5 EASY hacks you’re missing out on to drive MORE revenue..

What is up? In this video today, what I want to share with you is how to increase revenue through operations. What I continue to see is the lack of infrastructure in businesses that want to go from doing a couple million a year to $10 million, $20 million, $30 million, $50 million, and above. And I kind of want to break your beliefs around what operations is supposed to do because I don't have a personal story of how operations was unimportant to me and then became important to me. I was told from the very beginning of when we started Gym Launch that operations was important. Because of that, I focused on it and we were able to scale extremely quickly because we had the infrastructure in place. And so I actually credit a lot of my success to the fact that I just heard that, applied it right away, and I didn't question it. And what I've come across a lot recently is just the lack of belief in operations. And it kind of started with a conversation I had with an entrepreneur who's doing about $7 million a year. And we were at a dinner. We have lots of dinners with entrepreneurs. And at this dinner, what he was saying is that he fired, you know, most of the people that were in the operational roles. And I said, well, you know, why did you fire them? And he said, well, it just seemed like it was added overhead and it wasn't actually adding value to the business. Which 100%, if something is just adding overhead and it's not adding value to your business, the role should not exist in the business. However, the reason that a lot of people that are new to business and they're only doing a few million a year, or even up to $10 million a year, don't know how to utilize operations. It's not because operations is bad and it's just overhead and it's just adding payroll, right? It's because you don't know what operations is actually supposed to do. And most of the time you also don't hire somebody who knows what operations is actually supposed to do. And so here's what I've noticed, because I've had about 4 different operators that have worked directly under me. I've operated, obviously I operated in the beginning, then I hired people, I delegated. And the operators always roll into me. And so I can tell you what kind of operators work well in a startup versus what don't. And then how the ones that do work well actually drive revenue through operations. So the biggest reason that you might have felt in the past or you see people that do this, they bring someone on for an operational role, whether it be in finance, HR, IT, or just operations in general, like an operations manager, And then they just let them go, right? And it just continuously happens. And then the business is really just made up of sales, marketing, and product. And then there's a lack of backend, there's a lack of people who take care of fulfillment and all the administrative stuff on the other side. And the biggest reason for that is because they're hiring people who are a little bit too junior to be in that business. And what I mean by that is if you don't know what that role is supposed to do and you've never done it before and you haven't read 10 books on it before, or interviewed 30 people for operations before, then the likelihood that you can train somebody to do what is needed for that business at that point in time is very low. And here's what I've noticed. People who are newer operators, they've been operating for less than, you know, less than 5 years, and they come into businesses, even especially those who maybe have more of a background in bigger businesses, is they come in and they put a ton of infrastructure in place. They're like, we've got to get a CRM and we've got to get a finance thing, we've got to get a system for this and a system for that. And they're not talking about anything that's going to drive revenue. In fact, it's almost like they don't care about revenue. They only care about putting this infrastructure in place, system, system, systems. And this is the biggest mistake that you can make in terms of hiring somebody who's going to do that. And if you are an operator, this is the biggest mistake you can make for your business is putting operations above anything that produces or drives revenue. Operations exist to support revenue-driving activities. And so we have to think from that angle. And so that's the first piece is understanding that most of the time, if you don't have the experience, you actually want to hire somebody who has more experience in operations because somebody who does— so I'll give you an example. I have two operators in my business right now, or in the couple of businesses I have, and both of them understand that operations should drive revenue-related activities. And then there's always the stuff we have to do on the backend, right? There's things that you just cannot neglect that are, you know, you have to be legally compliant, et cetera. But what they understand is that depending on the stage of the business, that is what dictates what operations should look like. And so I'll tell you, when we hired our CFO, she came in and she was astounded at how many operational procedures we had. And almost to the extent that, you know, she thought we had almost too many for where we were at. And we did. We trimmed down a little bit because I think that we had had a prior operator in there who was actually a little bit too heavy-handed with the systems they put into place. Right? And so for the revenue level we're at, we're not at $100 million at that point, then we're not going to have a million SOPs, an SOP for everything, a system for everything, a database for everything. Like, that's just not feasible because we only have so many resources that we can put towards every area of the business, and it's certainly not all going to go towards things that don't drive revenue. Whereas an immature or a less experienced operator would come in and they'll probably tell you you need more SOPs, more infrastructure, more, more, more, more. What I want you to think about is you want minimum flexible systems. You want minimal flexible systems so you can run the business, produce revenue, and make your life easier. Operations should always make your life easier. When I'm advising somebody who's a new operator, or I'm advising someone who's hiring an operator, the first thing I want to think of is when you're bringing somebody in to do something like that, or you're transitioning someone into a role where they're going to be driving operations, I think that there's 5 different ways that are the easiest ways to drive revenue with little or no infrastructure, okay? And so I wanna talk about those 5 ways because I think that they're little known