Transcription
The single highest leverage activity in your business is not product, marketing, sales, or hiring. It's alignment. And in this video, I'm going to walk through the exact system we use to set goals internally across my portfolio of education businesses that served over 30,000 customers in the last 5 years. Let's get right into it.
All right, these are the exact 10 steps that we're going to walk through over the next couple minutes. First, understand that goals are just math. We're going to show you how every single thing that you model in your business is a simple equation. Then, we're going to set a monthly revenue goal. Identify the current trailing monthly revenue so we can identify the gap in the third step. Then we're going to identify if the bottleneck to getting to that goal is volume or efficiency and I'll show you how to distinguish that. Then you're going to brain dump a list of all the ways you could remove that bottleneck based on the more better new framework. You'll rank each of them on a scale of 1 to five on impact and effort. You'll attack the one effort lowhanging fruits that are easy quick wins. Then you will look at the ratio of impact to effort to set your highle strategic initiatives. Then you'll block three hours a day just to work on those things until they're complete. And then lastly, you will repeat the cycle over and over and over again every time you set a goal within your business.
So let's walk through an example of how we do this with a actual example of one of our profit centers within our premium ghost writing academy, specifically our front-end sales process.
Okay, so step zero, understand goals are just math. This is the single most important insight to understand when you're setting goals of any kind. The gap between where you are and where you want to be is a number. That number is made up of an equation with input metrics and efficiency metrics. We'll talk about those in a little bit. Your job is to analyze that equation and find out the part of the equation that needs fixing. This is your bottleneck. The part that needs fixing will create a new demand of you. Some kind of new thing that you're not currently doing required to improve it. Those demands will force actions that you need to work on every day until those demands are met and the equation looks like you want it to. That's it. Everything that is not improving the specific part of that equation that is limiting your growth is a distraction. It took me so long to learn this lesson. And I'm still falling for it today. And part of the reason I'm making this video is to distill this process for myself. So most of business goal setting is around getting extremely clear on the gap, the demand that gap creates, the action that fulfill those demands, and then ignoring quite literally everything else and staying focused on the few critical things that you identify in the exercise we're about to walk through. So that is my kind of condensed summary of the way I think about any kind of goals.
Now, let's look at actually putting this into practice. So step one, identify a monthly revenue goal. So, if you want to do this alongside me, feel free. Or if you just want to watch and kind of take notes of how I do it within one of our verticals, feel free. So, we want to hit, say, 500K of new front-end cash collected for one of our front-end verticals. That's step one. We got a goal. Step two, identify the current trailing monthly revenue. And so, that was 330K for this particular example last month. And then step three, quantify the gap between goal and current. Great. We're 170K short of our goal. That's the easy part.
Once you can identify the exact gap between where you are and where you want to go, then you're going to reverse engineer the formula. So from here, you want to identify if you have a volume or efficiency bottleneck. So I have a full deep dive on my channel. We can put it over here. I gave a keynote on the way I think about bottleneck analysis after this video. Go watch that one. It'll go deep on all the different ways to think about volume versus efficiency bottlenecks. It's a really in-depth presentation. So go watch that after this one. But for now, the difference between efficiency and volume. We have an efficiency bottleneck. If you could reach your goal simply by more efficiently converting the number of leads coming in. I just say leads as a broad bucket term here. But you could do views, you could do attention, but I think email subscribers or applications, whatever metric you want to choose. I just think about leads. And so leads are new email subscribers that come into our business. If we could reach our goal with the same level of net new leads coming in, but we just more efficiently brought them through our process, then we have an efficiency bottleneck. And I'll show you how to kind of diagnose that in a second. We have a volume bottleneck. If in doing that analysis, we see that all of the substeps when someone opts in to when they make a purchase are at KPI we call this, which is just the standard across industries and across people we talk to and across kind of generally accepted numbers that say, okay, the throughput of this equation is fine. You just need to drive more into the top of it. And so that's when you have a volume problem.
