Listen to the podcast here:
It’s not unusual for an entrepreneur to remind me that they are not experts at financial “stuff” and simply know their product or service really well. The brave and confident ones tell me that they may not even know their product or service really well but that they can sell. Whatever the case may be I have discovered there is really only one formula that matters when it comes to business:
Profit = Product/Service + Customer Experience
That’s it. It’s profound if you think about it. With each passing day clients and customers look to products and services to make their lives simplier and ultimately to help them make the best use of their time especially if it entertains them. Never before have people been more intend on using their time selfishly and entrepreneurs that want to generate profit have to create experiences through their products or services that customers find valuable and will ultimately pay for. The businesses that provide a better experience than their closet competitor will not only win more of the market but will earn a disproportionately higher amount of the profit available. If two products on the surface look the same and provide the same functionality it will be product that provides a customer with a better overall experience that will be sold in disproportionately higher amounts compared to the other.
It is important to note that a customer experience is not limited to the actual product or service itself but is the entire interaction with a business that provides the product or service before the sale and after the sale has been completed. From how a lead is attracted to a business, converted to a prospective customer, sold and then retained is all part of the customer experience that the best entrepreneurs work to create and improve each day.
If your business is not dominating a marketplace then you need to take some time to evaluate the experience your customers are receiving when they interact with your business. There is simply no shortcut around providing a best in class experience for your customers if you want to be profitable. You may think your business is profitable now but if it is not the market leader in your category or doesn’t have a dominate position then the next market downturn may have a major impact on your business. One of the strongest ways you can shore up your business is to build a wall around your customers through an experience that would keep them in place during a downturn and would help you expand your boundaries during a rising market. This is because people covet their time more than their money and the enterpreneurs that are helping them make the best use of their time through unbelievable experiences will have healthy businesses.
Even if you hate formulas there is one that you should memorize and work to solve each day. The effort will be worth the reward. Not only will your business have disproportionately higher profits compared to the rest of the market it will also be disproportionately more valuable.