Home » Business

Find Dangerous Profit-Spilling Icebergs Before You Ram Them

Jan 23, 2008
The Titanic was aiming to set a speed record for crossing the north Atlantic when it hurt a large iceberg and sunk. Over a thousand people died. It was the ultimate example of trial-and-error management: Go straight ahead as fast and you can and don't worry about obstacles until you hit them.

You can avoid being harmed by trial-and-error management when you identify profit obstacles to avoid. I have created a simple, valuable way for you to do so.

Here's the concept: I want you to run an nth degree test with current and potential beneficiaries and customers to find out what changes you can make that will greatly expand your sales volume or the usage of the offerings of your nonprofit organization.

If you don't know or remember what an nth-degree test is, here's a brief description: You take factors about your offering that can vary and imagine that you increase and decrease each factor alternatively to ridiculously large and small levels.

For instance, you might offer an economy size that's 100 times the largest size you have now at a very low price and a single serving that's just enough for a few seconds of use at a high profit margin. Usually, these nth-degree tests are mental experiments you run with yourself.

The lessons you learn may astound you. Here's an experience I had with a marketing test. When I was new to the consulting business, I decided to look for a way to eliminate all the time involved in attracting new clients.

Our clients liked what we did. Presumably, non-clients would have the same reaction after trying our services.

Having read a few marketing books, I focused on the custom that professional firms seldom offer guarantees of their work. Instead, the client is expected to pay for the results . . . even if those results aren't very good.

Encouraged by the idea that reversing the risk for clients might present an opportunity, I added a money-back guarantee to our most popular service, contacted most non-clients of any size, and waited for a surge of business from new clients.

I was shocked when we didn't add a single new client. In fact, I was dumbfounded when I realized that I had unintentionally scared many potential clients away.

Why? These executives assumed that anyone who offered a money-back guarantee for professional services must have lots of problems with their quality . . . and were desperate for business. Potential clients couldn't imagine that such an offer could come from a position of quality and strength. It didn't help the perception of our offer that some of our competitors saw our letters and made up stories to suggest problems about working with our organization because we made the offer.

Had we run an nth degree test, I would have avoided that well-intentioned and painful misfire and focused on some more productive opportunity.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
Rating:
Please Rate:
(Average: Not rated)
Print Email Report Share
Article Categories