This is the third episode of the series I'm doing on the business book Traction by Gino Wickman. In episode 1 we covered the importance of setting your company's core values and communicating them to the entire company. Next we covered setting the company's core focus and 10-year goal in episode 2.
Here's where most people hit a snag. 10 years is a length of time most people can't wrap their heads around, and we certainly did not have an easy time thinking about where we want to be in 10 years. On the other hand, setting a 10-year goal will definitely make you think what it is that you actually want to achieve with your company long term. Once you have an idea what 10 years would look like for your company, it's time to break it down into smaller goals achievable within a smaller span of time, and that's what we will cover in this episode.
Before breaking down the 10-year goal into smaller goals, Traction advises that you first set up your marketing strategy. In this phase you'll need to set up your customer avatar, the three things that make you unique, and what process you'll need to put in place in order to be successful. The book provides help along the way as you set these up.
Once that's done, it's time to sit down and formulate a 3-year plan. For most people, this means setting up a revenue number. That is definitely a part of the 3-year plan, but Traction emphasizes that it's so much more than that. You need to visualize not just the amount of money you're raking in by that time, but also the landscape of your company–how many employees you need to have, the products you'll be selling, systems and processes you'll need to set up, etc.
To help you along the process, I share my marketing strategy and 3-year plan in this episode as an example. In particular, I talk about the following:
- Customer avatars for some of our brands
- Our three uniques–the 3 things that set us apart
- The process we'll follow to be successful
- Our 3-year plan revenue and profit number
- Our 3-year plan company landscape
- Acquiring new businesses to enhance our growth
- Upgrading our IT systems
In the next Traction episode we further break things down to a 1-year plan. It's very important to keep your core values in mind as you go through this stage to make sure that what you're doing does not go against what you set out to become in the first place.
Amazon launch strategy webinar
E138: Traction Part 1 – Company Core Values
E140: Traction Part 2 – Company Core Focus and 10 Year Goal
Traction: Get a Grip on Your Business (Amazon afiliate link)
E129: How to Pick the Perfect Product to Sell in eCommerce
E102: Amazon Product Launch Strategy for 2018
Thanks for listening to this week's edition of the podcast. Until the next one, happy selling!
P.S. Comment below to win a free mug!
Full Audio Transcript
Mike: This is Mike, and welcome to episode number 143 of the EcomCrew Podcast. You can go to EcomCrew.com/143 to get to the show notes for this episode. And today we're back with another episode in our series on Traction. The previous episodes will be in the show notes. Episodes one and two went through our ten year goals and our core values and focus, and all that different stuff.
And for this one we're going to be going through our marketing strategy and digging into what I think is the more fun part of this stuff is getting into our three year plan. The next episodes will get even more granular with the one year plan and quarterly rocks. But today we're going to be getting into the marketing strategy and the three year plan which is pretty visionary I think at this point.
And it's really cool to see what we can do in the next three years. And it's also cool now having our entire team knowing what our plan is for the next three years, which I think is more important than anything. Something again that we hadn't ever done before in the past, and I think that's going to make a big difference in our company moving forward. I'm really excited to see what the next few years have to bring. So again you can go to EcomCrew.com/143 to get to the show notes for this episode. And right after this break, we'll dig into part three.
All right, so we are continuing through the Traction process that we went through ourselves. I’m just kind of talking to you guys about what we did along the way here. So we went through our core values, our core focus, and then our marketing strategy — I'm sorry then our ten year goal. And right now we're going to go over our marketing strategy.
So again going through this in the order that the book talks about it setting core values first, and then talking about your core focus, and then setting your ten year goal. The next thing that they have you do is set your marketing strategy, what is your strategy for marketing in your company and making sure that everyone within the company knows what that is. So again I just want to make one other comment here as a side comment, really important as you're going through this you have to prioritize this over everything else.
