How to scale up your agency: a fresh approach

A colleague and I were discussing “leadership” and what that truly meant.  We came up with this analogy, which I hope you’ll enjoy.

Imagine you move rocks for a living.  The more rocks you move, the more you’re paid.  You don’t move rocks, you don’t get paid.  Thus, you understand the direct linkage between putting in time and compensation.  This is the hourly wage model– some rock movers get paid more than others, whether flipping burgers, working in a big corporation, or drilling teeth. The more teeth you can drill, the more you’re paid.  Are you a corporate wage slave or someone who is paid piecemeal?  This was me for twenty years of my life– a prostitute selling my time for money. Whether I billed $5 per hour or $250– it was the same thing. One day in the proverbial quarry, you decide that moving more rocks to get paid more was not the right answer.  At best, you might move 20% more rocks than the other guy in a particular day, but it wasn’t sustainable.  So you leave the quarry for 7 days, much to the surprise of your fellow laborers. In that time you move no rocks and make no income.

THE SHIFT

But when you come back, you are driving a bulldozer.  Now, in one day you are able to move 100 times what a single laborer can do. But to get that bulldozer, you had to temporarily earn nothing– plus spend money to buy the vehicle and spend time learning how to drive the thing.  Your fellow laborers, noses down, continue to keep moving rocks— they don’t look up to see you in the bulldozer. They have heard about bulldozers in the magazines, but never thought it was something possible for them.

You hang out with the other guys driving bulldozers.  You have newfound wealth, which is fleeting, since the crowd you run with also enjoys the same standard of living.  You’re right back in the middle of your peers.  It feels great to be 100 times more productive than you were before, but you’re not quite fulfilled.

ANOTHER SHIFT

So you leave the quarry again and disappear for 7 days.  In that time you move no rocks and make no income.  And when you return, you are back with 100 bulldozers and 100 other eager new bulldozer operators. You’ve opened a bulldozer training school!  Flocks of manual laborers who used to move rocks now come to be trained by you.  And you make a commission on the rocks they move, since these laborers didn’t have enough money to buy their own bulldozers.  These laborers are now moving 100 times what they did before, but given the costs of training, equipment, and your profit, they only make 10 times what they did before.  Still, they are happy.

And you are temporarily happy.  With 100 bulldozer operators moving 100 times as many rocks as a single man can do, you’re at 10,000 times your earlier productivity.  Your lifestyle has changed, too.  You have have a Granite Card by American Express and have a new mansion in Boulder. People admire you–you’re a ROCK star. They think that the secret to your success is getting stoned.

But it’s not enough– something inside you is not quite satisfied.  You can only train so many new bulldozer operators per day.  You’re still moving rocks in a sense, just mass quantities. Growth in your bulldozer school is directly related to the amount of time you’ve put in.  So one day you close the bulldozer school.  The press thinks you’ve gone mad– that you’ve lost your marble.

SCALE UP AGAIN

You disappear for 7 days.  And when you return, you’re holding a brochure in your hand– “How to Open Your Own Bulldozer Training School”.  You’re created a franchise model, where you are training up other school owners. You have first hand experience in training new bulldozer operators, so new school owners can rely on your experience.  You now have sold 100 franchises, each one with a happy owner training 100 bulldozer operators, who in turn do the work of 100 laborers.  That’s 1 million times leverage.

THE LESSON

You would not have been able to pull this off unless you had personal experience moving rocks, driving bulldozers, training bulldozer operators, and running a franchised business.  You were able to take your knowledge and multiply it.   If you didn’t intimately understand each aspect of the business, scaling up would have just multiplied losses.

Now examine your life and what you do.  Are you moving rocks or are you multiplying? Writing software is a multiplication process.  You can write one copy and sell it an infinite number of times.  You could hand-build a single PPC campaign for a client or perhaps write a campaign management tool that can do it over and over in an automated fashion.  But just like the rock moving analogy, if you aren’t a practitioner with hands-on experience in managing campaigns, your automation won’t be effective.  There are lots of guys selling software that builds websites, manages PPC campaigns, creates SEO reports, sends out emails, and any variety of tasks.

If you want to create massive value, consider the rocks that you are moving. Can you write software or processes that can make life easier for others– or perhaps do some task faster, more effectively, or at lower cost?  Everyone has something they know exceedingly well.  What is that skill for you?  You don’t have to be able to write code.  Software is nothing more than rules for machines, just like processes are rules for humans.

McDonalds is a software company that just happens to make burgers.  People go to McDonalds not because it has the most delicious burgers, but for the consistency of the food and the experience. You can take pimply-faced teens all over the world, minds distracted with their latest relationship dramas, speaking different languages, skilled or not– and still turn out that same value meal each time. That’s process for you.