So for us, we are at good enough KPI to scale because of our efficiency metrics. So, if I just look at marketing and sales efficiency for the process we're walking through, I look at each of the individual steps that someone takes from going to our email subscription page to making a purchase. And I want to model out every single step that they take. So, if I was going to become a potential customer, first thing I would do is I'd go to the landing page and I'd opt in. Then I'd fill out an application. Then I'd get on the calendar and I'd be kept on the calendar. And I can calculate our marketing efficiency, which is the number of calls that we have divided by the number of leads that we have. We run a call funnel for this particular vertical. And so you would adapt this depending on what type of business that you run. But you need to model out the entire formula for someone sees you for the first time to someone makes a purchase. This is good enough and not worth trying to fix anything here. Now, for example, if 3% of people who subscribed ended up filling out an application, we're clearly misaligned somewhere. And so that would be our bottleneck because that's way out of KPI. But for us, these are all in line. So then I move on to sales. Okay. So when someone books a call with us, what are we doing? Well, we have a 75% show rate, 75% cash collected, 22% close, which gives us a strong metric of cash collected per book call. These are the two metrics that if you want to nerd out on our specific funnel that we look at with sales efficiency and marketing efficiency, lead to calls and then cash collect per booking. You're going to have different metrics depending on your business, but you need to be able to identify the marketing and sales efficiency, which is how well you're able to take someone who just found out about you to ultimately make a purchase and model that entire thing out. So, for us, our efficiency ratios are fine. That makes me confident that we have a volume bottleneck. But for example, if we had a 5% close rate, that would be the bottleneck because we could 4x that to get it to industry standard and likely be at KPI or the goal that we're trying to set if we just fixed that. So I could go through every single example here, but we've had efficiency bottlenecks for a long period of time. We are now just getting to a place where all of our metrics are in line and we need to focus on volume.
Now we calculate, okay, what is the number that we can best target that if everything else stayed the same, we would be at the goal that we set in our previous steps. So if we're 170k cash collected short of our goal or we collect about $800 per book call on average, that means we need 212 additional calls. Great. That is our new goal. And so you can see how I took the initial revenue goal, measured the gap, identified the bottleneck, and then said, "Okay, where are we actually trying to drive volume-wise that would help us hit that goal?" So I took our gap, divided it by a number that I have based on all of our other metrics. And then said, we're actually not this much revenue short. We're simply this many calls short. And that aligns our effort on the single most important thing, which will be driving more call bookings, which was what we'll do in the next step.
All right. So with our gap identified, we need to go book 212 more calls. What do we do? How do we do that? How do we think about doing that? So the best way to do this is a framework from the Hormosi team. We call it more better. First, you're going to look at all the places you're currently generating traffic and make a list of all the places you could do more. So this is always going to be your highest risk adjusted return is just maxing out the things that you're doing. In our case, we could do more on all the places we're currently posting content or at least we can see if we could, right? So, LinkedIn, we post every single day across both of our accounts, me and my co-founder, that drive traffic to the same product. And then we do a weekly viral drop where we do a big giveaway and it's kind of like a squeeze of that whole audience to get them to engage. We're likely capped out there. Could we post more on Instagram? Not really. We're at two times per day. Could we send more emails? We're sending them daily, so not really. Could we post more YouTube videos? Yes. We're under the maximum amount that we could do more there. And so, really, that's the only place we could do more besides increasing ad spend. That's another thing. If you run paid ads of any kind, the easiest thing you could possibly do in your business is just spend more there. It's a little bit riskier, but if you can model that out well, you know that increasing ad spend is going to lead to the result that you want. That's the always going to be the best risk adjusted return. Going through the more better new framework, we have two things that we can do more of. And obviously for your individual business, you would do all the places you're currently posting content if you had a volume problem. I can't walk through too many examples here of how to diagnose an efficiency problem, but you're going to take the same idea, which is depending on what the bottleneck is, you would walk through all the different ways you could diagnose it. More, better, new is just a way of thinking through potential solutions. I'll actually walk through an efficiency one in a second, but for now, let's keep going on the volume.
So, if that's more, what about better? What are all the places we're posting content that we could do a better job of it? And if we just did that, could we reach our goal? So, could we write better posts on LinkedIn? Maybe. We do a lot of effort there. I don't think so. Could we do better posts on Instagram? Maybe we could invest more there. Could we do better emails? Probably. I think we could invest more there. Better YouTube videos, not posting. So, you can't do anything better if you're not doing enough of it. From this list, we have we could write better posts on LinkedIn, better posts on Instagram, or write better emails. So, you can see how we're collecting a list here of all the different things that we could do to drive more traffic and eliminate this bottleneck. Then, lastly, we want to think about new, which is all the things that we're not currently doing that we could do to help generate more calls. So, for example, I just start listing things when I do this exercise. So, we could start having a daily outbound dialing cadence for our entire team to call all the leads who didn't book. Or we could launch a low ticket funnel that allows us to have a very short payback period to run ads to get more people into our ecosystem and then ascend. We could do that. We could also run a paid 3-day ghost riding clients challenge. Basically, like a big webinar. This is where a lot of people spend time focusing on all the new things that they could do, but they skip where they could do more or better. We've spent a lot of this year on new stuff, creating new products, but the year before that it was all more or better. We maxed out pretty much all these different platforms that we could post on and then said, "Okay, what are all the new things that we could do?" We're still in a bit of a new mode. But you don't want to overlook where you could just do more or better.
