Ready, Fire, Aim – Michael Masterson – Part 2

Note: this is the second part of the Ready, Fire, Aim column. The first part can be found here.

Read, Fire, Aim : Zero to $100 Million in No Time Flat”

If you have followed the program proposed in the first part of the book, you have brought your business to the edge of Step 1 and are ready to take it into the rapid growth of Step 2. You have learned many important things in Step 1 about doing business in your market, including :

  • Locate your core market – where your best customers are.
  • Found the best media to reach them.
  • Determined the best price for your flagship product.

Step 1 sales will slow down when you’ve exhausted the market with your flagship product. Initially, sales will be sporadic as you struggle to discover your Optimal Sales Strategy (OSS). Once you determine it, sales will increase exponentially, then slow down a bit as you make adjustments to your OSS – find new media, increase or decrease the price, get a new Great Idea for your advertising campaign.

This pattern of rapid growth and slowing down may continue for a while, and then all the small improvements you try will prove futile. The reason is usually very simple: your flagship product, which got you where you are, has exhausted its potential. Most potential buyers in your market have either bought it or decided not to buy it. There are always a reasonable number of new customers coming into the market and buying your product, but the days of exponential sales are over.

What can you do about it?

At this point, most entrepreneurs trade their dreams of multi-million dollar businesses for something more “realistic”, such as reducing operational expenses, stopping their least profitable advertising and settling for a meagre salary and meagre profits for their business. If the market doesn’t slow down, they can go on like this indefinitely. Thus the author cites statistics showing that 95% of American companies do not exceed a turnover of one million dollars.

According to the author, these businesses are self-employment businesses, that is, they offer their owners a guaranteed job and a salary that is what they would earn working for someone else. According to Michael Masterson, it’s better than being employed, because the self-employment business allows independence, but he thinks you should aim for more than just having a manager’s salary and feeling in charge of your future. You should have a business that provides you with the financial power to free yourself up and allow you to do what you want, while providing you with the excitement of seeing it grow.

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You can do this, as long as you understand that the challenges of Step 2 are different from those you have already faced. The major problem you faced in Step 1 was discovering your VSO and selling. But what do you do when your flagship product has reached its full potential and can no longer offer any hope of increasing future sales?

Michael Masterson, giving us the example of the publishing companies he has run or co-run for many years, explains that the solution is simple: launch more products, and even many more products, to increase sales. It’s healthy during Step 1 to focus on one core product and become excellent at selling it. But to move beyond Step 1, you need to create and sell new products designed for the market for which you are selling your first product. There are two important things to consider:

  • According to the author it is better to launch about 10 products than to focus on launching 2 or 3 exceptional products, simply because it is impossible to know if a product will sell well or not until it has been launched. Since on average only one product out of two or three is good, and one product out of five or ten is excellent, you are much more likely to come across winning products by launching a lot of them, then dropping the ones that don’t sell well and focusing on the winners.
  • You need to be aware of the difference between front-end and back-end marketing. Front-end marketing is aimed at prospects – those who have never bought from you – and back-end marketing is aimed at your customers. The goal of front-end marketing is to acquire new customers. The purpose of the back-end is to make a profit. Most entrepreneurs are not familiar with this concept according to the author. Picking up on Jay Abrahams’ analysis in Getting Everything You can Out of All You’ve Got, Michael Masterson explains that you can acquire customers at a loss if you know they will be profitable in the medium to long term because of the products they will then buy from you.

Chapter 10: Innovation – the key to second-stage growth

In his bestseller The Tipping Point: How Little Things Can Make a Big Difference, Malcolm Gladwell examines how some new products are creating new markets by taking the lion’s share, such as iPods and Slinkys.

Most of these products, says Malcolm Gladwell, are not revolutions that have come out of nowhere, but just minor variations of ideas that were already in the air and products that were already circulating. According to the author, innovations in a marketplace are similar to a very common physics experiment in high school: a teacher fills a glass of water to the brim. Then he pours a droplet of water. Contrary to what the students expect, the extra droplet stays on top of the water. The teacher adds more droplets, one by one, and they end up forming a mound of water that is higher than the height of the glass. Then, suddenly, one more droplet causes the whole mound of water to collapse and flow down the glass.

