The 3 Questions I ask in Order to Grow My Business

In a prior video I did, I talked about the necessity to be narrow in our offering to really achieve elite status. But most businesses diversify, overly diversify, especially early on, because we believe as an entrepreneur, the way to grow our business is to do more things. So if I simply add on this and that, I can sell more. And it works until it doesn't. I call it entrepreneurial entropy. Keep on diversifying, diluting our ability. Since in the early stages we have a captive audience, a customer or two that will keep buying from us, we see a revenue growth. I until it doesn't work anymore. Why doesn't it work anymore? Because with dilution of our product line, we dilute our ability. So the more variability we have, the less we can be elite at any one thing. The best customers buy the elite offering typically. So we need to be the best. In fact, through Prosper Group, our investment company, we're working with an organization that's doing $7 million in revenue. It's heavy in inventory. So when we do what we call the real revenue analysis, where they really generating minus inventory turn, it's about a $2 million company. They've diversified, meaning they're not elite anything. And the one thing they're really elite at, there's so much demand for other stuff that they can't focus on that. And so now they're having delays. So while the output, when it's done, it's excellent, it's taking too long. It's another component of eliteness. It's quality, it's efficiency. So this business, what we're doing is we are quickly narrowing down the scope of what they do. So if you didn't see my other video on the Pareto principle, that's how we do the analysis around it. What I want to do now is focus on 3 key questions questions you can use to differentiate your business and really stand out in the market. These questions are so important, I think they'll become a game changer for you. So perhaps you want to write this down and put it above your desk or tattoo it on your forehead or something. First question is this, and, uh, these questions I consider them Jedi mind trick questions, and you'll, you'll understand in just a second. It says, what am I doing right? If you saw my prior video, I talked about the elite customer and the top 20% customers who value you tremendously. I told you to call upon them. They're the heart of your organization. If your best customers are buying your best stuff, they are the heart of your organization. Why don't you call on these customers to ask them, what are you doing right? Now, this is a Jedi mind trick, and I'm going to give you an experience around this. In my prior, prior, prior organization, I had a company early on, right when I graduated college, and it was in computer systems. I went through that analysis, the Pareto principle. I want me to throw that kind of back up on the screen here so you have context. But the Pareto principle is the 80/20 rule. And if you remember, or if you saw the other videos, we did this concept called the overlap. And this was your clients, this was your products. And I was talking about these clients, best clients buying best stuff is the heart of your organization. So this is where we're looking right now. Well, when I did this analysis for my company, I identified that particular, there was a hedge fund and other customers. One hedge fund comes to mind. That was one of my best customers. To give context, when they bought computer equipment from us, 10 or 15 PCs. This was back in the day where a computer company, maybe they still do, I don't even know, would come to your office and actually set up computers. And then when there was a need for a repair or change, augmentation of your computers in some capacity, we'd come back to your office. It was an onsite thing. They would order those 10 or 15 computers, which I would have to put on credit card. I was a small little business. I was putting on my credit card to stock the inventory. And they would actually FedEx me a check before the delivery and say, hey, we know you're a small business and cash flow can be a pain, difficult. Here is the money for those computers in advance so it doesn't put strain on your business. Gosh, they were a definition of an extraordinary customer. Among other things. Well, I went to them, the hedge fund— he wasn't really the manager, but he was the person we're interfacing with. He was a controller, CFO effectively. His name was Larry. When I asked him a question, what am I doing right? He started comparing me to the last computer tech company they had, and he said, well, you guys respond quickly. The last company took a full day to get on site, sometimes two. We're a hedge fund, you know, we're trading stock and so forth. If our computer systems go down, we need them up. Now they have backup systems, so it's not like the computer goes down, they just sit there twiddling their thumbs. They have backup systems, but they want their main information feeds going and so forth. So response time matters, particularly when you were coming on site. He said, "You guys, Mike, you and your colleagues get here on site usually within 4 hours. That's what you're doing right." Now, here's why this is a Jedi mind trick. When you ask your best customers, "What are you doing right?" They actually don't tell you what you're doing right. They tell you how they place judgment on you, what they're observing in you and making a judgment on. So Larry was saying, "I notice how quickly