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In episode #538 of Marketing School, Eric and Neil discuss what you should do when your revenue tanks. Tune in to hear why you should have a plan of action for this eventuality and tips on how to overcome this hurdle.
Time-Stamped Show Notes:
- [00:27] Today’s Topic: What You Should Do When Your Revenue Tanks
- [00:37] Everyone has their ups and downs, no business keeps climbing forever.
- [00:53] Microsoft once invested in Apple, so that they wouldn’t go bankrupt and Microsoft wouldn’t end up facing antitrust lawsuits.
- [01:15] Revenue often tanks, because companies are distracted. You can’t lose focus on your main revenue source.
- [01:45] Revenue also drops, because companies stop innovating their core products.
- [02:15] Rocket Fuel is a great book about a visionary and an “integrator”.
- [02:45] You need to have preventative measures in place for when your revenue takes a dip.
- [02:55] Even consider short-term loans from places like Kabbage.
- [03:10] Someone from IBM once made a billion dollar mistake. The CEO simply called it a “billion dollar lesson”.
- [03:41] It’s important to have a plan for when your revenue tanks and learn from the mistakes that led you down this path.
- [04:45] Once everyone is on the same page with the same goal, you can get your company back on track.
- [05:00] Neil puts a person in charge of each aspect of the funnel or business process.
- [05:30] Once your revenue tanks, create your action plan.
- [05:52] Neil believes in firing the squeaky wheel, as opposed to considering it a lesson learned.
- [06:15] Survey your clients about their satisfaction levels.
- [07:04] Have a weekly sales meeting cadence, so it’s quick, informative, and concise.
- [08:10] Eric likes to use Ask Nicely for his surveys.
- [09:03] That’s it for today.
- [09:06] Go to Singlegrain.com/Giveway for a special edition of Crazy Egg, the heat mapping tool.
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The post What You Should Do When Your Revenue Tanks | Ep. #538 appeared first on Marketing School Podcast.
Full Transcript of The Episode
Eric Siu: Welcome to another episode of Marketing School. I'm Eric Siu.
Neil Patel: And I'm Neil Patel.
Eric Siu: And, today, we're going to talk about what you should do when your revenue tanks. Neil, this has probably happened a couple of times in your businesses, it's happened in my businesses, so do you want to go first?
Neil Patel: Yeah. You look at people, you can look at me, you can look at the Elon Musks, the Gary Vaynerchuks, the Peter Thiels of the world. I don't care who they are. Everyone has their ups and downs. No business just keeps climbing forever. Apple once was struggling, and they needed a bailout from Microsoft. Microsoft invested $100 million in them, so that way they wouldn't go bankrupt and Microsoft wouldn't have antitrust lawsuits up the wazoo. Everyone has revenue pitfalls and downfalls. Again, the question is just when.
So, what you need to do is go back and focus. There's something that made your business work really well. The reason a lot of times, what I see is, people's revenue tanks because they're distracted. They're doing too many things. They're trying to innovate, they're trying to expand. Yes, that's all good stuff, but if you lose your focus on your main revenue source, it's going to start dropping. You can't forget that golden goose. It doesn't matter if the golden goose isn't sexy anymore, it's still producing golden eggs. Make sure you're always building upon it, working at it, and making it better.
The second reason that I see most people's revenue drop is they stopped innovating their core product. Forget creating new stuff. They stopped innovating their core product. If competition comes out 'cause technology is always getting easier and easier, and better, and it's getting cheaper, eventually someone is going to clean up your lunch or take over your business, because you just left your eyes off of it and you're just going and distracted and doing something else. So, always focus on your core business.
Eric Siu: Yeah. I highly recommend reading this book called 'Rocket Fuel'. It talks about the concept of a visionary and integrator. Neil has an integrator. Neil, for his business, he's certainly the visionary. You know why? 'Cause he's out there talking to other people, he's out there ... If his business is around marketing, he's always involved in ... Like, look at it. We're doing a daily marketing podcast, right? He's the visionary for the business, but you also have an integrator that's actually able to execute on those ideas.
So, highly recommend that book. But, also, at the same time, I talked about it in a past episode, when your revenue tanks, even before that, you've got to have preventive measures, right? You've got to have that line of credit when you don't really need it, right? That's got to be available, right? You can look at from your bank, you can even look at short-term loans from Kabbage or something like that, and pull these when you need it. I'm not saying you've got to use them all the time 'cause they're really expensive, but just there to cover your ass, right? You've got to have your expenses lined up too, just in case something bad happens.
But, when your revenue tanks too ... Also, here's the other thing. I'll share a story with you. I remember reading about this, this story where somebody from IBM made a billion dollar mistake, right? It was a massive mistake, and one of the CEOs just basically said ... I mean, the CEO just said, "Well, you know, that's a billion dollar lesson, right?" So, what I did with my business is I basically decided to stay a little hands off and let one guy kind of make his decisions. I knew he was going to take a licking, and we certainly took a licking as a business, right? Revenue did tank, right?
But, what happens afterwards? That's when you gather everyone together, you gather the team together too, saying, "Hey, here's what's going on. Here's what we need to do exactly. What do you think happened?" We looked at all the feedback from the customers, and then from there, we craft an action plan, right? What's going to happen? What's the goal for the next year? What's the goal for the next 90 days? What actions do we need to take to fix this, right?