According to Gladwell, new trends work this way: in any social context, many people share the same basic idea about the innovations that should be made. Innovations emerge here and there, but most of these innovations are absorbed into the existing culture without producing significant differences.

The secret:

  • The secret to breaking into new markets or reviving a dying company is to create products that have a breaking point.
  • The secret to creating breakthrough products is to find trendy products in emerging markets, and find a way to make a similar, but new and different product.
  • You need breakpoint products for your front-end, but you can make a lot of money by selling regular products, as long as you sell them to your existing customers.

But how do you actually create tipping point products? According to Michael Masterson, the key is to create a lot of products: only one in ten will become a tipping point product. And how do you get a lot of interesting product ideas? The key is to brainstorm, with a minimum of 3 people and a maximum of 6 (or at the very least, 8), and following the 8-step formula that the author gives in his book. An important tip he also gives is to record the brainstorming session completely (because nobody will remember a month later the path that led to the idea, and all the details count in the development of an innovative product) and to have a sales page describing the product written within 24 hours after the session.

You can also use an excellent tool called the Magic Product Cube. It is a cube because, like all cubes, it has three dimensions: the first is the price, the second is the type of product, and the third is the Unique Selling Proposition. For golf this could be:

  • Price: you have three price levels, entry-level, mid-range, and high-end.
  • Type of product: you sell golf clubs, golf balls and golf bags
  • USP: you have three golf professionals who have signed a contract to endorse your products: Tiger Woods, Bubba Watson, Joe Bailey.

With this, you have 3 times 3 different potential products, that is to say 27. You can also add a category to each dimension, having for example a very high end, various golf accessories, and another golf professional. That would be 4 times 4 times 4 products, that is 64!

Chapter 11: Speed – Setting Up Ready, Fire, Aim in Your Business

When innovation and speed are combined, the results can be incredible. According to the author, the amount of growth a company can expect in its second stage of development is directly related to its ability to generate and test new product ideas quickly.

If you brainstorm as advised in the previous chapter, you will be able to generate many new product ideas by spending just one day every two or three months. But you’ll need to spend a lot of time making sure that these ideas become reality. Of course, there are many other things you’ll be under pressure to do, but you should now have half a dozen key people to rely on to delegate the essentials.

To succeed as an innovator, you need to develop passionate feelings about three things:

  • You have to love good ideas.
  • You must hate apathy. When you work with new ideas, you should be anxious about the passage of time.
  • You should enjoy the process. Taking new ideas from conception to execution is often a long and laborious process. If you find it too tedious, you may not commit to it enough and leave too much to chance.

To implement good ideas as quickly as possible, a good solution is to have existing customers test the product first, offering them free of charge against feedback on what they liked or disliked. Not every company can do this, but if you can, don’t hesitate, because :

  • Your existing customer base is always your best deal. If your new product doesn’t sell quickly when it’s free to your customers, it certainly won’t work if you advertise it elsewhere.
  • Because the new product is displayed as a test and given away for free, it does not need to be fully finalized. This saves a lot of money.
  • A test launch like this gives you feedback from your customers before it is officially launched. All this feedback will help you improve the product.
  • It gives the marketing team convincing customer testimonials about the value of the product.
  • Finally, telling your customers that a new product is being tested can create an expectation that there may be a better response rate to the product when it is officially launched.

But the two key concepts for launching products quickly are :

Accelerated failure
You must remain humble enough to realize that most of your good ideas will be rejected by your customers, for various reasons. You must accept failures. And make sure they benefit everyone, by documenting these failures and publishing them throughout the company, so that each new idea can be compared with the old ones to determine if one of the past failures can help avoid a new one.

The Ready, Set, Aim strategy
This strategy means what it means: when you have an idea that has the potential to grow your business, test it when you’re ready, without trying to make it perfect.