by a lot of people in the business and they can really increase the lifetime value of the customer. So the first way is your onboarding customer experience, okay? People vastly underestimate the importance of onboarding, okay? A great onboarding experience can improve retention in your customer by up to 82%, okay? And this wasn't driven by me, this was by like customer success metrics in a book I read. What that means is that how you bring the customer in is how they are going to experience the business. What the book did say, and what it talked about a lot, was that the more personal touch there is, the more you increase the lifetime value. And so even for, you know, direct-to-consumer products, a lot of people put in, at minimum, a phone call. It might even just be one of those phone ringers that goes to a voicemail, but it leaves the new customer a voicemail thanking them for their business, welcoming them to the product, etc., etc. If you're looking at more of a B2B, if you have a B2B product and you don't have a welcome call or an onboarding call, if you want to increase your lifetime value, that's literally the easiest thing you can do. And I have learned this firsthand because when we launched our software company, we tried about 6 different ways of onboarding customers, and I got to see the different lifetime value and how it changed based on how we changed our onboarding. Right? And so a lot of people look at churn and they're trying to fix churn, right? Especially a lot of people who are very front-end minded. But in reality, you want to fix the proactive step. You don't want to be reactive. Reactive and looking at how do I save people, how do I make sure they don't exit, how do I make it harder for them to exit. That's not how you increase lifetime value. How you increase lifetime value is being proactive. The average customer decides if they're going to stay with your business in the first interaction after a sale. So wouldn't you want it to be the best interaction that you have? And that is why onboarding is so important. A customer is literally deciding if they're going to stay with you right after they close the sale. The third way that I would also say that you could, you know, make a point of touch with the customer after they close is by sending them something, right? Like a card or a gift or anything like that, a handwritten letter for thanking them. So, uh, phone call, onboarding call, any kind of gift or wow package— those are the 3 things that I would say, like, if you're not doing one of those, I promise you you're losing money. The second piece that I would advise an operator to come in and look at is renegotiating different vendor relationships. And so a lot of the times, um, this can be banking, this can be merchant processors, or this can be suppliers depending on the kind of business you have, right? And so when you first start the business, usually you have the lower hand. You don't have the upper hand in the deal, and so you cannot negotiate really good rates with anybody. But as you gain more and more traction, you have more history and you have more record, then you can say, hey, we need to really look at these contracts. And a fantastic operator is going to come in and they're going to say, I'm going to go and I'm going to go get— so say for your merchant processor, right? Say your rates are something like 3%. They're going to go and they're going to go get bids from 4 other merchant processors and they're going to get them for lower. And then what they're going to say is they're going to bring those bids to your current merchant processor and they're going to say, "Match one of these bids or I leave." That's it. It's literally as simple as that if you want to get better rates. And so a fantastic operator is going to do that. What they can also do is they can actually take that bid from the merchant processors and they can show it to your bank. So whoever you actually keep your money with, with the business, with personal, etc., they can show it to the bank and say, "Can we just process directly with you?" Here's all of our history, here's all of our transactions, here's the bids that I currently have, but I would just rather keep it with you since you already have my money. And any bank is going to jump at that and they're going to say, okay, yes, I definitely want to keep it. And most banks have better rates than a merchant processor in general. So processing directly with the bank if you can is always advantageous. The third thing that a fantastic operator will do is they're going to look at referrals, okay? Because if you want to increase the business, without increasing any overhead, just learn to ask for referrals. It sounds as simple as that. In a, I think it was a Dale Carnegie study where they said that 90% of customers say that if asked, they would refer a friend. You know how many salespeople actually ask for referrals? 11%. And so obviously there's a huge discrepancy there. And what it actually is, is that most of the time, the salespeople just don't remember. And so maybe they just need a prompt or a very simple system, or maybe when they're entering the customer data, there needs to say referral. Whatever it is, a great operator is going to put that into place so you can get referrals coming in. So they're literally increasing revenue through something as simple as ensuring the salesperson asks for a dang referral when they close a sale. It is really that simple. And it's just a small thing where they can put that into place and make sure that they can drive revenue. Now another way that they can help support this too is that they can create a referral program, whereas one that you can acquire rewards points. You can also have basically modules or videos on teaching your customers how to refer. We had that in Gym Launch, so we had an entire module on how to refer people to the business because a lot of people don't know how to elegantly refer. And so that's the reason they don't is because they think, what do I say? How do I say it? Where do I send them? There's a lot of questions. Well, then you need to teach them, right? And so if it's not just collecting a name and a number on the front end of the sale, then teach them how to do it in the back end of the product, especially for the B2B. Now, the fourth way, um, is fast access to information with good bookkeeping. So a great operator will come in and they will know— everyone knows that finance is incredibly important to a business because it tells a story. It tells the story of the business, it tells the story of the customer, it tells story of the employees. It tells everything that's going on. I think that our finance department— I think we have about 6 people in there— they have the