It's very easy to be like, oh we’ve got something else more important to do today and do that over and over again. And next thing you know three months from now you're still stuck in the mud with this stuff. It did take us almost three full months to get through all these different parts of Traction even with meeting a couple or three times a week, sometimes even four times a week for a couple of hours at a time. We took it very seriously. I mention this in a previous episode. And it's so important that I think I just want to mention it again real quickly.
So let's get into the marketing strategy part. Now some of this I'm going to leave out because it's going to just get too verbose because we have four different brands, really five different brands depending on how you look at it. And I don't want to necessarily talk about what our geographic and demographic and psychographics thought that we came up with for each brand was. Plus it's a little bit too secret saucy for me. I’d rather prefer to keep a little bit of that stuff close to the vest.
But nonetheless I do want to mention that we did that. We put that down on paper here as a part of this. We talked about who our basically our ideal customer is or who our customer Avatar, what that looks like for each of our brands, IceWraps, ColorIt, WildBaby and the tactical sphere which is going to be survival food, tactical.com and then our new e-commerce brand that we're working on.
So we did all that and also added in the geographic data like what countries do we see or regions in the country being our target audience, and what sort of demographic is it, men aged 25 to 60 or is it women that are 45 plus or whatever it might be. And then the psychographic, what do they typically look like? Are they active, outdoorsy, concerned about prepping or survivalism, geared towards customers that want the best or that want the cheapest. What is it that they're looking for?
And we did that for each brand. So again skipping past all that information, let's get into some of the other things that I'm more comfortable talking about which is first of all what are your three uniques? So what makes Terran LLC different from all the other people out there listening to this podcast right now, and other people out at e-commerce land trying to sell things online to people?
First and foremost I think that we only want to develop the highest quality products not to knock on anybody else because I don't think that is the case here what we're trying to do, what I'm trying to say. If you’re fine selling lower quality products, that's fine. I mean there's definitely a marketplace for that. I would say two billion people like I think off on top of my head would be people in China and people in India typically look for these types of products.
They're just concerned about price; they don’t necessarily care about the quality being super high. But for me, what we're looking to do, we want super high quality products. This is one of our unique. And for the people that care about that, the people that are buying that stuff, I think that that's super important. And I think that by building the highest quality products, we're doing things in innovating ways and doing different stuff to the products that the vast majority of other people out there aren’t doing.
And most people I think that are out there are thinking about the short term, like what can I find as quickly as possible, get it up online as quickly as possible, buy for as little as possible and sell for the most as possible. And that's about as far as the average person I think is thinking in e-commerce. And that's certainly — and again I don't mean to belittle anybody. I mean that’s just the way that it kind of is.
And you don't need to take my word from me, just look at the average product up on a site like Amazon. I mean there's a ton of copycat and just me too type products that aren't very innovative or different or better or high quality etcetera. That’s one of our uniques. Our second unique is short of customers taking advantage, we never say no to a customer. So for us customer service is an incredibly important aspect of what we do. This goes back to one of our core values of we treat others the way that we want to be treated.
I don't like it when I buy something from a company and feel like I got bad service or a bad product or I had a problem and they wouldn't take care of me. That doesn't feel good. I do not want to make someone else feel that way. This is an important aspect for me. So we don't want people taking advantage of us either. We don't want people scamming us. We've had a couple of things where we've had to put the brakes on and stop people from doing this.
But that's definitely the rare exception and not the norm. Unless someone is legitimately just taking advantage time after time after time, we want to make sure we're trying to provide them the best possible customer service. I think that that's a unique for us over a lot of other companies out there. Again, the average company isn't even thinking about customer service as anything else but annoyance.
And then our third unique is building a community of fans. A lot of other companies out there, again they're just looking to sell products. They don't necessarily want to build a community of fans. And that community comes in really handy when you're launching new products. I was actually joking in our company meeting that we could manufacture a bag of poop with the ColorIt brand name on it and sell it. And the first time we sold it, I think that we would sell a ton of it. I think that we would lose all of our credibility really quickly by doing that.