In other words: use most of your time, money and resources to make sure the idea is ready to be tested. Any other things you can do to perfect the concept should be done, at most, after the test, and only if the idea has shown that it is viable.

Let’s take the example of 7-Up, not as it happened when it was first introduced in 1929, but in an application that the Ready, Fire, Aim strategy could have given.

The idea is to sell a colourless cola, whereas the market only knows coloured colas, such as Coca-Cola. When you discuss this idea during the brainstorming session, you realize that realizing the product has two major unknowns:

  • Will the market like the taste of the new product?
  • Is the market ready to drink a colourless cola?

To answer these two questions, you should first create a cola that tastes great and is colourless before you do anything, which can take years and cost millions of dollars. If you break the innovation into its two essential components and test them separately, you can speed up the process.

The obvious strategy would be to test the colourless aspect first by trying to sell it to a marketing test group as quickly as possible, and by doing a scientific test to show whether or not a colourless cola can be sold. If the answer is no, you will have saved a lot of time, money and resources by avoiding creating an exquisite taste for a beverage that does not sell.

Creating a Ready, Set, Aim culture in your business will reduce the time it takes to do just about everything. It will reduce the cost of failure, increase the chances of success, and decrease the damage that time does to every good idea. Michael Masterson gives 8 key concepts to accelerate the implementation of this strategy:

  • Explain the key concepts. When you introduce this strategy into your business, you will face internal resistance to change, sometimes coming from your best people.
  • Support management. Some parts of your company will take longer than others to adapt.
  • Implement. The key to implementing all these changes is that your employees will follow your actions, not your words.
  • Set parameters. Your employees need to know how fast you want them to go. Be specific.
  • Get agreements. Implementation will only work if your key employees support it.
  • Accelerate gradually. You can’t take Step 2 in just a few weeks. If your ultimate goal is to create 50 products and you’ve only created one in three years so far, make those 50 products a 3-5 year goal.
  • Support the company as it grows. Be liberal about hiring new people, but strict about firing the less good ones.

Follow the program. The methodology is Ready, Fire, Aim, and it is explained in detail in the book. Click here to get a copy

Chapter 12: Getting Ready

The Ready, Set, Aim concept is about velocity, about the profound benefits of moving from an idea to action as quickly as possible. But that doesn’t mean getting excited and taking action before you’re ready. It’s Ready, Fire, Aim, not Fire at Will. It’s putting the gun at your shoulders and pointing it, not shooting from the hip.

To make sure you do this, you need to ask yourself 7 essential questions throughout the process:

1 – Do I have a good idea?
You will never know how good a product is until you have tested it on the market. But it pays to ask yourself this question at the beginning – when you brainstorm the idea.

Start by defining what good means to you. Is the product good in the sense that it is better than another product? Good in the sense that the market needs it? These are common motivations for developing new products, but they are not enough. To develop your business you have to sell a lot of products, but each of these products has to be sold in a certain quantity. Until your product has sold this minimum quantity, it cannot be good.

So, before launching your product, talk to your marketing team – the 6 or 8 people who will be most involved in the launch – about your sales goal. Explain your thoughts, ask them what they think. If someone has doubts about the objective, ask “Okay, Dan, if you don’t think the product as we imagine it is not good enough to sell 10,000 copies, how can we improve it? How can we make it good enough to achieve the goal?”

2 – Do I feel that it will work?
If we leave Michael Masterson the choice between 1) methodically analyzing when a business idea is good enough to be successful in the market and 2) relying on the intuition of an experienced person, he chooses the second solution.

Intuition is more reliable for anticipating the future than formal analysis because it incorporates years and years of experience and information gathered through careful observation, most of which cannot be consciously recalled but continues to feed into the decision-making process.

You probably already have a feeling about what a good product is or is not. Don’t ignore it. But pay more attention to the advice of those who have more experience in bringing new products to market.

3 – Are my sales objectives realistic?
Your product idea is good. It brings a great explicit benefit to customers, and you feel it, too. Now you set sales targets. Now you have to ask yourself, “Are these goals realistic?”

