Use the Moneyball principle to grow your small business
July 9, 2013
Any suggestions on how to compete when you don’t really have a lot of assets to compete with? I don’t have a lot of extra money, I don’t have much of a staff, I am an OK businessperson, but all in all, I don’t have a lot of assets that can help me get ahead.
I think your situation is probably not all that unusual, actually.
I participated in a panel discussion a few weeks ago and the question of customer service came up. Almost to a person, the experts said, “You have to be unique, you have to be special, you have to wow them!”
Now, there is a kernel of truth there, of course. Your business should be unique in some way, and your brand should reflect that uniqueness. But I think it is unrealistic to think that most small business people are going to have the time, energy, or resources to “wow” customers on a regular basis.
Nor do I think you need to.
How often during your day are your “wowed” by a small business? Not often I bet. And I would further wager that it is also true that you don’t really care, that you probably return to those businesses that do their job efficiently, if unspectacularly. I mean, who really has the time to go find a new, say, shoe store, because the one you go to just sells you shoes? Do you really need to have the shoe store (pardon the pun) knock your socks off?
So the question is, how does the average small business compete, especially if being amazing day in and day out is unrealistic?
Let me suggest that you take a play out of Moneyball. Moneyball, as you may know, is a book (later a movie) by Michael Lewis that looked at how a run-of-the-mill baseball franchise, the Oakland Athletics, was able to use analytics and precise targeting of undervalued players to get ahead. The A’s didn’t have more money than the competition (they had less in fact), but what they did have was a better strategy.
I just heard about a similar concept being used in farming today, called “Precision agriculture.” Boiled down, the idea is that a farmer can get optimized results by precisely honing-in on using the right tools and the right crop in the right fields at the right time.
For the average small business – the one that doesn’t think every day about creating an exceptional customer experience – but instead works to offer a good product or service at a fair price, the Moneyball/Precise agriculture formula can be a valuable tool.
The question to ask yourself is this: What do you do that creates your biggest payoff? What client, customer, or product is your biggest moneymaker at the lowest cost/effort? In business, it is often said that 80 percent of your money comes from 20 percent of your customers – the so-called 80-20 Rule.
Well, if you want to get ahead, then hone-in on that 20 percent. Which customers, what products, which webpages, and what services are your golden 20 percent? That is the Moneyball way of small business. Figure out what gives you the biggest bang for the smallest buck, and double down on that.
Even if you don’t have a lot of extra time, money, or staff, by doing some careful analysis and precision targeting, you can figure out the best place to put your efforts.
Plant your field there and watch the money grow.