NOW IT’S YOUR TURN

BlitzMetrics is about empowering individuals to become entrepreneurs– we provide the tools and process to allow folks who know little about internet marketing, but are eager and willing to learn, to perform like experts. Our analysts are trained to help small business owners grow their practices.  We’re about the little guy helping the little guy.  Do you want to be a part of our team?  Contact me to find out more.

Calling Dan Gilbert: Our solution to Detroit’s youth unemployment issue

Nearly a quarter of youth in the United States are unemployed:

 
And Detroit’s unemployment rate, though steadily improving, is at 18.8%, over double the national average of 7.7%, according to the latest figures from the US Bureau of Labor Statistics:
 

High youth unemployment multiplied by a high unemployment area yields a 59% youth unemployment rate, according to Data Driven Detroit.

Kids graduating from Michigan State and University of Michigan are leaving the state to find jobs elsewhere. 

Yet companies like Grand Circus, part of Detroit Venture Partners, exist to train up world class technologists. Quicken Loans relocated most of their staff in Detroit– with 9,200 working downtown now.  Bizdom is a startup accelerator that is ranked one of the nation’s 10 best.

And though the city of Detroit filed the largest municipal bankruptcy ever in July, at $18 billion dollars, the area is ranked #3 in the nation for finding a tech job.

Dan Gilbert, the outspoken billionaire who is behind many of the initiatives to rebuild Detroit, says Detroit’s best days are to come.

We visited with a few of the portfolio companies this past week to witness first-hand the entrepreneurial energy.

 
                                              My New Friend Tony!

We met some of the folks at Detroit Venture Partners, the head of training and development at Quicken Loans, the CEO of OneReverseMortgage,

the social team at Quicken Loans, an independent film studio, Tom Silverman of Tommy Boy, and a few others. 

 

We saw downtown revitalized, safe. A picture from the rooftop pool of our hotel:

 

 

Yet many still are misinformed. Witness opinions on what it’s like to be in Detroit.

Here is a good example:

 

And at the end of this trip, we found ourselves saying that we’d actually consider moving our company to Detroit.  

Why?

  • Strong labor pool– more loyal than in San Francisco and at lower cost.
  • Tight community– a network of companies that supports one another, unlike New York City.
  • Vision– We’ve drank Dan Gilbert’s Kool-Aid, as we believe strongly in teaching young graduates and creating employment.

Dan– if you’re reading this..

Put some money in our company and we’ll move folks to Detroit to grow our business here, plus train and recruit locally. Let me show you our plan for Detroit.

My cell is: (817) 913-0780.

We want to achieve greatness in creating MASSIVE employment in the tech sector– doesn’t matter if it’s lead generation for Quicken Loans or driving sales for the local mold remediation company.

The principles are the same and highly scalable with gamification techniques, which those of all ages understand.

We are relentless to find a way.

And we expect to hear a YES before NO.

This post was edited and posted by Drake Grey, an analyst on his very first day with our company. He’s 21 and would be excited to move to Detroit.

What do you say?

Best regards,
Dennis Yu
Chief Executive Officer, BlitzMetrics

Why some technology companies fail and others succeed

Many folks speculate why Google has overtaken Yahoo! in search or why Facebook has dominated in social networking, versus Friendster. I believe there’s one key factor— if you’re running a technology company, you need a technologist at the helm.  Larry and Sergey of Google were Ph Ds (or about to be) in Computer Science.  The last few folks who have run Yahoo! were anything but technology people– one was a film executive, one was a financial analyst, and another is a professional manager.  Running a technology company requires a deep understanding of what’s coming next in a rapidly changing world.  And to not have a keen pulse is to drive in a dangerous fog.

Facebook was founded by Mark Zuckerberg, a young computer science genius– not a 55 year old male who is good at manipulating spreadsheets.  If you see a social networking start-up being founded by 55 year old males who are probably not even on Facebook– run the other direction as fast as you can.  The folks who can best guide a company are those who connect deeply with their customer base.  How can you start and manage a company if you don’t use the product yourself?  Even the guy who runs Hair Club for Men is also a client, so the commercial goes.

Of the technology companies we see fail, it’s not just age.  Often it’s also a lack of having a balanced core team.  Salespeople hire salespeople.  Engineers tend to like to hang out with other engineers.  It just works that way somehow, as people hire folks who are like them.  But to operate a technology firm, you need folks who are experts in sales, engineering, marketing, finance, and other disciplines.  And the technologist should be king in the technology company, in the same way that Nike was started and run by a star athlete, Phil Knight.   Does Frito Lay have a technologist at the helm?  No, they have a marketing person, since that’s the firm’s core expertise.

