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How To Perform a Health Check for Your Business (Thinks Out Loud Episode 388)

Photograph of smiling woman doctor to illustrate the idea of a health check for your business

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We’re solidly in the dog days of summer. And, we all know that it’s almost time to start planning our 2024 business and marketing strategies. And to start that process, you need to know where you are today, what’s working, and what’s not. In other words, it’s time to conduct a health check for your business and your marketing.

What is a health check? How does it apply to your marketing? What does it include? And how can you be sure that it makes a difference for your business? That’s what this episode of Thinks Out Loud is all about.

Want to learn more? Here are the show notes for you.

How To Perform a Health Check for Your Business (Thinks Out Loud Episode 388) Headlines and Show Notes

Show Notes and Links

You might also enjoy this webinar I recently participated in with Miles Partnership that looked at "The Power of Generative AI and ChatGPT: What It Means for Tourism & Hospitality" here:

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Recorded using a Shure SM7B Vocal Dynamic Microphone and a Focusrite Scarlett 4i4 (3rd Gen) USB Audio Interface into Logic Pro X for the Mac.

Running time: 19m 15s

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Transcript: How To Perform a Health Check for Your Business

Well hello again everyone and welcome back to Thinks Out Loud, your source for all the digital expertise, your business needs. My name is Tim Peter. This is episode 388 of the big show. And I think we’ve got a really cool show for you. Thank you so much for tuning in. Last week, I talked about Amazon and their day one culture, how they treat every day as though it’s day one, like they’re starting over and given that we’re halfway through the year, you know, we’re at the end of July right now.

We’re probably coming into the, you know, the dog days of summer for many of you, vacations for many of you. And when you come back from vacation, you’re probably going to start working on your strategy for next year, for 2024. That’s pretty common thing people do in the fall. So it’s a question you ask about how you’re doing.

How is your business doing? How’s your marketing doing? Is it working for you? If you were starting today, what would you do differently? You know my friend Robert Cole sent me a, a note after last week’s episode and he was making the joke that, you know, I was talking about Amazon and their day one culture.

And he said, to be fair, if you have 150% turnover in your warehouse labor. You don’t have many options aside from a day one mentality, which I mean, he’s not wrong. But I think we can talk about the fact, but let’s assume that you’re doing, you’re treating your employees well, and that you’ve got dedicated employees and the like, and you’re thinking about where you are today so that you can think about where you want to go from here, right?

As you build a strategy, you have to know where you’re beginning from. So when you’re doing a health check, it’s really asking the question of how is the business doing, how are we doing, and what do we need to do better? And I’d like to start with this idea that we want to get a better understanding of customers.

That’s one of the most important things you can do because think of the Peter Drucker quote that the first job of a business is to create a customer. When we think about marketing, the job of marketing is to identify those customers and bring them into the business in some way. Ultimately, your business can’t succeed without its customers and without either growing your customer base, growing the amount of money your customer base spends with you.

Or ideally both. So a great place to start your health check is who are your current customers? Where do those customers come from? What role does marketing play? Think in terms of do we know who we’re selling to? Do we know who buys from us? And do we know how it is they learn about us? And I’ll tell you some ways you can find this in a moment.

You also want to think about what it costs you to acquire those customers. Now there’s an easy way to test this, and it’s not necessarily something you’re going to want to do every single time. Pick a single channel. Could be paid search, it could be email, it could be social. And either double your marketing budget for that channel for a period or cut it in half.

Now, most companies prefer to halve their spend versus double it. CEOs and CFOs invariably prefer. The cutting, right? So you might want to lead with that one, but you can also try to push for maybe if we spend a little extra money here, we should get a better picture of what’s going on. And do this for a given period.

Do it for a week. Do it for a month. But you should see some change in new customer activity during that period if you double it. Business doesn’t increase or you cut it in half and business doesn’t increase a decrease rather then what you’re doing Probably isn’t working the way you think it is Now if it does that gives you some indication of what that channel is or is not doing You also want to look at how much Income those customers generate for your business.

Are there segments of customers who behave differently? And the answer is almost certainly. I usually recommend segmenting by profitability, but you can use revenue or other metrics. That matter to your business. You can look at how often they buy. What frequency do they come to you with? Or what is the average purchase size?