If you’ve done everything the author advises, the answer is probably yes. But because results in a business are rarely as good as expected, you should spend some time calculating “What if I’m wrong?” :

  • Determine how much it will cost to turn your idea into a product. Take that number and double it.
  • Determine how many copies will be sold (or how much revenue it will bring), and divide that number by two.

If even after doubling your costs and halving your profits the venture still looks profitable, go ahead. If not, forget it.

4 – Can I test the idea?
Like scientific hypotheses, business ideas can be tested in controlled environments. Testing ideas is a standard procedure in direct marketing, which is one of the reasons why the author believes that every company should do direct marketing.

Not all new products can be tested on sample groups with direct marketing, but many can.

5 – Do I know the tasks that need to be done?
Before you roll up your sleeves, it pays to create a short list of the main tasks that need to be done. Such a list should take no more than a few hours to complete.

6 – Do I have the people who can do the tasks?
All great ideas need great people to make them successful. Before you go any further, stop and ask yourself “who can help me?”

Start by choosing your champion, someone you think has the personality to make the idea happen. A champion must 1) believe in the idea, 2) have the authority to put it into practice, 3) have the experience to make wise decisions throughout the project.

In addition to this champion, a good idea may need other talented people to play key roles: who can produce the product? Who can test it in the marketplace? Who can be in charge of completing operations?

7 – Do I have a plan B?
Sometimes it’s all there: the idea is good, you have a good feeling about it, the tests are working well, and talented people are behind it, yet the product falls face down as you start to push it. Rather than be surprised by such an unlikely event, why not plan ahead?

By having a plan B – a “What if it fails?” plan – you’d be much more prepared to act if the time comes.

Chapter 14: Ready? Target the product

Ready, Set, Aim doesn’t mean you’re ready to create mediocre products. On the contrary, it is one of the most efficient ways to create quality products, because less money and time is wasted on functions, mechanisms and details that customers don’t care about. Less resources wasted in the Ready stage means more resources for the Aim stage.

The author warns us against the temptation for companies to cut costs by imperceptibly lowering the quality of product components: small, insensitive deteriorations in the product can accumulate and end up producing a much lower result than the original product, without the quality degradation being noticeable at each stage.

This is not to say that we should not focus on reducing manufacturing costs, but we should bear in mind that developing a successful business requires building long-term relationships with customers. In the end, what you do in targeting your product will depend on how you think the business world works.

The author has found that businessmen – well, all human beings – are divided into two groups:

  • Those who feel, on an instinctive level, that the universe is limited and disconnected.
  • Those who feel that the universe is interconnected and infinitely expanding.

Those who feel that the universe is limited and disconnected think that wealth is something limited and therefore must be amassed and guarded. Those who feel the opposite think of wealth as something that can be extended indefinitely and shared.

The former tend to treat those who are close to them better than strangers. They therefore tend to make their products as cheap to produce as possible: the better their net margin, the better they feel. The latter follow a different principle: they believe that the right way is to give as much value as possible – and as generously to a stranger as to those close to them.

Hoarders follow the Golden Rule:

The less I give to my customers, the more is left for me.

Sharers follow the Golden Rule:

Treat your customers as you would like to be treated as a customer.

Michael Masterson has met more hoarders than shareers in his 30 year career. And worse, he’s been a hoarder himself. It has been a stupid, self-destructive and degrading experience for him. And it cost him a lot of money – he knows that now.

Because he now knows that he can make more money more easily by following the Golden Rule – by treating his colleagues, employees, salespeople and customers as he would like to be treated as a colleague, employee, salesperson and customer. He knows that if he gives more he will get more, and if he shares more, more will be shared with him.

If you want to develop a business that continues to grow, don’t spend your time trying to reduce your production costs. Spend a good part of your time asking “how can I make it better?

Because you’ve been ready before you shoot, you’ve come to market with a product you know is already good. And your customers seem happy with it. But because you believe in the Golden Rule, good isn’t good enough for you. You want your customers to be more than happy with all the products they buy from you. If they are happy with your products, they will reward you by buying more of them. If they are more than happy, they will recommend you to their friends and colleagues.