So once you've done that, you now have a long list of all the different things you could do to solve your bottleneck. You don't want to overthink this part. You just want to list all the potential things that you think maybe could help you solve this bottleneck. And we're going to rank them in the next one. I'm actually just going to walk through a quick example. Let's say our close rate, and I'm just going to riff this one off the cuff. Let's say our close rate was 5%. And that was the single bottleneck that we identified that we need to go and solve. You can still run through the more better new framework, which is like, okay, what are all the things we could do more of? We could do more training. We could do more daily meetings. We could do more call reviews. You'd want to look at that. We could do better. Okay, we could hire better people. We could have a better script. We could have a better sales process. We could have a better pre-all confirmation page. All the different things that you could list. And then new, it could be we could hire a new rep entirely. We could have an entirely new script. You just generate a long list of ideas in the more better new framework just kind of helps you unlock. Don't overthink this. Just list as many things as you could and we'll rank them in the next step.
Okay. So, this is where it gets fun. For each of these initiatives, we need to understand that we only have limited resources we could deploy into any of these. So, we want to choose the ones that have the highest likelihood of getting us 212 additional book calls gap. To do that, we're going to rank all of our projects across two dimensions. Impact and effort. So impact five being we think it has the potential to close our gap entirely if we just did that thing. So if we only did that thing would it help us reach our goal and then one is we don't think it's going to help very much at all and then effort one to five. Five being this would be extremely resource inensive with the entire team dedicated to just this thing or one being a very quick win we could do or decide on in under an hour. Those are the two rankings and most people just never do this. They generate a long list of things that they could do and they go okay we're going to do all of them and then as a result they end up doing none of them. Lastly, once you rank them on these two axis or two metrics, you're going to create a ratio of impact to effort, and that becomes the guiding metric for choosing what to work on.
So, let's look at all the things that I just talked about. So, you can see this here. So, starting with increase ad spend by 50% on our webinar to get more people show up live. That is something we could do more of. What's the impact of that? Well, if we only did that and we spent 50% more, if you look at our past webinars, that might actually get us there. That might be the only thing that we need to do. and it's a little bit risky, but we know that if we just do that and all the other metrics hold, we could actually reach our goal effort. However, that's not just clicking buttons because if we're going to spend more, we need to have a more diverse creative portfolio, more than likely to have more ads running. We might have to refresh the webinar to have more people show up that haven't have seen it in the past and now, you know, want to see a new one. But it's not going to be some giant initiative. It's just going to be like a little bit extra work than, you know, just clicking button. So, I gave that a three on effort. Then we have launching a low ticket funnel that allows us to have a less than 7-day payback period impact. I think it's a five because if we had that, we could spend a lot of money with a relatively quick payback period and a relatively high ascension rate that would let us model out, okay, we just need to spend this much and create this many new ads for us to reach that callbook goal. So, I put it at a five. However, effort that is quite high and that's a four. not so intense that everyone on the team has to focus on it, but I do think that we could build this in 10 to 14 days of very focused effort and that's a pretty high effort thing. Then we start to get so I already ranked these by this metric here. So let me just jump down to like start making better posts on Instagram. That sounds like a great thing to do, you know, okay, we'll just post better there and like we should be better on Instagram, so we should go do that. However, like let's look at impact. How many calls did we actually book from Instagram last month? 30 35. So, we have to do quite a bit better there if we're going to make up our goal. So, sure, having some talking head content can improve that, but it's not going to get us there. And it's also going to take a lot of effort because I got to sit down, I got to film, I got to script, I got to think about posting, I got to iterate, I got to go on Instagram and watch. It's relatively high effort for not that high of an impact. The amount of effort to build a higher quality Instagram shorts cadence versus building out a low ticket product is probably the same thing and might even be higher on an ongoing basis to do more Instagram. However, the impact is way less. And so you can see here the impact toe effort ratio is 3 out of 4, which is 75. That's the lowest one on our list here. Low ticket funnel was 1.25. Increase ad spend 1.6, right? And so I'll just do one more example here. And you need to do this for all the initiatives that you generate. So let's say, okay, start having a daily outbound dialing cadence. Okay, how many new calls is that? And people just never do the math on this stuff. They never look at the potential initiatives that they run and go, "Okay, how much actually is that going to do for us?" They just see these new ideas. And when I say people, I mean me. Because I've been extremely guilty of this throughout my entire entrepreneurial career. So, this is mostly a reminder to myself, and if you do this too, you're definitely not alone because it's easy to just come up with initiatives, think that they're all going to be important without actually doing the math on how important they are. This is the exact process we did at the beginning of October. It was the only thing that we focused on was first setting these goals and then picking the the highest leverage three.
