Rebuilding revenue systems and pipelines post-
COVID presents an opportunity to do much more
than simply recover lost ground.
Probability, compound interest and double-digit revenue growth
Casinos are licenses to print money, right? We hear that so often and we know it's true, so we seldom if ever stop to think about why it is actually the case. As businesses, casinos are spectacularly good at continuously spitting out enormous rivers of cash. Yes they have the advantage that they feed off a human addiction to gambling, but if that was the whole story, every drug dealer would be a millionaire.
Who would have thought high school maths could be so powerful
Casinos are businesses that run almost entirely on maths. Probability and statistics to be even more precise. But basically - it's maths. And they are hugely successful because they also run according to extremely precise systems, processes and formulas - in other words, algorithms.
Different casinos offer different games, but the most popular games are found in just about every casino. Blackjack, Roulette, Craps, Poker etc, all with multiple variations of rules and structures. Everyone who's ever been in or watched a movie about one, knows that whatever the game you're playing or watching, the casinos stack the odds in their own favour; the so-called house advantage. That isn't news. What way fewer people understand however, is just how skinny most of those heavily stacked house advantages really are.
It's more than just the odds
We're all led to believe that the odds are massively stacked against the player, to the point that they player can't win. But that isn't true. People win in casinos all the time. They just don't win often, and over time - the house always win. That's the concept worth thinking more deeply about. I'll say it again. Players win sometimes, but when they do it's because of luck. Casino's don't win all the time, but over time, they always do. They may lose occasionally because of luck, but over time they always win because of maths and process.
Across the dozen or so most popular casino games, the house advantage ranges from about 0.1% to about 5%. Not much is it? [Tip: Don't play Keno - the house advantage there can be more than 25%!!]. In other words, casinos don't make money by winning big. They make money by winning small and winning often, and they win small and often by working the odds according to a disciplined system, so that those odds always work for them. Even if they don't win every time, they win over time. Always!
Card Counting - For Revenue
I promise you it's exactly the same with revenue. Card counters playing blackjack tilt the odds of every hand imperceptibly from the house's advantage to their own. On a single hand - or two or three or four, it makes no difference at all. Play 20, 30 or 40 hands and it starts to become a different story. So different that if the casino even suspects they're card counting, they'll eject them immediately - and forever. And send their picture to every other casino so they can't play there either. Nothing terrifies a casino operator more than a player who knows how to shift the odds in their favour - even if only by the tiniest margin, and then how to play consistently to a system.
Telemetry & Marginal Gain Theory
More than 150 organisations around the world - from very large to very small, have used Telemetry and Marginal Gain Theory to do exactly that. To tilt the odds in the revenue game in their favour using a demonstrably proven system. Their year-on-year revenues went up by an average of 24% as a result. The same as doubling sales in three years and 2 months. If you think that's a ridiculous boast, think again about how much money a Las Vegas casino spits out every year. Using the same principles. Or click here and see those clients and their results for yourself.
What Sales Directors and CSO's can learn from Hollywood Directors.
In a former life I was once fortunate enough to attend Dov Simens world-renowned 2-Day Film School. Dov is the flamboyant and unabashedly self-professed “expert” on how to produce a Hollywood blockbuster, who learned his trade under the great Roger Corman in LA. Dov talked about the “Hollywood Formula” that spells out in precise detail how long each scene needs to be, how many explosions, how many plot twists and all the other elements that need to be in place at just the right time in just the right order with just the right level of intensity – for success to be“a given”.
Hollywood has long had the whole thing down to a formula where every minute detail of the overall task is precisely defined, structured, measured and then honed to a finely tuned edge. If Steven Spielberg, James Cameron and Quentin Tarantino get that, why is it that CEO’s and their sales leaders cannot?
For the vast majority of organisations, the concept of selling remains hiring reps, giving them cars, mobile phones and if they’re lucky, a list of prospects. Sales process is making sure they make 20 calls a day and log their activities in the CRM system. A surprisingly small but steadily growing number of companies are beginning to understand there’s a lot more to top line success and are embedding“process” into every part of their marketing and selling DNA – just like Quentin Tarantino or James Cameron making the next Hollywood blockbuster. But the vast majority are still lost in the fog
Growth is back on the agenda
As the global economic recovery spits and stutters and memories of the GFC continue to fade, accountants are relinquishing their collective grip on the reins and organic growth is firmly back on the agenda. Recent surveys released by ANZ Bank and PwC both confirm that growing revenue and finding enough of the right people to do that are firmly back at the top of strategic priorities for CEO’s and their Boards.
