Last night’s game, like Saturday’s ended with a losing-team player disconsolate in the dirt, but this time without an attached ruling to talk about. Kolten Wong, a ninth- inning Cardinals pinch base runner, was cleanly picked off first base by the Boston closer Koji Uehara, for the last out of the game. No excuse: Sox win, 4–2, knotting the series at two games apiece.
–Roger Angell, The New Yorker Blog, October 28, 2013
In Business, as in Baseball, scoring is the heart of the competitive game. Without it, Roger Angell’s meaning is gone.
Now, baseball isn’t scoring, of course, and no scorekeeper ever made it to the Hall of Fame. That’s reserved for the great players who inspire us with skill, courage, grit – American virtues that built this country.
But without the humble scorekeeper, and his offspring, the statisticians and analysts, it is hard not only to cite the deeds of the heroes, it’s also hard for those same heroes to know what to do.
It isn’t a game if there isn’t a score.
For business owners and their companies, it’s not a game without a score, either. While a baseball score may turn into cash in several ways, none of them are as direct as sales and sustainable cash flow in a company.
Most growth plans include the unexamined hypothesis – the “estimate” of budgeting for sales and marketing – based on historic practices, averages, and guesstimates. This leads to spending patterns that are often not optimized, and, if understated, cause serious sales risks.
In the online world, where either leads or sales arrive from a variety of sources like search, online advertising, outbound programs, and the like, sorting out where prospects came from, and what made them come, is complex. Having this information allows the company to make proactive acquisition actionable, however. If your company isn’t doing it, you can bet your competitors are.
And yet we need to find new customers!
For most companies, acquiring new customers is required for their viability. The customer acquisition component of the business model usually drives the entire business. Every business owner wants to know how long it will take and what it will cost to obtain customers, how long they stay, what they’ll spend, and over what period of time how much contribution margin they’ll contribute. An accurate customer acquisition cost – one that is actionable – allows the company to budget acquisition expenses on a regular basis, expect them to yield the targeted results, and hold the owners of the process accountable for results.
So do this:
- Budget based on actual, detailed historic company data. Be sure to include everything that makes up the cost to acquire a customer.
- Build a bottom up revenue forecast.
- Monitor execution relentlessly and as often as data is available. For one of our clients, that’s twice a day.
- And take the more predictable result right to the bank.
With these processes in place, business owners avoid the many months or years of risk before estimates are proven to be right or wrong – and if wrong, at a very high cost.