Chapter 14
5 Percent More Profit = Being 5 Percent More Efficient and 5 Percent More Accountable at Work

I have friends from all walks of life who ask me for advice on business, and recently a really close friend of mine came to me pretty desperate. He has been working in the beverage industry for close to 20 years and has had tremendous success in the past, but his new business is struggling. We talk pretty often about his business, and right now things seem very busy with a lot of positive activity and hard work, but no results or high payoff accomplishments.

My friend's company markets, promotes, and sells products in the wine, beer, and spirits industry, and his company seems to be doing a lot of great things. He is signing new brands very frequently to promote and market, and he is constantly working. His employees all seem busy, too, but there is little revenue coming in. Why?

I always hear people talk about how they work 50 to 60 hours a week, even 70 hours a week. Most are not being honest with themselves, but my friend really was in the office five to six days a week, 10 to 12 hours a day. We were talking about how great things were, but also looking at why there was no money coming through the door. His phones were ringing, he had people calling on potential clients, he was sending out samples like crazy, but something was missing. We were candidly discussing how hard he was working with little payoff, and I was concerned not only with the business but with him personally as a great friend. He was telling me how he lives, breathes, dreams, daydreams, eats, and bleeds the company. There was no one more dedicated to his business than himself. Why then was there little revenue coming in? Why was he working so hard, why did his company seem so busy, but still he wasn't making money? He appeared to certainly be putting in the effort. So then what?

Answering these questions takes me back to the early days of my company that I described earlier. We were steadily growing, and the money kept on rolling in, but we were still struggling. We were growing but, incredibly, as we continued to grow we continued to lose more and more money. My company sells products that come in certain configurations for many reasons. Like many brands that are consumable, we like to package and sell them a certain way to increase efficiency and maximize profit, something I really didn't understand at first. There were and are many ways to package or bundle our products, but we found the most profitable is a configuration of a three-month supply, meaning if the product is designed to last for one month, we would like to sell the customer a three-month supply. This was the sweet spot for orders. They would be more likely to buy a three-month supply as the cost wasn't too high. Any smaller and we were not maximizing our profit; any larger and we found customers either wouldn't bite or would return the order because they were overwhelmed with a large box sent to them, so a three-month package was also less likely to be returned.

After about a week of meeting with my team members and accounting staff, we realized that despite our revenue we needed to sell more of these smaller configured packages, like the ones described above, as opposed to pushing for bigger orders. This was about 2012, and at this time we were millions of dollars in debt and I didn't have the resources to continue on. Right around this time I was also working with a company that had lent me millions of dollars and was working on a plan to specifically get them paid back. Some of the plan included a layoff. I also had to reduce people's salaries and even ask some executives to skip checks.

I met with our sales team and explained to them that we needed them to change their mentality of selling a lot on the first phone call and think about the package that we as a company needed. I showed them that the smaller package made more sense long term for the company. Well, the salespeople didn't listen to me, and they kept selling bigger packages that brought in a lot of revenue, but in the long run were significantly less profitable, even though it meant a higher commission to them. Now here is the crux of the story. They were selling bigger packages and making bigger commissions. They only saw what was going into their pockets. They didn't think about next year. They only thought about their next paycheck. I was thinking about staying in business so I could actually get them more paychecks for a long time! I knew that I had to, essentially, force them to sell the smaller packages we needed in order to survive.

So I changed the compensation plan. Changing the compensation plan in any sales organization is a slippery slope. We thought about how to force them to sell the package we needed. We could have easily just removed the large package, but sometimes that package made sense for some of the customers. What we did instead was reduced the commission on the larger package and increased the commission on the smaller packages.

One Thing That Is Always Constant Is Change

I thought the sales staff was going to lynch me. Some quit instantly. One sales agent sent me a barrage of text messages, calling me a loser, telling me I didn't know how to run a company, threatening to “call the authorities,” then called me and actually told me he hoped that I died in a fiery car crash. Sounds a little drastic, right? He wouldn't let me explain that it was actually going to work. I was trying to tell him a couple of things, which included why small changes have a big impact, but also not to burn bridges. Needless to say I fired him. Incidentally, a few months ago he actually called me, and he said he wanted to have coffee with me. Now, I had heard through the grapevine that he had gotten a few DUIs and was struggling with drugs and alcohol. I immediately knew it was one of the 12 steps that he wanted to apologize to me for what he had said. I told him not to waste his time and that I had forgiven him and I wasn't interested in the coffee. But back to my story—I even had some old friends who were now working for me just walk out. In fact, even my own brother who also worked for me left and didn't even say a word. I had done a lot for this particular brother and quite frankly employed him when I shouldn't have, and he just walked out. All of the people who left refused to listen and refused to see that these small changes were actually good for them.