Growth may be back on the agenda, but selling has never been more difficult. It has never, ever been more difficult to sell – anything – period. Whether you’re selling state-owned utilities, sophisticated technology solutions, mechanical widgets or professional services, the cards have never been so heavily stacked against making the sale. If you don’t believe that, consider that in 2018 fewer than two of every 100 sales leads convert into buying customers. And like it or not, that statistic is unlikely to change any time soon.
Consider the following statistics:
• Sixty two percent of sales people now fail to make their quotas;
• Sixty eight percent of organizations fail to make their annual revenue target;
• Eighty eight percent of sales opportunities fail to close as forecasted; and
• Sixty eight percent of sales leads are never followed up by sales.
These numbers have significant implications for Boards and CEO’s still calling out double-digit targets for revenue growth over the next 2-3 years.
Old thinking won't solve new problems
Albert Einstein once famously said, “A fix using the same thinking that created the problem will only ever be a band-aid.”
For the last forty years, the tonic of choice for the ailing company top line has been either more training for the sales force or another dose of technology. As often as not, this has been accompanied by the departure of the previous sales manager and a few sales reps and the arrival of shiny new ones – with the cycle repeating itself every few years.
Since the late 1990’s Customer Relationship Management (“CRM”) systems have challenged sales training as the panacea for the problem of how to grow revenues. More recently , analytics has stepped in to the frame as CRM has failed to deliver on vendor’s much hyped promises of all kinds of success. Global vendors including the likes of Siebel, SAP, Oracle and Salesforce.com have come to market with ever more advanced technology offers promising the Holy Grail – consistent top line growth.
With that level of investment being thrown at a problem, one would have expected it to be well and truly licked by now. Well – it isn’t. In that same period the average conversion rate of revenue pipelines fell by nearly 100% to be 1.92% by the end of 2017.. For every 100 selling opportunities that began their journey as “leads”, less than two resulted in closed sales and revenue.
And yet as their companies push on in the quests for growth, many CEO’s and Sales Directors are still turning back to the training and technology “silver bullets” unaware that the world has moved on and the challenges they face in growing their top lines in the 21st century, are beyond the scope of the same old one-dimensional approaches that failed just as badly in the 20th century.
Business process and performance measurement
The answers to the revenue performance dilemma have actually been readily apparent for some time. And they’ve been applied successfully to every other aspect of business for decades.
For success in anything to be sustainable it must be repeatable. And for anything to be repeatable there must be a process. And that process can and should be measured. Hollywood producers and directors get it. CEO’s and their Sales Directors are starting to to as well.
The blind spot facing the Australian general insurance industry in trying to assess their critical business risks
Even though it’s barely begun, 2019 is already lining up to be a challenging and difficult one for buyers of insurance. The market continues the hardening trend which began in 2018 and underwriters are withdrawing from classes long considered to be business as usual.
In their recent quarterly market commentary, Honan Insurance Group predicted “a continuation of upward pricing pressures” throughout this year.
While brokers benefit from rate rises, Honan and other predict a growing discrepancy between low and high-risk business and and increasing willingness on the part of insurers to walk away if profitability thresholds are not met.
Insurers and brokers are also bracing for pending shockwaves of the Hayne Royal Commission as they ripple out through the market. The precise implications are yet to be fully understood, but executives in the large insurers say they are hoping for the best, but preparing for the worst.
If the banking and wealth sectors prove to be any sort of guide and many industry insiders and analysts believe they will, the way insurers and their broking channel partners engage with their customers is set for an overhaul at least as dramatic as the one the banks are starting on. In the short term, the current hardening cycle driven by increased focused on profitability will enable many organisations to kick the customer engagement can down the road a little further. An environment of rising prices across the board will provide another convenient smokescreen behind which sins which have been accumulating for some time can remain hidden. But like Dorian Gray’s picture of himself, when the truth is revealed – as it ultimately must be, the consequences for those left to face it might be decidedly ugly.
Like the banks, insurers and brokers face the prospect of rebuilding much of their go-to-market models in the near future. Some have begun already. Others will need stronger coercion, possibly regulatory. Whenever they choose to begin however, it isn't going to be easy. And not just because of a hardening market cycle or a Royal Commission.
More than a decade ago, a cracks began opening up between the growth aspirations of companies and the ability of their marketing and selling functions to deliver that growth. At RPMG we have been observing and measuring the widening of those revenue cracks across countries and industries since 2005. In 2019 for the first time, we have been able to quantify the scale of the crack for general insurance in Australia.