best insight about the business. And the reason for that is because they have the numbers for everything. And so if you don't have any infrastructure in finance, here are my 2 suggestions for if you're bringing in an operator and you're looking for something for them to do for this to drive revenue, or you're looking at doing it yourself, which is you need to decide if you want to have an outsourced finance team that can give you this information and compile your data and give you monthly reporting, or if you need to build an in-house team. Now I would say that until you get to around, I would say like $7 to $10 million in revenue, you probably don't need an in-house team. You could probably get by with just a staff accountant or bookkeeper, and maybe someone for like AR/AP. So you could just have 2 people running it. However, if you want to have good monthly reporting, good customer metrics, you know, where you retrieve all the true information about the business so that you're not using Excel every night trying to figure out what's going on, then I would say then you want to start bringing in-house. So if you're trying to go from $10 to $20, $30, $50 million, I personally would prefer in-house. I have tried lots of out-house. I have tried to refer people to out-house. There are some that are good, but if you want the absolute best information, then I do believe having in-house is the best. And I do think in the long run you actually save money because they're doing everything correctly and they get you the correct metrics to give you information about the business so you can make decisions. And so that is how you actually drive revenue through finance and through good bookkeeping, is that if you have financials that are readily available quickly, and you have customer metrics that are available quickly, you can make faster decisions than if not. So I remember back in 2018, before I hired my CFO, and we had a team of like 11 people in finance, and I had not hired anyone with enough experience to know how to properly, you know, calculate the metrics and systematize things. So our data was really bad. And so at one point, I remember I looked at the weekly report and it said something like, it was like our churn spiked from like, I don't know, below 10% to like 25%. And I was like, this is insane. What the— why is nobody pointing this out to me? This is a huge problem. And I remember me and Alex, we called the whole team in and we had like 2 weeks of meetings that were going until way into the night, early morning. We were super stressed out. You know what happened? Turns out our team was calculating it incorrectly.. And so when we came back, it actually had never changed. They had just put in the numbers wrong. And that was because it was an inexperienced team. And so that is how important it is to have the correct numbers because I look at the decisions that we made because of those numbers, which we did make decisions that ultimately lost us revenue because they gave us the wrong numbers from bookkeeping, right? And I look at the amount of time that we lost in putting our energy towards something that wasn't even a problem. It was ridiculous. So that is why good bookkeeping is something that I would give to an operator. I would say if you are an operator, you want to make sure you have good financials in place and good financial reporting and good customer metrics. Okay, and that should all be driven by that department. And then the last way, uh, to drive revenue through operations is by having a formal communication structure with direct reports. So essentially what I'm saying is you have the manager and you have their direct reports, and creating a formal communication structure where it is I want to say the word mandatory. Mandatory that they have a one-on-one weekly or biweekly with the people that report to them. And obviously this is going to be dependent on team size and what kind of team they are. Are they part-time, full-time, etc.? Right? Like if you've got 50 direct reports and they all come in for a couple hours a week, you're not going to have a one-on-one every week with them. It might be every 3 weeks or 4 weeks. I'm reasonable. But if someone's full-time, I think that having a 30-minute one-on-one every week or an hour every 2 weeks is crucial. And the reason for that is because if you look at the metrics of employees who have one-on-ones, and this study was done by Google, okay, uh, the likelihood of an employee sticking with your company increases by 3x over 2 years, and their productivity increases by 2x over 2 years if they have formal one-on-ones with their manager. And so it drives me crazy because I know all of these metrics, and I tell people, I'm like, have one-on-ones. If you don't have one-on-ones, really get these into place because I know how much they're going to drive productivity and efficiency within the team. And that's because you have speed only if you have clarity and trust, right? And so if you have those one-on-ones, you're establishing the trust, you're giving clarity, and then you can have speed on the other side. And so if you're not doing this, I would suggest as an operator, you set up a cadence for everyone in your company to have these on a weekly or biweekly schedule. And you say you're going to let the employee decide if it's weekly or biweekly, because it should be up to the employee, not to the manager, because the employee is going to kind of dictate what they need at that point, at least to start. The second is you're going to ask them on that call simple two questions: what are your current pain points, and how can I support you? The rest of it is just listening. And so if you can give somebody that kind of time, that's the kind of output increase and the kind of retention increase you're going to see in your business, right? And if you look at the cost of employee turnover, The average employee that turns over before 1 year, who has been on in the company for over 3 months and leaves before 1 year, costs you about $50,000. So if you could expand the lifetime value of your employees by 3x, don't you think that would save you money? And so that is how operations drives revenue. And so I hope this helps if you're somebody who doesn't believe in operations or has had a hard time with operations or you're Never wonder, you always wonder like, why does it not work when I bring these roles in? This is why. Because operations should drive revenue, it just does it differently than marketing, sales, and product. And so I will continue to make more videos on how we can drive revenue through operations. I hope this one helps. Send it to your ops manager, use it when you're hiring, take notes on it, whatever. I will see you on the next video.