To ensure this, you need to engage in a process of incremental improvement – improving your products slightly, even if there is no evidence that your customers are not happy. But remember, profits matter. Making your business profitable is the best way to ensure that it will produce consistently high quality products. Keep in mind that you want to improve your product to make it the best in a tight market. You don’t want to sell the best watch in the world for $39, you want to sell the best watch in the world for $39.

Chapter 15: Targeting Marketing, Part 1

To pass Step 1, you had to become an expert to sell your flagship product to a type of customer. To take Step 2, you need to expand your product line – and that means expanding your marketing skills.

If you’re not a born salesman and marketer, don’t worry: Michael Masterson says he doesn’t think there was anyone less talented than he was when he started. And you already know the most important things. All you have to do is practice the three steps the author gives, and one day the people around you will call you a “marketing genius”, and you will think you don’t deserve it – when you do deserve it.

Step 1: Exorcise the demons

Even if you have created a company that has reached or exceeded one million euros in sales, you may have bad feelings about the sales process. You may also be afraid to sell. If this is the case, don’t worry: it is extremely common. But to become a marketing genius, your company needs you to change your thoughts and feelings about selling. To do this, the author gives three extremely common myths and their remedies:

Myth 1: It’s good to sell things to people who need them, like cereal or milk, but it’s bad to sell things to people who don’t need them, like televisions or sports cars.

Reality: Over 90% of what people buy is based on wants, not needs.

Myth 2: It’s good to sell things as long as you don’t ask for more than they’re worth.

Reality: What does value really mean? It is often said that there is a difference between intrinsic value and perceived value, intrinsic value being value as a commodity, and perceived value being what the product is worth psychologically. There is some truth in that, but keep in mind that 95% of modern commerce is not based on selling staple foods, but things that have been manufactured. And when something has been manufactured, there is room for qualitative differences. And where there are qualitative differences, there is room for perceived value. How much that little difference in quality is worth is entirely subjective.

Myth 3: It’s good to make things better, but it’s bad to sell them.

Reality: Yes, that’s right, yes. If you understand that over 90% of what people buy is based on wants, not needs, and that 90% of what we pay for any item is based on perceived value, not intrinsic value, then you must conclude that the business world is over 90% about vibrating molecules, not satisfying basic human needs.

This brings us to the Golden Rule of Marketing Genius:

Don’t be afraid to do to your neighbor what you secretly want done to you.

Which is another way of saying “Treat your customers the way you would like to be treated”.

Step 2: Boosting incomes with three basic approaches

Jay Abraham in Getting Everything You can Out of All You’ve Got explains that there are only three ways to grow a business:

  • Increase the number of customers.
  • Increase the average customer shopping cart.
  • Increase the number of times customers come back and buy again.

Let’s imagine that you have a thousand customers who buy on average for $100 with every purchase, and that they buy on average twice a year.

This gives you :

1000 x 100 x 2 = $200,000 in sales.

What happens if we increase these three factors by just 10%?

1100 x 110 x 2.2 = $266,200 in turnover

Turnover increased by 33.1%. And a 25% increase in all these factors almost doubles the turnover to $390,625. It’s very simple. But the results can be incredible.

To find out how to do it, pick up on Jay Abrahams’ analysis in Getting Everything You can Out of All You’ve Got,

Chapter 16: Targeting Marketing, Part 2 – Understanding the Shopping Frenzy

One of Michael Masterson’s clients owns an international publishing company generating more than $270 million in annual revenues. His responsibilities require him to travel around the world. Over the past 15 years, the author has made some 50 trips with him. During these 15 years, he has seen him use only one travel bag, a shabby, shapeless nylon bag with worn edges and a barely functioning closure. He lugs it around on his first-class trips, and in his suites in 5-star hotels in Paris or Madrid.

One of Michael Masterson’s clients owns an international publishing company generating more than $270 million in annual revenues. His responsibilities require him to travel around the world. Over the past 15 years, the author has made some 50 trips with him. During these 15 years, he has seen him use only one travel bag, a shabby, shapeless nylon bag with worn edges and a barely functioning closure. He lugs it around on his first-class trips, and in his suites in 5-star hotels in Paris or Madrid.