I also had another sales agent post on Facebook some pretty graphic and rude comments about me. Now, I usually don't care. After all, people say bad stuff about me all the time because I interact with a whole lot of people through my business. But this agent was a top sales agent, college educated, and a great kid. To be honest, I was shocked and hurt that he would attack me personally considering that he was a smart kid and should have seen why I made the change. I fired him instantly. He didn't say a word to HR when he got his last check and just left. He knew he was wrong. So he didn't make it worse, and he didn't burn the bridge. About a year later, in late 2013, my outbound sales manager asked if I would consider taking him back. I was a little reluctant, but I knew he had just made a mistake. Today, he is my number one sales agent and makes six figures.

Anyway, despite the discontent with my sales staff, we reduced the commission on the larger package by 5 percent and increased the commission on the smaller package by 5 percent. Now to put it in perspective, the larger package was roughly $300. By reducing the commission, the salesmen would make $15 less on each package sold. The smaller package was about $150, and the increase there was $7.50. So, net/net, it looked like we were taking money away from them. But what they didn't account for is volume! The smaller packages were much easier to sell, and they were much faster to sell. They were less likely to get returned, and they were actually better for the customer.

The result? What actually happened was the overall commissions paid out went up, we as a company sold a package that was more profitable, and we paid off our debt and stayed in business!

This small change has now led to more stability as a company and given us the ability to continue to hire and grow as a company. We have continued to implement this sales and commission structure across all of our product lines, and it has continued to work. This 5 percent change and increase in sales on one package across all of our products has enabled us to grow our revenue at a rate of 15 percent and 20 percent in 2013 and 2014 while maintaining a healthy profit margin. As a company we are always asking more of ourselves, even just a small bump in productivity; 5 Percent More allows us to expand our business to different markets and grow as a company.

My friend who was working 50 to 70 hours a week, by the way, is now a partner, and we have made some small changes in his business model and things are moving in the right direction. He's still working the hours he was working before, but the small changes we've made have allowed him and his team to become more efficient. One small change we made that has had a dramatic result in productivity, is that we leveraged the technology he already had in his company to make his salespeople more efficient. Once we became partners, my team helped show him and his team how to make some minor changes to things like his sales database that allows his people to accomplish more in less time. When things are difficult and you seem to be doing all that you can and you are looking to make drastic changes in your business, I find it easier many times to make small changes first. The small changes will have the best long-term results.

Locker Room Story

I was in the locker room at my gym one day listening to a 20-something kid complain that he was behind in his e-mails—350 of them! He was telling an older gentleman how difficult it was. I almost burst into laughter thinking about how little of a problem 350 e-mails in a day was. Really, you can't handle that? As I write this section on the stationary bike at the gym at 6 PM, this self-proclaimed overworked and overwhelmed guy sits on the bike next to me. What a great opportunity to maximize his time. Right? Well, this same guy who five minutes before was acting like he couldn't breathe because he was being suffocated with e-mails was managing his fantasy football team. So it made me wonder, what if we were more efficient in handling our e-mails or any form of digital communication, or the rest of our lives for that matter? What would that look like to the employee and the employer? What would the employee's life outside of his or her work responsibilities look like? Would they have more free time? How about less stress? Would they be happier? I learned a technique a while back that relates to e-mails. Many of us keep our e-mail open and respond to them as they come in no matter what else we are working on. What happens is, the work we are attempting to complete gets set aside so we can respond to an e-mail. That causes a tremendous loss of productivity, not to mention a whole lot of stress. Instead, try this different method for a week: Close your e-mail while working at your desk, and check it once an hour. This may not work for all office environments, but for most it should. What will happen is, you will actually become more efficient, less stressed, and definitely happier.

Just two and A Half Doors a Day

I recently had the opportunity to speak at Comcast in Boston in front of their door-to-door sales group. It was such a great opportunity for me, and I had a great time talking about the many concepts in my first book and the 5 Percent More mentality. One of the things I showed them was what just 5 Percent More effort would look like to their bottom line individually. The average salesperson knocked on 50 doors a day, times 5 days a week. That is 250 doors a week, times 50 weeks, for a total of 12,500 doors a year. I challenged them to just knock on 5 Percent More doors a day, which is just an extra 625 doors a year. I made some assumptions for demonstration purposes, but if they just knocked on 5 Percent More doors a day and closed only 5 percent of those people, they would net an additional $6,250 a year on an annual basis. 5 Percent More is only two and a half doors a day on average. Just two and a half doors a day. After my presentation I had several salespeople come up to me to tell me that 5 percent is not only achievable, but easy to do!! You can find that speech at https://www.youtube.com/watch?v=FfmGaOoD6G0.

Now imagine what would happen to Comcast if every salesperson in every division just did 5 Percent More. Do you think their stockholders would be happy? What about the individual salespeople and their families? That kind of money is life changing, on just 5 Percent More effort. The most powerful thing about this example is that just a 5 percent increase in productivity will have between a 10 and a 12 percent increase in their annual salary. Let me repeat: 5 Percent More effort and activity in this example will have roughly a 10 to 12 percent increase in their annual salary. And this does not take into account 5 percent compounded. This assumes that they knock on just two and a half more doors a day.