Do you have people who buy a lot? Do you have people who buy a little? Or do you have people who buy somewhere in between? If you think about how much income they generate, you may also want to look at how much profit they generate. Again, same segments as income. There can be a frequency, there can be monetary, there could be recency.

Think about how much they generate profits, though. You also want to look at your churn rate. How frequently do customers leave? What is the long term value of each customer? Do they only buy once and you never see them again? Do they buy two or three times over a given period? Do they buy every day or every week and they do that for two or three years or maybe more?

Obviously, these are going to vary based on your business. But they give you a sense of the different types of customers that matter to your business. Another thing you want to take a look at is how many customers there are, not just of your business, but in the market for what you offer. Is the market itself growing or shrinking?

Are you competing for a growing share of the pie over time with your competition? Who we will talk more about in a moment. Or, are you trying to get a bigger piece of a pie that is shrinking? Mike Michalowicz has a simple test he runs. Where he asks, is there a trade show or conference for who you want to talk to?

If there is, then you undoubtedly have a market to tell, to sell to. If not… You may be too narrow or you may be too broad. It’s not a foolproof way to think about it, but it’s certainly a quick rule of thumb. And obviously, if you’re too broad or too narrow, either can hurt you. Too narrow is obvious. It’s just there aren’t enough customers to sustain your business or sustain the industry or market you’re in.

At the same time, If it’s too broad, you may be wasting a lot of your marketing budget on people who are never going to buy from you. You’re simply casting too wide a net. So you want to take a good long look at that. Once you have a sense of, do we have the right customers? Are we segmenting them appropriately?

Are we thinking about them the right way? You can ask, what are our customers big questions? And there’s so many. Fantastic tools to help you identify this. Look at search traffic to your website in Google Search Console or in Google Ads to see what keywords resonate with your customers, what they’re searching for.

You can find similar information in your Google Business Listing if you have physical locations. You can and should look at your internal site search. And of course you can use third party tools like SEMrush or Ahrefs or the Google Ad Planner or Answer the Public to see the kinds of queries people ask when they’re looking for you.

Of course, you can also do social listening using tools like Mention or BuzzSumo or Sprout or Octopost. You can use Facebook or LinkedIn’s reporting to learn more about who’s engaging with your content and your business of those sites. You can look at the top pages on your site in Google Analytics to see if there is alignment between your content.

And your customer’s questions. You want to be thinking about, do we have the right content? Are we using content as a strategic asset for our business? As a 24x7x365 salesperson? Or as a 24x7x365 customer service person? So, part of getting an understanding of where you are, is understanding, is our content relevant to the questions our customers are asking?

And then, of course, you want to look at the overall landscape your business operates in. Now this, I could do a single podcast episode on each possible item in here. But you want to look at things like the economy. Read economic forecasts from people like the conference board, or the Bureau of Labor Statistics that will give you a sense of what’s going on with the economy.

And is it expected to grow or is it expected to decline in the next 12 months or so? Obviously, you want to keep up on technology trends. And of course, there’s lots of ways to do that. You can create a list on Twitter of people who are on top of these things. You can follow people on LinkedIn who speak about technology trends.

You can subscribe to email newsletters like tech. Brew or Benedict Evans newsletter or people, Stratechery is a great one that give you ideas of some big tech trends. You want to take a look at the legal and regulatory environment, particularly as relates to your industry, what’s going on there that you see happening.

And again, you can follow the same kinds of things, subscribe to a couple of newsletters of people you respect, or, you know, follow some folks on Twitter. And of course you want to take a look at your competitors. What are they doing? Check out their website. Subscribe to their email newsletters. Look at their activity on social.

What are they talking about? Because that will give you some sense of what matters in your industry more broadly. When you think about your competitors, be very clear on who your current competitors actually are. You know, why do customers buy from them and not from you? Is that a gap you want to close or feel you’re capable of closing?

If yes, why? If not, why not? Also, never forget that your biggest competitor is always the customer does nothing. There are almost certainly more people not buying any solution in the marketplace who need that solution versus those who are buying from you or your competitors. Why is that? What are their objections?

