This is part three of a five part series. If you haven’t already, start with the Introduction to Priority Mapping.
How do you solve a complex problem? Simple, break it down into its component parts.
So if revenue is your goal, then where that money’s going to come from and what you’re going to do to get there are your component parts.
Squares are the Where. The What is limited by your resources so we want to make sure we’re focused and clear on the Why.
What’s your Revenue Goal?
Defining your revenue target is easy. Finding things to do is also relatively easy. It’s the messy middle area of connecting your goals to your action plan that’s hard and confusing for your team.
It’s easier to start from your high level goal and work down from there. I find it’s much harder to start with an infinity list of tasks and try to rationalize them up to your goals.
Two basic Habits drive your revenue
At the highest level, your revenue can be described as the average amount of money your customers pay you times the total number of customers who pay you.
Or from your perspective, your ability to deliver value and your ability to win customers. Let’s call them the two basic Habits of your company.
Put simply, they are the what you’re going to do to hit your revenue goal. How much you can do is based on cash in the bank and your people, products and processes.
How do you deliver value to customers?
The amount of money someone pays you is the result of the value you deliver to them. How you deliver value might be based on information products, services or actual physical or technology products, plus any supporting delivery processes.
Like everything else, you can have products and services that work for your Filters, some that kind of work and some that don’t work yet. Initially, your goal is to build the least amount of products, services and processes that delivers value to customers so they pay you.
As you find Filters that work, you want to consider if you can hit your goals with the amount those customers pay you and if you can find enough of those specific customers to meet your short term revenue goals.
Once you’re able to win customers in those Filters, you’ll want to look for ways to double down on the value you’re delivering to push ahead of the competition.
How do you acquire customers?
The number of customers that pay you is the result of your ability to win customers. How you win customers might be based on inbound tactics, outbound tactics or referral tactics.
Like delivering value, you can have tactics that work for your Filters, some that kind of work and some that don’t work yet. Initially, your goal is to find the least amount of tactics to win customers and build the least amount of processes to support them.
As you find Filters that work, you want to consider if you can find enough of those specific customers to hit your goals and if the cost and speed of those tactics will take you to your short term targets.
Once you’re able to win and deliver value to the customers in those Filters, you’ll want to look for ways to diversify your tactics to reduce risk.
How to start putting together your Execution Plan
Since you can look at your revenue as where the money’s going to come from and what you’re going to do to get there, you can think of your execution plan as the sum of all of your Squares and the sum of all your Habits.
And since you can look at your revenue on a Square-by-Square basis, you can think of the revenue from each Square as the sum of all your Habits, related to that Square.
The connection between Squares & Habits is how you make sense of the messy middle area and give your team a why that’s easy to understand.
Where do your Habits work better?
When you’re looking at your revenue goal, you’re looking at your averages. You’re looking at the average amount of money your customers pay you across your entire customer base.
As you break your revenue down by Squares, you’ll have some where your Habits are doing better than average, some that are below average and some that are just average.
Basic optimization says you want more of the above average ones and less of the ones below average.
So how do you find your above average Squares?
It’s always cheaper to prioritize your Squares than build something new. So as you put together your plan, start with your above average Squares and see how far they will take you. Do them more often, keep getting better and then find more.
Let’s explore Part 4 – How to Find your Squares that Work.