you respond effectively." And here is the greatest Jedi mind trick part of all. The thing you're doing right is the thing you need to improve. Write that down. What I'm doing right, that is the thing that you must improve. Now let me give you some context. I spoke with Larry. I said, so Larry, you know, what are we doing? That's right. He goes, you respond quickly. The last computer guy took a day to get here. You get here within 4 hours. Now the traditional approach for most business owners is like, oh, I get here on time. He's happy with that. Let me focus on other parts of my business. I'm doing this right. No, if that is how you're being judged, that's the thing you need to improve. And if you improve it, he, they, your best client will notice because that's how they're judging you. I understand you do hundreds or thousands of different things in your organization, but this customer is measuring very few of the things. So your job is to identify what they're measuring. By asking, what am I doing right? They will tell you. They don't even know they're telling you, but they will tell you what you need to actually improve. So here's what I did. I dispatched myself or one of my other technicians to always be within about a 15-mile radius of Larry, which meant if Larry's network or computers had problems, I could go to another a secondary customer, if you will, that is already at, say we have an emergency, we'll be right back, we have to go to this absolute emergency. And we would get onsite usually within 15 minutes for Larry, regardless of the importance of the emergency. We weren't prioritizing based upon that. We're prioritizing simply response time to our best customer. And Larry, you won't be surprised here, was blown away. He even said, I don't know what you guys are doing, but my gosh, the service is getting better and better and better. You guys are rock stars. We fixed one thing, we improved one thing. We improved how he judged us. Now again, you do hundreds or perhaps thousands of things, the customer can't see it. You get to see their perspective when you ask them, "What are you doing right?" They will tell you the few things or the one thing they're judging you on. And that's the thing you need to improve because when you improve it, you will blow their minds away. That's what I'm doing right. The second question to ask your best customers is, "What is the industry doing wrong?" I wanna put a little caveat here. I'm not saying, what am I doing wrong? The question is, what is the industry doing wrong? And we're gonna put emphasis on that. Why don't we ask, what am I doing wrong? So you go to your best customer, it's the same customer analyzing, we're still focused here. Best customer buying best stuff, we're still focused there. And why don't we ask them, what am I doing wrong? The reason we don't ask them what you're doing wrong is because they won't tell you the truth. There's social consequence to this. If you and I were in a room together right now and you look at my outfit, which is very Stitch Fix-y. You look at this, you may say, gosh, Mike, that's so lame. You should really dress better if you want to be a professional, dress like XYZ. That may be the truth and you may be 100% right. The problem is subconsciously when I receive that information, I go into defense mode and my mind, even though logically I say, oh, I'm receiving this, this is so helpful. Inside I'm like, who are you to say that nasty comment to me? And so there's a subconscious defense, which means there's resistance. But you also know the social consequence. You say that, now I'm going to come back maybe on an attack, and now there's an argument. Have you ever seen, you know, the booger on someone's face? A lot of people don't say anything. It's like, I don't want this person to feel uncomfortable. Now I'm uncomfortable. Everyone's going to be uncomfortable. Let's just ignore and hopefully it'll go away on its own. And that's the problem of social consequence. And if you ask your best customer, what am I doing wrong, your customer won't tell you what you're doing wrong because it can become embattled. Oh, you don't respond quickly enough. Well, You know, we actually do, Larry. We do respond quickly enough. You're just not observing that. And now we're in conflict. So what's the out? Well, the out is industry. When I asked Larry, I said, what is the industry doing wrong? We're talking about the person outside the room. Think about it with me. If you and I were in the room together and I walk out and you're with someone else, you could say, gosh, the way Mike dresses is so Stitch Fixy. It's so generic. Here's what he should be doing. You can have a candid conversation about me in my absence. So with this question, what we're doing here is we're asking about the industry. So I asked Larry, I said, what's wrong with the industry? The person outside the room. And he said, "Oh, you know, Mike, the last computer guy, when our network went down, they would come and fix it usually after a day or two. And we get these bills and they were so confusing." In fact, we had a Palm Pilot. I don't know if you remember the Palm Pilot back in the day. My joke is it was the original smartphone that was neither smart nor a phone, right? It was the original smartphone. And he said they would charge us to fix these things and it's cheaper just buy a brand new Palm Pilot. I'd rather be charged that as opposed to repairing it. So the point is the billing practices were confusing. Felt