So, as a services business, here's what I did. One of the exercises we did in our offsite last week was I took out a marker, we took it on a drawing board, basically, and I said, "Okay, guys. Tell me, what is a one star client experience?" Okay? Everyone listed things out. You know, people don't care, things are on autopilot for our services based business. "Okay, great. Tell me, what is a five star experience? What happens in a five star experience?" Okay, great. A company can anticipate, they can innovate, like to Neil's point, right?
Then, after that, we're not done. "Tell me what a seven star experience is?" We're talking about, basically, an agency that basically is an extension of the team, that the client doesn't need to think about, right? So, things like that, right? But, when you're able to kind of spec these things out and people get on the same page, you've got to get your people on the same page, then you are all committed to the same goal, you're able to hit numbers, and you're able to keep tracking these numbers every single week and talk about them all the time. That's how you're going to get back on track.
Neil Patel: Yeah, and what we end up doing is we put people in charge of each part of the funnel, right? Or business process, or sales process, or whatever you want to end up calling it, right? However you make money. As you start seeing numbers in a certain division start taking, and you're getting indicators that week, your team needs to have an action plan of what they're going to do the next week to start reversing that effect and start growing again. If you don't have that, you're going to start seeing that you're going to get way more instances of revenue tanking versus being preventative and stopping it from happening.
Once your revenue does tank, of course, your team needs to create an action plan to figure out, all right, how are you going to tackle this, and how are you going to stop the bleeding and continually grow? Eric and I come from two different schools of thought, and I'm not saying either one is right or wrong. Eric's big on if the revenue tanks and it's caused by a few people, so learning experience and let them go, and then keep training and learning. I'm a big believer, if people keep screwing up, I'm just going to fire them and I'm just going to end up replacing them. I'm a bit more cutthroat entrepreneur, and I'm not the easiest person to work with, as Eric can probably attest to that. But, yeah, you've just got to end up figuring out what's right for you, and operate from that way.
The other thing I like doing, especially if you're in a service based business, is you should survey people as clients, right? Your clients are paying you. Each month, we have a satisfaction survey: what did you like? What did you not like? What could we do to improve the service? This goes back to Eric's five star, seven stars, etc. This way you can see who's upset before they churn. That way you can end up fixing it, and they'll stay much longer.
The other thing, if you're in a consumer based business, where you're selling products, your biggest reason for a revenue tank is usually going to be [reliancey 00:06:43] on one marketing channel. Like Facebook Ads go up or they don't convert as well. What you need to start doing is diversifying as soon as possible. Even if Facebook's your bread and butter, it's okay to lose some money each month experimenting on new channels. That way, you can get some of them to work right. That way, you're not as reliant and you can recover much quicker when something goes down.
Eric Siu: Yeah. The final thing I'll add is around the weekly sales cadence, right? You have people in the room. You could have your integrator, your visionary in there. You have multiple stakeholders in there, and you also have the account executives or the closers in there, right? Talking about, "Okay ... " Maybe the VP of sales is like, "Okay, here's how much we've closed this week. Based on these numbers, we're on target for this quarter, which means we're on target for the year," right? But, it's a very accountable kind of statement in the very beginning, and you run this meeting more like a ... It's very process oriented, right? It's like a boom, boom, boom, no people are asking open ended questions, things like that. It's just you get to the point, you talk through numbers. The closers are talking about what deals they closed, what they're on track for.
Then, also, if you're a service based business, you're also making the client services team aware of, okay, here are the deals coming down the pipeline, right? Also, the client services team, or the client success people, can say, "Okay. Also, at the same time, the current clients, these are up for upsell," right?" Or, "Maybe these ones aren't that happy right now." And, to Neil's point, you have to be preventative, right? If you're able to look at these things ahead of time, and to Neil's point, running some kind of happiness survey or an NPS ... I like to use AskNicely. That's asknicely.com, I believe. Use something like that, and then that way you can have feedback ahead of time.
Here's the thing, right? When you have the NPS survey, you have actual feedback from the clients, and whatever product or service you're selling, you take in front of the team, this is irrefutable, right? You stick this in front of everyone, "This is exactly what happened. Here is the result right now. What can we do?" It shouldn't be on you, as a leader, or the manager, to have to figure out all the answers. 'Cause if you are figuring out all the answers all the time, guess what? Everyone else is going to rely on you, and you aren't going to be able to build the business or grow your team.
Neil Patel: So, now you pretty much have it. If your revenue tanks, just follow the advice we gave and you should start recovering and doing well. Of course, don't just wait for your revenue to tank. Do the preventative measures that Eric and I mentioned. That way, hopefully your revenue doesn't go down.
Eric Siu: Great. That's it for today, but if you want a special giveaway of Crazy Egg, which is Neil's heat mapping tool, just go to singlegrain.com/giveaway to learn more. We will see you tomorrow.
Outro: This session of Marketing School has come to a close. Be sure to subscribe for more daily marketing strategies and tactics, to help you find the success you've always dreamed of. And don't forget to rate and review, so we can continue to bring you the best daily content possible. We'll see you in class tomorrow, right here on Marketing School.
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