

Luck has nothing to do with it

The real treasure had nothing to do with the report we created or the improved conversations I had with clients. The hidden treasure was the data itself. We tracked, tested, and measured everything from that point on.

The insights this data produced were critical because it allowed us to know exactly what the causes and effects were for any changes or key decisions.

This allowed us to develop new campaigns and strategies based on proven facts - not hunches. We were able to avoid quick marketing fads and continuously improve on what was working and more importantly…

Eliminate what didn't work!

My intention of this article is not to impress you about J&L Marketing. It's to impress upon you the power of testing and the impact it can have on you, your business, and your employees.

I'm the same person I was 31 years ago... but I'm a much better businessman and marketer today because we are a data-driven business. We rely on data for all our key decisions. You can do the same.

?Test everything

None of us has the right to predetermine what the marketplace wants. You do not know in advance what the best price, offer, or approach will be.

Once again, you do have the opportunity to put every important marketing question to a vote by the only people whose ballot counts... clients and prospects. They vote with their time and money.

Your Google Adwords account is a perfect example. You or your agency should be testing different approaches, different headlines, different ad extensions, hot-button emphases, different display designs, different keywords, and different campaigns within your account structure.

Test different channels such as Google, YouTube, Bing, Discovery, Facebook, etc. The same fundamental approach applies to TV, radio commercials, and all your other marketing channels.

Why run five 60-second TV commercials each day saying something only one way, when another offer or a different marketing channel might pull in a lot more clients?

The cost is the same whether that commercial produces 20 clients or 220. Isn’t it worth your while to find out answers to questions like these? If you are on TV, test where your commercials run – what stations and what time of day.

When this recession hits…

Most businesses will make the critical mistake of cutting their ad budgets. The problem isn’t cutting it… the problem is they don’t know for sure exactly what to reduce and/or eliminate.

What baffles me is that business leaders wait for recessions to make these decisions. Shouldn’t we be improving on what works and eliminating what doesn’t work every day/week?

Average or below average business leaders go with the status quo when times are good. They're not willing to set up the processes to get the data they need to make better decisions. They bury their head in the sand.

But when the market changes for the worse - they panick and start making changes without any data to support their decisions.

For those of you who have limited budgets, modify the testing concept and apply it to your sales teams. Then test different approaches against whatever you or your sales staff currently use. You'll find improvements in results, here too, when you test.

After replacing what you were doing with whatever test approach out-performs the original, keep on testing additional factors.

The purpose of testing is to demand maximum performance from every business effort

If one person on your sales team averages 100 communications per day (either by email, phone, text, etc.), doesn’t it make sense to find the message that gets twice as many responses or appointments with the same amount of effort?

If higher appointment show ratios lead to more sales... instead of having four appointments show out of every ten made, you could identify a script or confirmation process that improves your show ratio to eight out of every ten appointments. You’d immediately double the productivity of your sales team.

One thing you’ll discover when you start testing variables is that the difference in response or results can be extreme from just a small shift.

Another strong way to test is with control groups

One of our publicly traded clients requests that we do control group testing on every campaign we run.

A control group is when you randomly remove a percentage (we do a 10% group) of your target audience (the control group) and exclude them from your marketing campaign.

After your campaign ends, go back and measure the response, leads, and sales generated from the people you marketed to and compare it to your control group (who did not receive the marketing campaign).

This provides a very clear picture of the actual "uplift" your marketing campaign generated.

Our client continuously tests specific offers, headlines, etc (one variable at a time). The average “uplift” for their efforts is 120%. That means sales are 120% better with the marketing efforts than without.

We’ve had certain campaigns generate an uplift of over 250%!

Control group testing lets you know with absolute certainty that your program is worth it because the average sales increase is significantly higher with your marketing campaign compared to the people who bought without your market efforts.

Control group testing is one of the easiest and most cost-effective ways to test.

Attribution is a key marketing buzzword. In the end, you want to know...

• Is it worth my investment?
• Did I sell more… did profits increase or not?

Control group testing is a quick way to answer that and it can be done on anything you do that involves a data list.

Where do you start?

I'd start simple. First, start doing control group testing.

Then make a list of the activities or marketing you do in your business that produces measurable results. Include all processes where persuasion or influence are important to your success.

Next, identify the key transitional elements in each of those activities (example: landing pages, headlines, phone scripts, lists, etc.).

Then come up with two alternative ways or approaches to those activities. Then conservatively test these different approaches against your current “control” approach.

You’ll be surprised at how many of your new tests outperform your old standards. Or even better... how many new "great ideas" you would have normally invested a lot of time, effort and money into - and discovered they tested worse - allowing you to stick with the more successful standard you already have in place.

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Thanks!

Scott Joseph is a business growth expert with 31 years of sales, marketing, and leadership experience. He serves as the CEO of?J&L Marketing which is considered one of the leading digital advertising and direct marketing agencies serving some of the world's most successful and aspirational brands such as; Shell Oil, BMW, Mopar, Stellantis, Fastline, Melindas, and more. At 35, he purchased the first of three Honda dealerships and has iworld'sd their valuations by over?500%! He's the founder and host of the move crush count podcast, delivering content that helps businesses grow. In each episode top business leaders graciously share their secrets to building inHe'sry-leading cultures and growing their businesses and brands exponentially. In addition to running multiple businesses, he creates and facilitates mastermind groups and events such as Business Bourbon & Cigars where attendees demonstrate a COMMITMENT, CONFIDENTIALITY, and WILLINGNESS to both give and receive advice and ideas. These exclusive communities help you think bigger and stretch beyond your boundaries.