So watch out for technology companies that don’t have any engineers in sight or believe that engineers are commodity products that can be contracted out or hired offshore.  If you are a business person and are thinking of starting a company in the Internet space, my advice to you is to quickly find a technical co-founder.  You’ll thank me later for this advice.  

A great entrepreneur knows what he knows- and more importantly, knows what he doesn’t know– finding someone to complement him or her.  If you’re an engineer, find a strong marketing/sales ally and make him a business partner.  Your freelancer will give you great results for a couple months, maybe longer– but eventually will flake out on you, which is why they’re freelancing.  

Are you a technologist— and if not, do you have a technologist that is part of your founding team or is at least a CTO level person?  If you are one of these companies that’s lacking a technologist, but wondering why you may be having trouble executing, I hope this article helps shed some light on why.

Compete or Die!

One of our new clients was held hostage by a programmer that built a custom CMS, when WordPress would have done just fine.  This programmer also did his own hosting, which failed quite often, allowing him to bill the client for time to fix things.  The client was complaining about being held hostage and here is my response to him.  If you are a business owner, consider whether you have chosen folks who are world class in what they do.  If you service clients, consider if parts of the service you offer are available today elsewhere for free– painful as that may be to admit:

Let’s just say this– your site gets so little traffic that there is no reason for this sort of thing to EVER happen. You should not be in the business of hosting, nor should this fellow.  That’s why there are the GoDaddys, The Planets, and Amazons of the world, who have invested significantly to solve generic issues like this.  It would be akin to you want to get a ride to the airport and the cabby saying that he has to stop to fix his custom-made car.  

That cabby should just buy a car from one of the big auto manufacturers and drive that.  Yet, if he really is a car hobbyist, he should do that on the weekend in his garage, not charge his paying customers.  This is something we see quite frequently in our space– engineers that prefer the fun of building your own when off-the-shelf works great and costs almost nothing.  That’s why this fellow decided to build his own CMS when WordPress does almost everything you need, is the world’s most popular CMS, and is free.

However, it’s more fun to learn how to build your own, you get paid for it, and you can hold your customers captive if you make mistakes along the way.  The problem of custom software is that when only one customer uses it, it’s likely to be VERY buggy, as it hasn’t been time tested by millions of customers. And when there’s only one developer, you’re limited by the time and knowledge of one guy, who is unlikely to be world class in PHP, content management systems, hosting, and whatever other topics.

In our world of website stuff, we see one man shows all the time on a suicide mission to try to beat the world in multiple ultra-competitive niches.  Me, I like to make sure we do a few things world class where we have a unique advantage (such as Facebook advertising and local lead gen) and leave the rest to where we can buy off-the-shelf software or partner with the other companies that are #1 in the space.

hat do you think?  It will be pretty hard to argue this– to say that because of one of two particular requirements for your site, that it justifies doing something completely from scratch versus using something free and easy.  But we see this all the time.

Jack Welch, who used to run General Electric, talked out being #1 in every area they compete or to get out. If you’re not winning or have a unique advantage, you’ll eventually get crushed.

Why loyalty programs are failing and how to fix yours

An article in MediaPost today highlights why few companies are delivering upon their loyalty programs. In a nutshell, consumers want personalized rewards, whether it be through their grocery store cards, airline frequent flyer program, or other points-based system.  But marketing departments are not able to personalize because they are unable to collect the data needed to personalize offers and internal organizational hurdles prevent companies from unifying their data across multiple silos.

I was fortunate to spend a few years at American Airlines to perform analysis on the AAdvantage program– to learn firsthand how the granddaddy of loyalty programs operated. Some challenges and how we overcame them:

Incomplete customer data
The website, reservations deck and gate agents all had separate customer databases. If you were a smart customer, you could complain at all three locations and earn triple the points. So if a bag supposedly fell on your head from opening the overhead bin, you could get miles for the inconvenience and the agents at the airport, on the phone, and from the website wouldn’t know that you were already compensated. 

The solution– create a unified customer database. This is quite expensive, has political issues to solve, but is well worth the effort.  When you can create a single view of the customer’s activity, you can measure their overall profitability and create programs to incent the right kind of behavior.

Mass blasting (spamming) customers

Email marketing is so easy and inexpensive that SVPs of Marketing are tempted to spam customers.  After all, if sales increased from changing the newsletter frequency from monthly to twice a month, why not weekly? We’ve seen this approach taken at a number of large brands.  Not only is this a customer turn-off, but goes against the whole point of offering personalized offers that are most appealing to where a customer is in your lifecycle and their stated preferences.   Part of status is being remembered for your particular likes (mints on your pillow and extra towels, if you’re a hotel customer), not to get the same message delivered to everybody.

