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by • March 27, 2012 • UncategorizedComments (2)175

Re-think in orders of magnitude

How many sales calls can you make a day? 10? 20? You prep for each one, take notes afterwards. That last one was stressful and the guy yelled at you, so maybe you get a cup of coffee.¬†You’re barely break even, and you’re paying yourself peanuts. Sales guys have way higher salaries than you do. The model works, but how will you ever scale?

Can you increase the number of calls you make by 50%? 100%? That would be a nightmare. You’ve already working at max capacity–there’s no way you could sustain twice this rate.

Then you hear that Groupon reps make 250 calls a day[1]. Two-hundred and fifty?

First, your mind rebels (“That’s impossible”). Then it sees the opportunity (“If I could make 250 calls a day, I could scale this!”). And then it starts shucking constraints (“Maybe I don’t need to be taking every first meeting in person at their office”) and reinventing your process (“If I was obsessive about CRM usage, I wouldn’t need to prep for calls”).

Then you realise that things are going to suffer. Groupon’s unofficial tagline is “signed with blood” for good reason. Google sucks at customer service because it decided taking care of individual problems was a constraint it needed to abandon in order to reach scale. Are you comfortable with the what you’re going to have to leave behind?[2]

The order of magnitude what-if is the best way I’ve found to overcome local maximums. I talked to a company the other day who was working to go viral. They had a good start and great numbers, but their testing was taking forever. They were spending a month per funnel experiment. And they were doing great work! Their site was spectacular and metrics were strong.

But the fact remains, they weren’t viral. Going viral is such a crap-shoot that you have to be willing to try a lot of stuff. Telling them to run twice as many experiments was never going to work–they were working to capacity already. They needed to find a way to launch 10 user onramps per month instead of 1. Instead of having the whole team work on each possibility, maybe they become 2-man projects. Instead of using a custom design, maybe they all launch with a wordpress theme behind them. Is it worse? In a certain sense, yes. Is it necessary? Also yes.

When your model isn’t working, incremental improvement isn’t going to help. You need to leap by a factor of 10.

 

[1] That’s 1250 calls per week to close an average of 4 deals.

[2] I’m not, the realisation of which has had a big influence on the types of businesses I’m interested in starting.

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2 Responses to Re-think in orders of magnitude

  1. andrej telle says:

    interesting approach. I like the think-outside-the-box approach. Think something you have not thought before.

    It also shows you were your structural problems may be hidden, if you cant go up 100%

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