Category Archives: compensation

Increasing Revenue – 15 models to choose from (guest post)

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Is Your Revenue Model Right for Your Business?
Your revenue model is how you profitably match your product or service with your desired customers. No other business decision has more potential to make or break your business. In fact, your entire business will be structured around your revenue model.
Is Your Revenue Model Right for Your Business?
The revenue model impacts marketing and sales efforts, and it also affects product and service design, which is why it’s one of the first decisions you need to make when you start a new business. I also recommend that you re-visit the model every year or so when you’re updating your strategic plan.
Let’s start with a couple of classic – and successful – revenue models.
Razor and Blade: Razor companies are actually in the business of selling razor blades. They attract customers by selling cool new razors at a good price, and then keep selling them disposable razor blades. Once they have you as a customer, they find it easy to keep you – that’s where their profitability comes from.
You may have run into a variation of this model with your laser or ink jet printer. What are the printer companies actually making their money on? That’s right – the toner and ink.
Cell phone service providers also use this model. You probably already realize that the cell service providers don’t make money on the phone they sell you – far from it! But by locking you into a service contract, they have automatically recurring revenue.
Freemium to Premium: This model is well known in the software industry, especially with cloud-based solutions where the base subscription is free or very inexpensive, and power users pay a hefty subscription fee for a much more robust product. However, the basic idea has been around for a long time in more traditional businesses as well. A variation is the free sample. For example, many grocery stores give out free food samples to shoppers, who then often purchase the product itself. This model is usually combined with another model (for example, the subscription model for a cloud-based application).
Here are a few other typical models:
  • Franchising: prove your concept and sell to others in order to grow; benefit from franchise fees and sometimes product sales.
  • Price Segmentation: often used in business-to-business commerce; larger purchasers get better prices or advantageous terms.
  • Loyalty programs: certain types of customers get better pricing; often used in retail where once a customer gets to a certain lifetime purchasing level, they automatically get a discount on all future purchases.
  • Licensing: someone else markets and sells your product and you get a cut.
  • Direct Sales: consumer or business to business.
  • Multi-Level Marketing: you’re selling a business opportunity as well as a product.
  • Affiliate Marketing: often combined with other models; benefit from the sales efforts of others.
  • Internet Marketing: includes social media, e-mail, and other ways of driving traffic; often combined with another model.
  • Sticks and Bricks: traditional location-based retail, often combined with internet marketing.
  • Direct to Consumer: cutting out the middleman or retailer and selling direct.
  • Subscription-based: works for many different services and some types of products.
  • Product Plus Related Service: a good example is automobile dealerships. A significant part of dealer profit comes from servicing what they sell.
  • Get the Spec”: become a trusted supplier of a product that is a part of another business’s product. Your customer reorders every time they manufacture their product. The sale happens once; the key to keeping the customer from switching to another provider is service and sometimes price.
So how do you choose the right model? The key is to clearly understand who your customer is and what their buying behavior is likely to be. Here are a few questions to ask:
1. What problem does my product or service solve?
2. Who has this problem and is therefore my potential customer?
3. Do they know they have the problem? Or do I need to educate them about it?
4. Where and how can they be reached?
5. Is there a typical industry standard for how they make purchases?Who makes the purchasing decision?
6. What other solutions are available in the marketplace? How are those solutions delivered?

As you work through this, you’ll come up with more questions of your own, and the answers will help you determine the best revenue model, or combination of models, to build your business around. Don’t be afraid to try more than one! Successful businesses often change their model several times before they design the one that’s the most profitable.
guest post by Joanne Berg  March 7, 2011
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Accelerate your Career: 4-eye’d Employee (pt4: the 4-eye’d employee)

The following is based on a presentation made to the UBCO (University of British Columbia Okanagan) female business students affiliated with the Sauder School of Business on January 28, 2011. (Presenters: Meryle Corbett, CMA,FCMA CFO of Kelowna Flightcraft Group of Companies; and Paulette Rennie, President of ValleyFirst Credit Union)

What strategies will make YOU successful in business? A group of C-suite executives agreed that the key to a rising business career includes four main characteristics. They are described below in our series, “The 4-eyed employee” :
So what are we talking about? The first “eye” or “I” attribute is the underlying foundation for business success:
The second “eye” or “I” attribute is the secret to longevity in your career:
The third “eye” or “I” attribute is the driver of where and how far you go:
The fourth “eye” or “I” attribute is the attribute that will accelerate your accomplishments:
INTUITION
This is the magic ingredient that makes careers soar!  Even though you can be intelligent, of the highest integrity and a great worker with lots of initiative, sometimes it’s a combination of luck, timing and “street smarts” that will make your career take off.
a) Read body language and get to know your customer / boss / client
One great style assessment tool is the DISC model:  Dominance, Influence, Steadiness, Compliance.    Are you task-oriented, needing a high level of control over your world?  Are you a relationship-based consensus builder?  Are you an analyzer preferring routine activity?  are you most comfortable with rules and regulations and heavy structure?    Do you have problems relating to peers because their style is different than yours?  Do you have problems with team members  or subordinates “clashing”?
The DISC assessment tool enables individuals to view their leadership and business style in a comparative way to others, and offers solutions to help them leverage their own styles to work most effectively with others.  Learning how to read your audience can enable higher levels of success.
b) Use your right-brain creative side as well as your left-brain logic.
The ability to look at an issue from all angles will give you an advantage to help you find innovative solutions.  A great technique is to use the six thinking hats.
c) Listen to your inner voice.
In thirty years of business, my little voice has never been wrong.  I have ignored it on occasion (to avoid a conflict, or because I was too busy to deal with a small detail) — always with some measure of regret.  Your instinct will develop over the years and “fine tune” your gut feel of situations – there is an intuitive capability that remains just under the surface of our everyday thinking, if we only work on utilizing it.