I was speaking at a business conference recently where people paid as much as $10,000 a seat! My presentation was about the direct response industry and how direct response marketing, if implemented properly, could increase revenue and profitability in virtually any business. Toward the end I discussed the 5 Percent More methodology as it related to making sales and showed an example similar to the one about Comcast. One woman came up to me who is a professional network marketer. She had been in the network marketing business for more than 30 years. She had attended hundreds of trainings and seminars. She was blown away with how simply 5 Percent More would translate to her business and the people in her down line, and was ecstatic to share with them the 5 Percent More way. It is so simple: You talk to a few more people a day who aren't in the business about the business in an attempt to get them in the business. You don't need to talk to every person you see. Why not? Because most people get overwhelmed with the idea of talking to every person they see, and they get anxious. But if we say to just talk to a few a day, just a few more people every day, it is achievable, it is realistic, and it's also sustainable.

My Dad the Sales Guy

I talk about my dad in Ask More, Get More when explaining increasing one's net worth and exploiting an opportunity. But things actually took a turn for the worse at his job and, even though I am not a big fan of nepotism, I hired my dad in my outbound sales department. Now, before I continue, let me just describe my dad. He is a 64-year-old Italian man who is a product of the sixties. He is hard working and intelligent, but he is also stubborn and does things “his way.” So he's a hard-working, stubborn hippie. When I hired him in sales, I explained to him that we had systems in place and there are certain sales techniques that he must learn. His response was just classic my dad: He said, “I do things my own way, I have my own strategies.”

Now, I hired my dad because I didn't want him working in the machine shop anymore; he suffers with Bell's palsy and polyneuropathy, and the latter seemed to be getting worse. I told him, “Come in, learn how to sell, but don't worry about making me money.” He then responded and told me that he was going to sell, and he was going to make me money but with his “own techniques.” Needless to say, he was consistently on the bottom and his techniques didn't work! He was in my office a little while ago and I was telling him about 5 Percent More and discussing with him what just 5 Percent More effort and enthusiasm would do for the average person, or just making 5 Percent More calls in outbound would look like to his bottom line. He just listened and didn't debate with me about how his system of just talking to people and not actually asking for the sale, or just making a few calls a day, or getting up every ten minutes to smoke a cigarette were the best techniques.

The next day he came to me and asked if I had seen his sales for the previous day, the same day I had explained to him, a nonsalesperson in a salesperson's job, the benefits of just 5 Percent More. I hadn't looked, but to his surprise—but not mine—he'd had the best day he had ever had. He actually had a 200 percent increase in sales on that day over the prior day.

I asked him what he thought it was that was making him more successful, and he smirked at me and said he was 5 Percent More enthusiastic, he made 5 Percent More calls, and just gave it 5 Percent More effort. I tried to hammer home the point of what had just happened. I said, “Dad! With just a little more effort, with just a little more of an upbeat thought process, and with just spending a little more time on the phones, you increased your sales that day by 200 percent!” He proudly announced that he knew it had worked.

Now, here is the challenge: My dad knows that he doesn't have to really try, in fact he probably truly doesn't want to. He has worked his whole life and has taken care of me and now it's my turn to return the favor. But just imagine if you really wanted more and had to go get it. Can you believe that just 5 Percent More enthusiasm or effort can increase a nonsalesperson's sales? What if you were a skilled salesperson? What if you worked in an assembly line, you think you would increase your net worth by doing things just 5 Percent More efficiently? Don't take my word or the science behind my word as truth; try it yourself, and once you see what I have seen, then compound it! It works!

Yes, You Can Make More Time—At Least 5 Percent More!

So many people are pressed for time every day. Getting up in the morning, getting in the shower, getting dressed, getting the kids off to school, then the morning commute. Then your workday starts and you are already overwhelmed with stress and anxiety thinking about all the things that need to be accomplished during the day. The pressures of producing in whatever career can be difficult to manage. Most of us are able to work through this chaos and push through the day. But did you accomplish everything you needed to? Are you getting ahead in life in general? Or are you, like most people, aimlessly spinning your wheels dreaming about getting ahead?

So many of us want more, and try to do too much, and try to accomplish too much too fast. What I would like you to try is to just do 5 Percent More in whatever it is you are trying to get through every day. By way of example, if you are trying to become more efficient during your day, rather than radically change your daily routine by trying to do more, make small gradual improvements. For instance, if you are a writer and you are always behind the eight ball and find yourself rushing things to meet your deadline, take a look at your routine and find 5 Percent More time in your day to accomplish your main task. Modifying your behavior by just 5 percent is much easier than drastic changes, and scientific research into human nature supports my theory. Doing fewer things just a little better will actually improve your overall productivity.

..................Content has been hidden....................

You can't read the all page of ebook, please click here login for view all page.
Reset
3.23.63.252