obtuse and strange. And so Larry said, I just wish I knew how much was being billed. Well, here's the goal. When you identify what's wrong with the industry, this is how you can redefine the entire market. You can redefine the industry. So once you know where they're broken, this is opportunity for you to redefine the industry. So Larry said the billing practices are, are confusing. I said, I'm gonna go to a flat rate billing fee, which I don't know if you work with an MSP or service provider, it's common now., but it wasn't back in the '90s when I had my business. And that became a redefining approach. There was predictability in billing and so forth. So we redefined the industry by moving to that before most or any of our competition did. So identify what's wrong in the industry by asking your best customers, the heart of your organization. Ask them what's wrong with the industry. And then if you find a common thread, I'm not saying interview just one customer, interview all your customers. When you find that common thread of what's wrong, that's your opportunity to redefine the industry. And if you pull this off, my gosh, you can have explosive growth. The third and final question I want you to ask is congregation points. And here's what I mean by this, is where do you hang out? Now you're asking your best customer this. So I went to Larry. I said, Larry, I really value doing business with you. Thank you for your guidance on what I'm doing right. Thank you for sharing with me what's the challenge in the industry that you see. I also want to know, where do you get information? Not just on the technology we do, but all information. How do you improve your your business? Are there podcasts? This is before podcasts existed, but are there podcasts you listen to? Are there conferences you go to? And so forth. And Larry said, yeah, of course. He goes, in fact, all the hedge funds go to a conference out in Long Beach, California, and Greenwich, Connecticut. I was going to the Chamber of Commerce at the time. That's where I thought you drum up business. And it was good for a small business, but I now wanted to target my best customer. Here's a question for you before we play this scenario out. If you right now pick your best customer, imagine having 5 or 10 clones of them. What would be the impact in your business? Would it be significant? Would it be extraordinary? I pretty much guarantee it would be extraordinary because every business I've analyzed, if you can copy your best client 5 or 10 times, my God, it redefines the business. These are your best clients after all. Well, Larry, by telling me where his congregation points were, he was telling me where the other birds hang out. You know what I'm saying? Birds of a feather flock together. He was telling me where the other hedge funds were going. So what I started to do from that day forward was always attend the Long Beach, California conference. Always go to the one in Greenwich, Connecticut. I started hanging out there. I was the only computer guy. I didn't get a booth or anything. I just went there. If you simply appear in front of where your best customers are appearing, they will notice that. They'll observe you. There's a marketing technique, or actually it's about behavior, and it points to the frequency that we have an experience with something. On my own website, if you visit mikemichalowicz.com, as you scan the site, you'll see many pictures of me, not the same picture repeated over, many diverse pictures. The more pictures you see, the more frequently you're having exposure to me. It actually starts to blur the line between, did I meet this person in person or not? It actually brings about trust. So the more frequently you're in front of someone, the more trust is built. So I just started appearing at these conferences, meet people, say, hi, how are you? Nice to meet you. By the third or fourth meeting, people are like, oh, I see you all the time here. What do you do? Tell me about your hedge fund. I'm like, oh, I don't have a hedge fund. I do computers for hedge funds. I started to get business that way. Birds of a feather flock together. We move in pockets. You just gotta find out where those pockets are and your best customer knows. So when you interview your best customer, you ask them what the congregation points are. Your job is start appearing there. Now, don't just interview one best customer, interview the whole suite of them and find out like, oh, there's these podcasts they listen to, there's magazines they subscribe to, there's conferences they attend, and you simply need to insert yourself at those points very quickly over time, over reputation. For at least an awareness, but also a reputation for trust that you're the go-to person simply because you're appearing there. And sure enough, you're going to win over tons of business. So there you have it. Here are the 3 key questions that transform business. Know your best customer. You know how to evaluate them. If you didn't see that video before around the Pareto overlap, I really invite you to look at that to understand this. This thing, what am I doing right? This is a Jedi mind trick. This is the thing you actually need to improve. What's the industry doing wrong? This is a Jedi mind trick. It's an opportunity to redefine the industry and congregation points. My gosh, stop trying to go everywhere to find your clients. This is how you do targeted marketing just by appearing where they appear. There'll be a transfer of trust.