>Career Acceleration: 4 Essential Elements (pt 3, the 4-eye’d employee)

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The following is based on a presentation made to the UBCO (University of British Columbia Okanagan) female business students affiliated with the Sauder School of Business on January 28, 2011. (Presenters: Meryle Corbett, CMA,FCMA CFO of Kelowna Flightcraft Group of Companies; and Paulette Rennie, President of ValleyFirst Credit Union)
What strategies will make YOU successful in business? A group of C-suite executives agreed that the key to a rising business career includes four main characteristics. They are described below in our series, “The 4-eyed employee” :

So what are we talking about? The first “eye” or “I” attribute is the underlying foundation for business success:
INTELLIGENCE
The second “eye” or “I” attribute is the key to career longevity:
INTEGRITY
The third “eye” or “I” attribute is the secret to how far your career will rise:
INITIATIVE
1) Stand out from the pack:  Produce  at least 10% more than your competitors
You need to position yourself above the crowd in order to accelerate your career.  This means getting noticed by management for producing results superior to your competitors.
     – quantity of work is higher – find scalable improvements, efficiencies that save time
     – quality of work is superior – what makes a boss notice you and your work?
     – deliver more than is expected – anticipate what your boss will ask or need
If you can find a way to be seen as “above the crowd”, you are on your way to winning promotions and moving up the career ladder.

2) “Results” are more valued by management than just “Effort”
Think about it:  if one employee puts in 50% more effort but delivers the same results as the average employee, he/she is inefficient compared to the others.  In fact, this inefficiency is probably even costing the company overtime.  RESULTS are what count in the long run and what get you noticed in the workplace.  

3) Make sure you balance work time versus home time

One of the challenges you will probably face throughout your working career is balancing priorities between personal life and work.  This is a personal choice you will have to make:  how much personal time will you sacrifice to advance your career?   The answer is different for everyone; it’s a personal decision you will have to consider at various points throughout your career.
a)  Choose a job / career that matches your hobbies and your passion – then your job is not drudgery, it’s a motivator that invigorates you!  How much easier is it to spend time at work when you love your job?
b) Work SMARTER not just harder.   Nobody gets ahead by slacking off on the job; however there are tricks to work smarter in your role as opposed to grinding away for long hours.  Streamline your procedures (remove unnecessary steps), delegate duties, automate portions of your work (like reports) where possible

4) Anticipate your boss’s requirements – get yourself noticed 
Exceeding expectations within your job will get your boss’s attention, and will make his job easier, too.  Consistent ability to exceed expectations regularly also will win you opportunities for advancement. 

5) Make realistic commitments to set realistic expectations
There is an old saying, “promise little, deliver lots”.   Don’t take on extra tasks to be a hero – make sure you can deliver before you say yes.   NOT delivering will diminish your credibility and erode your reputation over time.  

6) “WOW” your customers
Ask yourself regularly, “How can I “wow” my customer?  What would it take to “wow” my boss?”  Wow-thinking stimulates creative solutions and will keep you energized and proactive in your approach to your career.

Pay me more, please: Effort vs. Results

Over the years, many employees have expressed unhappiness when they receive an “average” pay increase.

My first question to them is, “Why should you receive a higher increase than the rest of the group?”
The answer?    … “Because I have worked harder than anybody else”.

The dilemma here is this: just because an employee works harder, does not mean he/she creates better results.  In fact, an employee who stays late often, plugs in more hours (but does not complete any more volume of work or add improvement to the business) might be actually more INEFFICIENT.
How does an employer look at compensation?

Good compensation packages have clear job descriptions for each position — specific expectations, measurable deliverables:
– What will be done,
– by When,
– by Whom, and
– How (i.e. collaboration with others, at specified quality/accuracy levels etc.)

 

Job Descriptions:
A detailed description of end results, eg “the monthly operations report will be delivered to management by the 5th working day of the following month, complete with standard statistics and price/cost/volume/ product mix analysis” is better than “prepare monthly reports”.
Soft skills should also be measured where possible, eg “customer satisfaction survey will be presented quarterly, ranking the group’s service delivery (timely, accurate, complete, delivered in a friendly manner) using a 1-4 scale.”

 

Going above and beyond:
Yes, there are individuals that do deliver better than average results.
What does this look like in the workplace?
– design new reports with more meaningful information for customers
– develop new customers or areas of business beyond current job scope
– anticipate upcoming issues, develop procedures to mitigage risks
– take on significant increase in duties and responsibilities permanently
Climbing the career ladder means delivering more in terms of volume, quality or innovation in the business. These are the areas where a business can save money, make money and therefore afford to pay more in compensation.