Perception Versus Reality

Most business people would acknowledge the importance of “knowing your numbers”.  That is, knowing the business measurements that will indicate whether your business is performing at its best, or not… 

We find that most of our clients have a good handle on their key business metrics.  However, there is always more that they would like to measure and sometimes performance feedback is more anecdotal than measurement based.

This month we take a quick look at a phenomenon relating to perception versus reality in terms of business performance.  Throughout my career in sales and marketing in the fitness industry I have witnessed many wide gaps between perception and reality when it comes to assessing business results.  My initial reaction was to give little or no credit to any anecdotal feedback unless it could be backed up numerically.  Over time I began to see why the variations occur and when to be on the look out for discrepancies.

Following is a quick look at why we might get one feeling about a business situation when the reality is quite different.

Something Painful

One of the most common variations between actual and perceived outcomes relates directly to sales.  After a period of low sales performance a sales consultant is asked why people are not buying.  They respond with something like: “They are all mentioning the really cheap membership that the club down the road is offering… We can’t compete at that price, so we are losing sales…”  This type of objection may cause the sales person some emotional “pain” when they hear it as they feel can’t do anything about it – they can’t control the competitor’s pricing.  Even if this objection isn’t common, it can feel more prevalent due to the degree of impact it has on the sales person.  (They may feel that they are hearing this objection more often than they actually are…)

This response could, quite logically, prompt the sales manager to work with the sales consultant on how to handle that specific objection.  However, with real numbers the information and the subsequent actions may be very different.

At Advance we will typically ask an underperforming sales consultant the above question.  However, we will also ask them to write down the reason why everyone who did join did and why everyone who didn’t join didn’t.  Using the example above, we might find that out of 10 presentations, there were only 2 that didn’t join due to low prices at the club down the road.  This leaves 8 prospects that should convert at the regular conversion rate.  (In many cases the performance shortfall goes beyond the 2 that gave the specific objection.)  More often than not, the other reasons for not joining will be length of membership, lack of time, motivation, etc.  That is; they could all be addressed with general sales training, not specific objection handling. 

In the above example, if the sales manager responded to the sales person’s “feeling” about what was happening the sales manager would provide training regarding how to handle the cheap club down the road.  In this instance, that would only help the sales consultant on 20% of his/her future presentations.  By quantifying the actual outcomes in the example above, the sales manager has discovered that the problem is core sales skills (understanding needs/wants, selling based on results, creating value, etc.) that can be applied to 100% of the sales person’s future tours – resulting in a much higher conversion rate.

Something New

Another situation that can cause a variation between what you perceive and what is real is during a new campaign.  In this instance, when you start to see leads coming in from a new source you may be more “conscious” of those leads than those of your regular sources.  You may feel that the new campaign or marketing tool is working well.  However the numbers may present a more balanced result. 

Of course, this can go both ways.  You may not always “feel” a response from some changes to your advertising or marketing.  However, the numbers may tell a very different story.  As an example, we had a relevant experience with SMS marketing at Advance.  The total sales numbers for SMS marketing are quite small at this stage (but growing every month*).  However, our detailed reporting confirmed that the return on investment SMS is very high, and this warranted putting more effort into increasing the total numbers.  Without accurate marketing reports we may have dismissed this marketing tool and our Clients and Advance may have missed the financial benefit.

There may be many other examples of where feelings may suggest a different outcome to reality.  However, it is not possible to measure everything.  As with all areas of your business it is about priorities – what are the areas of greatest risk and highest potential return?  At minimum, you should strive to have regular and accurate reporting with regard to your sales performance and your advertising return on investment.  With good reporting you will be able to make fast and accurate decisions about your business that will ensure continued success.