The Method Episode #12

Stars

The Easiest Sales Boost I Can Think Of

After word of mouth, getting positive reviews is the next best thing you can do for your business.

There’s a reason Netflix tells you what shows are trending. There’s a reason packaged foods show the heart tick. They’re trust signalling.

They work, and whether we like to admit it or not, we’re all influenced by them. So, the more of them you can put in front of your customers, the more likely you are to make a sale.

Trust signals are easy to collect. Especially reviews.

Spending 60 minutes this week to set and forget a review collection system might be your best ROI this year.

First things first. Collect reviews where your customers are looking. If people find you via Google, get google reviews. If they find you through Facebook, then collect Facebook reviews and so on.

Use an automated email. If you’ve got a customers email address and a way to send an email. You’ve got everything you need to make this work.

Most CRM’s can do this for you. Or you can use Zapier to mix and match your tools to create an automated follow-up email.

If you sell a product, send a follow-up email asking for a review after they’ve received the product.

** Disclaimer – If the product needs delivered, allow for shipping times.

If you sell a service, send a follow-up email requesting a review once you’ve completed the job. You could even make this part of your invoice email.

Try to make it as personal and conversational as possible. But even clunky efforts work like this one that we send to our gym members a week after joining.

review-email

It needs work. However, even this half-a** effort got us 20 5-star google reviews last year.

Inflation

Stress Testing For Inflation

Inflation is real. It’s not some gimmick used by the media for headlines and political debate.

The higher inflation is, the faster your lifestyle is degrading.

As an employee, this sucks. As a business owner, it’s painful. As a business owner with a mortgage, it’s dangerous.

Consider this scenario. Say inflation sticks to 6% for the next three years.

Your $60,000 salary will be worth ~$50,000. That might mean no family holiday, dealing with that toothache for another year and fewer dinner parties.

What about if you own a business?

Say your revenue is $100,000 and expenses are $50,000. So profit today is $50,000.

Three years from now, your costs will have risen to ~$60,000, reducing your profit to $40,000. And the purchasing power of that $40,000 will decrease to ~$33,500.

And the mortgage? Assume the government increases the OCR to 3.5% to fight inflation and your mortgage rate increases to 7%.

Using an average mortgage amount of $300,000. Your annual payments will increase by $10,000.

So your profits have dropped $10,000, you’ve lost another $6,500 in spending power, and your mortgage payments have increased $10,000. Leaving you with ~$23,500 to fund your lifestyle. Your purchasing power, net of mortgage payments, has decreased 50% in just three years.

What does your life look like in this scenario? Six per cent inflation for the next few years is a scenario more possible than we’d like to think.

This thought exercise is called stress-testing. With forethought, we can plan appropriately. With ignorance, we can fail quickly.

“Integrity is when what you think and what you say and what you do are one.”

~ Naval Ravikant

Lego

First Principles

First-principles thinking may be the most valuable mental model we have access to.

But knowing when and how to use it is tricky.

It’s often referred to as foundational thinking. Meaning stripping away assumptions and using what we know to be true to solve a problem or find a new way of doing it.

This is how the world’s great scientists, artists, innovators, and tinkerers push society forward. They don’t accept ‘because it’s always been done this way or ‘that’s what the book says. Instead, they look for a new best way by removing all assumptions made about the previous method to do something.

First principle thinking leads to new music, new technology, new medicine, etc.

First principle thinking has led to iPods and iPhones, reusable rockets, foo fighters, even the rolling luggage bags we travel with.

In many ways, ingrained knowledge and knowing how to do something counter our ability to create and innovate.

The problem is, it’s not practical to attack every problem or every way of doing with first principles.

A lot of what we do doesn’t need to be re-done. I didn’t need to learn biochemistry fundamentals to boost my mood this morning – I just made myself a cup of coffee. Although Angus Brown, the creator of Arepa, may argue differently.

Thinking with first principles generally takes considerable brainpower and time. So it makes sense to only use it when the outcome is possibly worth the effort, i.e. asymmetric payoffs. Where the possible rewards considerably outweigh the upfront costs.

Given those guidelines, our careers is an obvious place to start applying first principle thinking. We all fall into the same boat here, self-employed, self-employed, employer.

Suppose a career is a necessary means to an end. To provide for family and friends, to give our kids better lives. Then, what assumptions have we made about getting to that end that we can remove to find a more meaningful life?

The significant problems we face today cannot be solved at the same level of thinking we were at when we created them” – Albert Einstein

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