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From the author’s point of view, his client desperately needs a new bag. But he doesn’t see it that way. As long as his pathetic little bag can carry his belongings, he won’t buy a new one because he doesn’t feel he needs a new one. And if he doesn’t need one, he doesn’t want one.

Michael Masterson, on the other hand, wants a new bag almost every time he walks into a store that sells them. He wants one in black leather, one in brown suede, one with lots of compartments, one in one piece. Next to the room where he writes this, there is a wall against which 14 bags of all sizes and shapes are stored. Clearly, he doesn’t need one more bag. However, he is sure that the next time he goes to a store, he will want another one.

Often, when he and his customer travel together, they pass a luggage store or an accessory store that has bags in the window. Michael Masterson almost always stops to look… and then suggests that they go in together “just to take a look”. His client usually does this service, but without enthusiasm. For him, a shop that sells these things is as interesting as a dress shop for the author. Surrounded by dozens of new travel bags, the author feels full of energy. But anything that excites him about bags annoys his customer. Before 10 minutes were up, he left the store with his old bag in his hand and the author made his way to the checkout with some new bag to add to his collection.

Question: if you were in the travel bag business, which customer would you want? The guy who has a bag and really needs a new one ? Or the guy who has a bunch of empty bags and really doesn’t need a new one?

When the author asks this question at a seminar before telling this story, most people answer that they would rather want the first customer because he needs a bag. When he asks this question after telling this story, most say they would want the customer who doesn’t need a bag. They understand.

They understand that it’s not about what the customer needs. It’s about what the customer wants.

Let’s look at the psychological implications of the author’s penchant for owning so many duffel bags. Is he insane? He might be. But he doesn’t feel crazy. He feels good about his bags, like some women feel good about their shoes, or some men feel good about their cars, or their books.

When the perpetrator walks into a luggage store, he doesn’t act rationally…

  • but not irrationally either. Somewhere in his mind, he’s fully aware that he doesn’t need a new bag. But he’s also aware that he feels a lot of pleasure in owning these products, and he knows that sometimes
  • if the store has the right products and the right salespeople
  • he feels a lot of pleasure in the buying experience itself.

He rationally recognizes that if he enters such a store he has a good chance of enjoying the moment, and leaving the store with something he can enjoy in the future. That’s pretty rational, isn’t it?

So, using part of Maslow’s analysis in his famous pyramid, Michael Masterson tells us that once we’ve covered our basic needs – food and shelter – the next goal, if we’re smart, is to save money or buy things that will be useful to us in the future, and then everything we spend is aimed at giving us a better life, that is, buying things we don’t need.

So as he said in the previous chapter, you should never feel bad about selling products to people who don’t really need them, because 1) there are very few sales that don’t fall into that category, and 2) since buying things you don’t need is something you do all the time, then selling what others want and desire is a very effective way to follow the Golden Rule of marketing genius: treat your customers as if they were your own.

As im building my 2 companies at 40 years old, do live freely and be able to work from anywhere in the world. I have 2 blogs in French but your can use Google translate to get the English Version:

A better way for you to protect and grow your wealth for you and future generations.

Investing to ensure the long-term future of your assets

The Bible of Full Consciousness for Men Authentic and Sacred Women

Free to Die, Reborn and Grow Again

Reading Ready, Fire, Aim was also enlightening for me: for any company that is being created, finding its first customers and making its first sales should be the very first priority, and after those first sales I fully agree with the author that the company should devote 80% of its resources and time to selling.

I made that mistake when I started my business, and I really wish I had read Step 1 of this book, as it would have provided me with a guide to apply in my business, both in setting goals and in my everyday actions.

Moreover, the emphasis on the fundamental question “How will I find my customers?” and the leads and methods given by the author seem absolutely brilliant to me.

Have you read the book? How much do you rate it?

Let me know if that book was also brilliant to you…

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