The data crypt

What used to be called a data warehouse, then later called a datamart, then called business intelligence, then enterprise analytics is really just the same thing with a new name each time. Even if you can embark on a $20 million project to consolidate customer data into one spot, the bigger issue is actually getting it out.  Most marketing managers believe they have to speak a special prayer to the high priests of IT to be granted access to the database. The inability to easily access the data– no matter what expensive analytics tool you might have bought– prevents marketing manager from being able to do the analysis necessary to create a tailored menu of rules. Without a menu of actions and corresponding points, and then being able to adjust payouts based on what’s working, a loyalty program bleeds.  And the more data you have in your scoring model, the complex it is to calculate status, as you’re dealing with an increasing number of empty fields for variables and bad data.  So perhaps you were able to get a data append from a third party– let’s say Acxiom– and now you have gender, income, and the type of car they drive.  How is that affecting the ways to earn and burn points in your loyalty program?

IT doing Marketing and Marketing doing IT

Managing a loyalty program is really an exercise in user psychology, but which requires some technical execution.  You’re really looking at video game design and trying to influence their behavior.  An average IT administrator is not going to understand this, nor is a traditional brand marketer that has done media buys for 20 years. If you have a loyalty program in-house, ask yourself who is running it?  

The answer is finding folks who are well-versed in data analysis (crunching SQL statements in the database) and also understand user psychology.  Writing SQL is for engineers, you say?  Look at Amazon, where they require marketing managers to know how to query a database.  It’s not that hard.  How are you going to structure and adjust rules for earning and burning points by customer segments if you’re not able to go in there and hands-on be able to run reports? 

Summary– the weakest link

Well there you have it– all it takes is one break in the chain and your loyalty program has a problem.  If you aren’t able to collect user data– transactions and preferences, you can’t create personalized offers. If your marketing people can’t properly access the data, that expensive database just sits there. If you have the wrong people trying to solve the problem, it’s a guy with a hammer who thinks everything looks like a nail.

I’d say that brands would be well-served to hire folks from Nintendo, Blizzard, and other companies in the gaming industry to help revamp their loyalty programs. This is nothing more than a video game.


How Jack in the Box reminds me of the Jetsons, airport security, and video games

I stopped in at a Jack in the Box today and noticed no employees at the register.  Customers were ordering through a kiosk.  This beautiful touch-screen marvel spoke in English and Spanish and upsold you at every turn– would you like bacon on that?  How about upgrading to a large?  Just a little more for seasoned fries! 

A couple hours ago, I had a similar experience checking in at the airport– except I had to swipe my credit card first and then they asked if I wanted to upgrade to first class.  Same thing at the supermarket, where they eliminate clerks (who aren’t going to reliably and aggressively upsell every customer in that cheery voice), but also will tell you that there’s an unexpected item in the bagging area.

  If you’re at least in your 30s or have watched older cartoons, you might remember the Jetsons.  They had a touch screen display where the family could order dinner items, too. To make the analogy complete, Jack in the Box would merely have to automate the back of the store, too– to have a factory method as efficient as Toyota making Camrys with robotic precision.

Trouble is, as great as this utopia sounds (if you’re a fan of Deming or other efficiency gurus), in practice, it’s not so simple. The fellow ordering above tried to order a value meal no less than 4 times– not being able to navigate the menus and submenus and finally giving up.  It’s not easy for everyone, even with picture menus.  Sometimes you just need a human involved.

But in the long run, I believe that social game dynamics will simplify a complex process, whether it’s buying a hamburger, checking in at an airport, getting your annual physical at the hospital, or configuring your local search campaigns. Games and points will make complex processes easier, especially those that don’t appear to have video game dynamics at first thought.

Watch the gaming models permeate nonprofit fundraising, factory methods– or maybe even serious stuff such as CPR training.  Do you remember when McDonalds first implemented those timers next to each cash register, so that everyone could plainly see how many seconds the average order was per cashier?  You’ve taken a mundane, hourly job and turned it into a video game because now there’s a score.  No other process improvements or bonuses for better service– there’s just an added element of measurement. And that’s enough.  Imagine adding a timer next to airport check-in counters. Think it would work?

Any system or set of processes is really nothing more than a video game– as it contains a series of rules with rewards and punishment, with accompanying stimulation. A Las Vegas slot machine is nothing more than a malfunctioning ATM.  That blue collar timecard punch clock is the most boring video game ever— as it doesn’t blink, make satisfying sounds, or dump coins into the collection tray in exchange for good work.  

Is there something in your business or your life that can be made more pleasurable or efficient by re-evaluating it from the lens of game dynamics?