But the point is that we've built a lot of really good goodwill with our customer base because we've developed a series of good products. People have come to know us for this. And that's a really important aspect. We have 70,000 or more people out there that really feel this way about our business, which is not only a great feeling but we know that when we go to launch a new product that we're going to be successful out of the gates with a much higher degree of certainty than if we didn't have that to lean on.
I mean it is a huge, huge asset for us that is really hard to even quantify in to words. So those are our three unique. The next thing that Traction has you go through is the process. Like what is our process for being successful? The first thing is to pick a niche that meets our business model. And I'm not going to go into this in a ton of detail because I just released an episode about this not too long ago about picking the perfect product.
So go back and listen to that episode. And it talks about the obvious stuff like it's small and light and easy to ship and all the other things that people talk about out there for the most part. But it also talks about some other stuff like passion and Facebook audience and stuff like that; I think a pretty good listen. It's actually turned out to be one of the more popular episodes. I might create other content like that because it seems to be responding well.
But we pick a niche that meets our business model and then we build a community by collecting email addresses, social followers and launching content sites around this like the tactical.com where we're getting traffic and eyeballs organically and inherently and not having to necessarily pay for that over and over again. That makes it a lot easier to launch products. So I kind of feel like that's our secret sauce to launching products so much so that we actually are making a training course specifically on this that's either just around coming out around when this podcast episode comes out or soon, the launch process that we're doing for Amazon.
And we only select products that meet our defined set of standards for opportunity and quality. This is very important. It's important because like a lot of times you get 90% of the way through something and you feel like you just got do it because you've already put the time and effort into it. For us we're looking for reasons not to do something more than to do it, because we want to make sure that it meets all of our criteria, that we don't make the same mistakes we've made in the past over and over again.
That just seems silly to me. You're going to get the same results if you keep doing that in my opinion. We launch products with a bang using our preferred or perfected internal process. Again this is something that we're going to be talking about in this new course coming out. Sorry I’m not trying to plug the course here at all, I’m just mentioning that as a side note. But the whole idea is that especially when you're watching products on Amazon not just your own site, the Amazon algorithm works off of a rolling moving average.
And if you can come out of the gate the first couple weeks with consistent strong sales, you're going to beat everybody else that's out there doing giveaways and coupons and review groups and almost other really shady crap. We stay away from that, do it the white hat way and cannot artificially prop up the Amazon algorithm but actually in a white hat way produce some really good results and statistics and indications there for them to help our product rank organically long term.
We service our customers with the highest degree of satisfaction. I’ve already talked about that but it is a part of our process. Customer service is something that is important to us. We want happy customers. And we evaluate our catalog for improvements opportunities or removal. This is not a part of our process. It's important just because you have something in your catalog to not get married to it, and just keep it there just because it's there.
Our goal basically at this point is every year to remove 10 to 20% of our catalog and put effort into the things that are working better. Every product has an overhead cost to it. It's not just what does it cost to buy the thing, what does it cost to store the thing, but there is a mental energy and capacity that goes into that. You should be every year applying new things that you've learned. Like we learn how to optimize our listings better as a for instance.
Do we need to go back and do that for an underperforming product? Probably not. And if we don't do that then the product under performs even more. And it’s just this vicious cycle of continuing to have those types of products up there that aren't going to perform as well as others. Now last part of this that Traction has you do is your guarantee. And we put this in writing. So our guarantee is if someone gives us money, and they aren't happy for any reason, we will “make it right” or give them a full refund.
So that's the part that we put down for our guarantee. And we want to make sure that everyone in our company and all of our customers know this. If they aren’t happy and they've given us money, like I don't want someone's money. That’s just the way that I feel about it because I don't want someone taking my money and then ripping me off and making me feel that way. I would not want someone else to feel that way. That's our guarantee.
So this is our marketing strategy part of this. That was the thing that you do after the ten year goal. And then comes your ten year plan, and then comes the three year plan. So let me go over the three year plan. I’m going to take up the rest of this episode to talk about that, and then we'll get into other parts of this after that.