All you do is look your rankings and then in the next step you attack the lowhanging fruit. So first there's going to be a handful of things that are a one effort. We actually didn't have any but if we had something like update LinkedIn bio or start putting CTAs in my ex posts like this only takes 30 minutes and then it's done. You want to do those. One, it's going to build momentum because you're going to just start to see some forward progress. And then two, it's difficult to have a low impact toe effort ratio when effort is one. So you want to just pick those kind of lowhanging fruit or silver BBs if you want to call it that too of these are going to be quick improvements that we can implement right now. So you pick all those and then you move on to the next step that might take you a day, might take you a couple hours, whatever it is, knock those out. Then you need to look at the ratio of impact to effort and say what are the one to three things that I'm going to dedicate my entire month to. The first one was just a decision for us. We're going to run a bigger webinar, not that much effort, and we're going to do it immediately. So, that wasn't something that like I needed to focus on a ton. And you can see here based on the rankings, this is what it looked like. Just do that one. The next was building a low ticket $27 product funnel. This one took our entire month of focus. So, we probably underestimated the effort, but we're already seeing a big impact because we have a lower ticket product that people can buy that we can ascend. We can slice and dice and put it into other offers and things like that. But, it took our entire team focused on it for about 10 to 14 days. And then now that it's running, I've been focused on it for a month. But that's what doing high lever things looks like because we eliminated posting more YouTube. This is November 5th that I'm filming this. I didn't film any YouTube in because this was not high enough. It was not high enough relative to these things. So I didn't focus on it, but now I am. And if I redid this right now, the reason I'm filming this video is cuz it's popped up. And then lastly, the third highest ranking thing was writing better emails. So we started to diversify the types of emails. We invested in some courses that taught us some storybased things. That was like all we did new in November. It was the or October. It was the only three things that we focused on. And why I'm making this video now is cuz I can look back on this process and go, it was extremely well informed because we eliminated all the things that weren't in that top 1 to three, only focused on them. Now we can redo the exercise and go, okay, based on what we have now, and this is what we do every month. We follow this exact process across our departments and different verticals.
So from here, the steps or rules start to diverge based on if you're a solo operator or you have a small team or you have a more fleshed out team. For those with a small team, you're going to have to block time to attack these while continuing to do all the other things that are required for you to keep running business. This is the upside down side of being a solo operator or having a small team. These new initiatives, you have to go do that job on top of the job that you're currently doing. But if you have a larger team like we do, we have 30 full-time employees. You can look at individual profit centers within the business and have them do this exercise. So you can have your department heads run through this, set their strategic goals and then come to you with ideas when you set the full vision for the entire department. So I personally oversee marketing and sales. So they report to me and I kind of set the strategic vision for what we're going to work on. And that is why I did this exercise really companywide, but also identified that the bottleneck of our entire business is generating more traffic. So that's why I kind of took this exercise and said this is the most important thing across the entire company, really the entire portfolio. So depending on which one you're in, it'll differ. So if you're a beginner, you have a 50K, whatever business that's continuing to grow, you're probably doing it with a very, very small team or by yourself. So just take that with a grain of salt when you are choosing what to work on.
And then lastly, step 10, repeat the exercise to identify the new thing to work on. So from here, you attack all the initiatives that you laid out, you finish them, you reme-measure the results, and then you do this exercise again. And that's it. You don't overthink. You don't go do a bunch of the lower leverage things just because you did the higher ones. You now have to re-evaluate, okay, is it actually worth doing the lower things on that list or have new opportunities presented themselves? There's no set cadence you have to do this on. It's really when you accomplish the one to three things that you said you would, then you do this exercise again. And your bottleneck might change. Like for us, for example, if we do these three things, which we're now stepping into, they're already completed. Redoing this might show us that we actually now have an efficiency bottleneck because we started to drive more traffic, that then showed us we have an efficiency problem. We go fix that. You ping pong back and forth. So, this is the exact exercise we do within all of our different verticals across all of our different products for six verticals, 30,000 customers, a full-time team of 30.
So, if you found this useful and you want my help personally implementing our marketing, sales, fulfillment, operations, tech processes into your business, DM me the word scale on Instagram with a quick kind of two sentence overview of your business. I'll see if I can help. We're opening a few slots for our Vortex mastermind where you work directly with me to install all of those systems that we've done with our different six or seven different verticals at this point. So, if you enjoyed this video, subscribe, leave a comment, and you can go watch that other video where I do a full breakdown on how I think about bottleneck analysis over here. Other than that, we'll see you in the next one.