Business is simple really – not easy – but simple. You create a product or service that offers value to a market, and that market acknowledges its value by purchasing it. If your product (or service) is not purchased, then you have to look at whether or how much the product is valued. In a way, customers are voters. With each purchase, the customer is voting for whether they like your product and/or your brand. You get lots of votes and you stay in business; you poll poorly and you are out of business.
Okay, so this is looking at business far too simplistically. There are many factors that go into a business working or not working. Indeed, you may well have a good product but haven’t figured out a way of marketing it or producing it at a cost that fulfills profit goals and a market’s price point. But that aside, let’s roll with our metaphor of the customer as voter.
This mechanism of voting/purchasing is based on a value exchange between the provider and the market. The business owner’s job is to be in constant relationship with the market to know whether or to what extent that relationship is healthy and there is a value exchange. If the relationship is healthy and the market perceives a fair value exchange, you are doing pretty well. Sales is a very clear feedback loop on how your business is tracking.
What about non-profits?
Small (and big) business owners know this and track sales constantly. It is like a doctor checking the businesses pulse (okay, no more metaphors). But what about the non-profit ‘market’? Read more
In the business world it is a fairly common tactic to use bonuses, commissions and other rewards to incentivise performance and retention amongst employees. Is it possible to create a more powerful incentive however, where the employee who does the work receives nothing personally? In addition, could it be possible to create an incentive where the individual receives nothing, but generates good will amongst others?
A few years ago I worked with the business development team at a well known Australian charity. It was at an important stage in the organisation’s growth. They had a proven product and a good understanding of their market. The challenge was simply one of increasing volume, filling up business in quiet periods and making the whole operation more profitable. Sounds simple doesn’t it.
The organisation was highly effective at retaining existing clients, with over 75% having been with them for over 15 years. Each year there was a small attrition of clients, and a modest acquisition of new clients. To meet the organisations growth, profitability and sustainability targets, new sales needed to ramp up significantly. The team had participated in training, implemented new sales tracking tools and managed its contacts more closely. The organisation also invested in innovating new programs and services to take to market. Aside from the new style programs, none of these made a significant difference to increasing sales.
The Executive Team considered whether the organisation needed to implement an incentive scheme for its sales staff. Prior to this, business development staff were salaried and conducted sales alongside client management. There were no specialist sales people in this team – each person had Read more