So our ten year plan is basically for — sorry the three year plan is for the fiscal year 2020. Revenue, I’ve talked about this in a previous episode what we think we can be doing three years from now will be 21.1 million. We have a profit goal of 2.2 million. We want to be at 10% net profit in that year. It's a very important goal for us as well not just to throw up a number. As Dave always says, revenues are vanity; profits are sanity, so this is important to us.
And then from here it's not only goals of like, oh we want to do 22.1 million, or we want to build a better mousetrap or whatever it might be. But this is more along the lines of what do you think your company will look like? What will the landscape in your company look like? What do you have to build towards to be able to get to this goal? And what other aspects of things are important to you to be able to get to this goal, and for you as a company to be able to do to feel good about yourself and your company day in and day out as you come to work?
So these are all of that, these next parts of this, the measurable, the landscape part. So, the first one is that we probably will have 12 to 15 employees in our Escondido office and probably somewhere between 30 to 50 employees in the Philippines office. We have typically this two to one or three to one ratio of employees in California to the Philippines and that we keep that in check. We would want and need to move offices to something that's probably in the 2,500 to 3,000 square foot of dedicated office space. So that's just our class A office space, part of our office and operation.
And we probably would need an equal amount of space for warehouse because that's about what we have now and we don't really foresee being able to completely get rid of that. Even though we use third party logistics companies, we feel like we need to have a warehouse to be able to handle the catchall like with oopsies [ph] got you type problems that come up. And having that lets us be more efficient in the entire other rest of our process.
And the same thing goes for our office in the Philippines and Cebu. We're probably going to need to expand and have a class A office space there as well that's our office space and not in a co-working space to make a better work environment for them. We'll probably acquire at least one other e-commerce business. I’m definitely on the path of I'd rather acquire than start from scratch. We've done this with IceWraps, we've done this with Survival Food.
And I think that buying existing businesses has a lot of inherent positives versus starting from scratch. Starting from scratch has positives as well. But I think buying a business that's in disarray that you can apply your secret sauce to and pull out of the dumps, there's a lot to that. And we've done that now with IceWraps. We turned what was a $50,000 investment in IceWraps into a seven figure brand at this point. We could easily sell it for something in the seven figures now on a low multiple.
It's definitely been a great investment. I think we've done the same thing with Survival Food. The fact that someone offered me ten times of what they paid — what they were willing to pay for originally was less than ten times for us but certainly close to that. It goes to show you that we were probably right in our analysis. I'm really excited about what we can do at Survival Food.
So we would be looking for other companies that would be in our four silos of brands which is hot and cold therapy for IceWraps, adult coloring products, arts and crafts products for ColorIt. WildBaby is the organic natural type baby and mom type products. And then Tactical is high quality military type great stuff we're going to be pushing towards, products for Tactical.com and Survival Food and being in one of those niches. And that's probably what we would acquire.
We wouldn’t acquire something that would be like completely out in left field that doesn't relate to one of those four brands because brand building is tough. And we've talked about that before. It's expensive, it's long. We wouldn't want to create another whole brand or silo from scratch, but bring something else in that makes a lot of sense that would fit in nicely I think is a part of the long term three year plan for us.
The next thing here is to have at least three brands that are doing five million dollars a year. So to me this is important because again I don't want all my eggs in one basket. We want to make sure that of that 22 million, it isn't like 20 million of one brand, and the rest of it's made up by these other brands. I think it's important to be able to handle cycles in your business, recessions or competitors or industries changes, or just fads coming in and out or the environment changing, whatever it might be, traders wars or one of the crazy things that's happening right now. All these different things being able to handle that.
So we want at least three different five million dollar brands. So our brands are basically more evenly distributed and they're pretty evenly distributed already. But we have one five million dollar brand with IceWraps, and ColorIt will certainly be a five million dollar brand here shortly. And that's five million dollars in sales annually per brand. So those two will be softballs, hopefully nothing will go wrong with one of those two brands. And then it's just a matter of getting WildBaby and or Tactical to be in that group as well. And if we can get lucky we can have four brands that are all doing five million and really balance that out, that would be awesome.
Another really important aspect to us is that our employees rate us a nine out of ten, at least nine out of on work environment as a place to work. I think it's really important at least to me. I want people to enjoy coming to work, and I want to enjoy working with them, and I want a great relationship with our employees. Obviously it's employee relationship it's not a friend’s relationship, so it's always like respecting that boundary.
But at the same time I spend a third of my life or more working and all of our employees do, and I don't want people coming in here only because we are handing them a paycheck. The idea is that they really enjoy what they're doing and that they're coming in excited to be here and want to be here, and they would be here even if it weren't for the money, that they really enjoy where they're at. And I think that's important and that's something that's actually a measurable, something that we're looking for as a part of our long term plan.
We want to be a leader in e-commerce, as I've said not just a follower and this would be for every brand that we have. So we want to continue to innovate and not just be complacent in the things that we're doing because you design something you do something and then someone copies you and rips you off. We've seen this time and time again. Even back to the online poker days, we created this promotion for sign up for online poker and we’ll give you a free gift. And then within months someone else was copying us, and then within just a couple more months after that there were dozens of people copying us. And there was a kind of a race to the bottom all offering more than you, and that was tough.
And the same thing went for the instant bankroll promotion we made, and the rebate program that we came up with. All that stuff gets copied over time. So you have to be able to weather that storm and constantly come up with new stuff yourself. And even though it's frustrating that that's what happens, it's something that you just have to learn to deal with as an entrepreneur and be the person that's doing the innovating, because if you're just always just following it's tough to win in that situation.
The next one is we're probably going to need to upgrade to what I would call enterprise level IT systems. We have decent IT systems right now, but I don't think they're going to carry us to a mid eight figure company. I think that we're going to need something that would be considered enterprise level by that point to be able to handle our IT back end.
95% customer satisfaction rate. Again customer satisfaction is another really important thing to me. I want to make sure that through all of this that we're making happy customers plain and simply. Right now our customer satisfaction rate is a little bit close to 90%. So our goal over the next few years is to continue to make that better a point or two a year at a time until we have a much higher customer service rating.
Having an average product rating of 4.5 stars or better. Again, this kind of goes hand in hand with good customer service but also great products, and not letting our product quality drop. I mean I really want 5 star products, but I know that is impossible. People will leave a 4 star review that says I love this product more than anything else I've ever loved in my life. It's the best thing ever. I can't wait to buy more, 4 stars. It's really tough to actually have a 5.0 star product and on Amazon to have 4 or 5 full stars appear as the ranking, it has to be 4.8, 4.9, or 5.0 star ranking. Statistically that is a really, really, really tough to do.
Most of our products are actually 4.7 stars which is unbelievably frustrating considering that's a 4.5 star product on Amazon and I prefer to have a 5 star product. So we want to try to push towards that 4.8 stars as much as we possibly can averaging no less than 4.5 stars across our catalog for all of our products. We don't want 3 star products. We don't want to just sell crap that people, yes it might sell well, there's tons of stuff out there that people buy that isn't that great and we don't want to be that guy.
Establish a performance based bonus program to incentivize employees. This is something that we're actually already rolling out. But it is part of our three year plan, but it just also become a part of our one year plan in 2018. And the thing that you'll find out as we go through the next part here, when you create your one year plan, the one year plan is a fall off of the three year plan. What are you going to tackle in this one year that is going to help you get to your three year plan?
So some of the stuff is stuff that we're going to do in 2018 including establishing a performance based bonus program to incentivize employees. The next one is to develop and launch 100 new products. We're doing 50 in 2018. So that basically means 25 more in each of the following years. But it's important for us to be able to develop new products to continue to develop our revenue stream, because you can only grow so much through marketing.
The next one is forming an advisory board or a board of directors. I think it's incredibly important in business and in life to surround yourself by people that are way smarter than you and that have been through things. And I'm surrounded by a lot of really smart people, but most of them are in my sandbox or people that are doing let's say two to ten million dollars a year in e-commerce. I know very few people that are actually doing eight figures. Those are few and far between and we're going to hopefully be one of those people this coming year.
And I always talk – I mean this is not an ego thing or whatever. I think it's always important to stay in your lane and look at things relative to you. And we just started planning our journey; we're finally going to be at that eight figure mark. And while I want to still hang out with and podcast to and mastermind with etcetera, etcetera with people that are under ten million, I have to find a way to surround myself with people that are in the eight figure range and maybe even nine figure rage that can help us understand the different challenges that exist in that world because I've never been there.
I've only been in a low eight row figure before which was a great accomplishment, but there's another whole set of challenges that I don't even know that are coming my way. There's that saying of you know what you know, you know what you don't know, but you don't know what you don't know. And I don't know the challenges we are going to face as a company being a $50 million company for instance or $100 million company ten years from now. I have no clue like what that's going to look like. I can kind of extrapolate and come up with some ideas.
So there's board of directors and advisory board I think will be three to five different individuals that potentially get a quarterly board fee for appearing for that and maybe even like a half a point or point of equity. And then they have connections and wherewithal and knowledge that just even talking to them a couple of hours a quarter can like really change the direction of your business greatly, and they can give you really good advice because they've been there before.
I feel like I can help people that are just getting started in e-commerce or that are at the one million or five million dollar mark really, really help people at that level. And obviously people that have come to know me like know how much I enjoy doing that, how much I can enjoy helping them. But I can't help a $100 million company, like I have no idea like what that looks like. It's a totally different world and that's the path that we're on. So I hope that this advisory board will help us get to that next level and struggle less to do that because it's again every stage of the business has another challenge.
The last one here is to have paid health care as a benefit for all of our employees. This is something I want to be able to offer everybody. I think that everyone should have health care. Or not to get super political, I personally think that at least in the United States a really wealthy western country should be providing this to all of its citizens. There's plenty of money to do it but we just don't have the political capital and will to want to do it. So how do you change things in a row? You make it done yourself?
So this is something that out of our profits which we’ll hopefully have as we continue to grow will be able to be able to do this for all of our employees so they don't have to worry about they have appendicitis having a bill that they can't that afford to pay, or if they break their arm they can't pay it. I don't want our employees to have to worry about that. I also want them to be able to go and get checkups, or if they get strep throat or just the things that happen from time to time.
One of our employees the other day was telling me like she actually slipped and fell in the shower and had to get some stitches and it was like a $1,200 bill and like she can't afford that. That is ridiculous some of the stuff that happens these days. So this is something that we can't do yet which frustrates me. We tried but we're not at a stage — we don't have enough people quite yet to do it. But this is something in three years that we want to be able to do.
So that's our three year plan, all these different things. So the next stage is to go over the one year plan and a couple of other things that are in between here, issues, and some other stuff. So the next episode will dig into that. And again I hope you guys have found this valuable. This is the process that we went through which Traction. Listen to the stuff back again, have your team listen to it, get them the book, go through this yourself. You can probably already see what a difference this can make in your business.
I'm at such peace with myself and our company in a way that I haven't been ever because like I feel like I know exactly what it is that we're doing unquestionably now, not just for the next three months because I’ve done a good job planning again for three months or even a year but even further out. And I know our team knows that, and that we're all comfortable in our own skin of where we're going to go over the next few years.
And we're not looking at other people to help set this or trying to follow other people to do that. This is where we're at in our skin and we're happy with this. We will continue to work towards this goal. So that's the end of this episode guys. So let's hop into the closing and we'll talk to you soon.
And that is wrap folks. I hope you guys enjoyed the third part of our series on Traction. We will be back with part four not too long from now. We’re going to start digging into our one year plan and our quarterly rocks after this, definitely excited to get into that. But in the meantime if you have any questions or thought on this episode, you can go to EcomCrew.com/143 to get to the show notes and comments. We would love to hear from you. Again, EcomCrew.com/143. Until the next episode everybody happy selling, and we’ll talk to you then.