Take a look at the prospects you’ve lost or the people you’ve talked to who didn’t buy to try to understand what is it that didn’t work for them. And then, of course, once you’ve looked outward, look inward. What are your current capabilities? We always think in terms of people, process, and platform, or people, process, and product.

Do you have the right capabilities in those three areas? Do your people have the right skills, the right knowledge, the right capabilities, enough capacity? Do you have enough people? Do you have standards and measures in place that they know what they’re supposed to do? Do they get feedback that they’re actually doing what they’re supposed to?

to do the work that they need to do. When you look at your processes, think about where you are in terms of a maturity matrix. Are you doing this on an ad hoc basis? Are you aware that you need to do this, but you don’t quite have the process in place? Are you striving? Are you putting processes in place, but obviously still have some work to do?

Or are you driving? Are you consistently delivering against those processes in the way that you should? And then for your platform or your product, you can think kind of the same way. Is this something that we’re doing kind of on an ad hoc basis? Or are we aware of where we need to be? That we’re, you know, lagging the marketplace?

Are we striving, we’re trying to keep up with the marketplace, but maybe have some places where we can do a little better? Or are we leading in the marketplace? Because as you identify those, it will enable you to say, okay, where do we want to go from here? And help you identify the ways that you get there.

Not all of the information you collect across these various areas. In terms of your customers, in terms of your, their questions, in terms of the landscape. In terms of your capabilities and in terms of your competitors, not all of the things you learn will have any real impact on your plan. You’ve heard me talk about on this podcast before, the MAST framework, particularly around analytics, meaningful, actionable, segmented, trended, and timely.

Well, any of the data you collect, you want to test for meaning. Ask, so what, about each piece of information you gather. If you answer, so nothing, then you can disregard that. It’s not going to matter in your plan. On the other hand, if you say, Oh my gosh, so what? Well, let me tell you how what. Then you can see that it’s something with impact.

It’s something you’ll need to account for in your plans. But what you’re looking to do with all of this information is give yourself a grade. Are we doing really well? Are we keeping up with the industry? Are we leading the industry? Or are we falling behind in some areas because that will enable you to start to put together a plan to say, great, how do we close the gap between where we are and where we want to be?

Or how do we continue to maintain our lead in the areas we’re leading? Or how do we make it more efficient for us to keep up if we’re okay with simply keeping pace with the industry? You can’t really build a plan to take you where you want to go if you don’t know where you’re starting from. Think about board games.

Think about any game you’ve ever played. You don’t know how to reach the goal if you don’t know where you’re starting from because none of the rules make any sense without a starting point. So this is what you’re trying to do, is you’re trying to establish your starting point, you’re doing a health check, you’re doing a wellness check to make sure you know exactly the state of your business, and you know exactly the state of your marketing, so that you can say, this is the gap we need to close.

If you put together this health check, if you put together this test to see where you are, You’ve already got one really good step in place to make a strategy to develop a strategy that’s going to work for your business for the longer term. And once you do that, you’ll be all set to start prepping for where do we go from this place, which I’ll talk about next week.

So take a little time to do your health check to make sure you’re geared up for where you want to go from here.

Show Wrap-Up and Credits

Now looking at the clock on the wall. We are out of time for this week. As always, I want to remind you that you can find the show notes for today’s episode as well as an archive of all past episodes by going to TimPeter.com/podcasts. Again, that’s timpeter.com/podcasts/. Just look for episode 387.

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And, of course, you can send an email to podcast@timpeter.com. Again, that’s podcast@timpeter.com if you want to chat directly.

Show Outro

Finally, I do want to say thank you so much for tuning in. I know I say this again and again and again almost every week, but I say it again and again and again because it’s so important for you to hear this.

I would not do this show without you. Your support, your listenership, your comments, your conversation, the community you are helping us build mean so much to me. So please keep the tweets coming, keep the messages coming on LinkedIn, keep the emails coming. I love getting a chance to chat with you and hear what’s on your mind and learn how we can make this a better community together.

So with all of that said, I hope you have a fantastic rest of the week. I hope you have a wonderful weekend, and I will look forward to speaking with you here on Thinks Out Loud next time. Until then, please, be well, be safe, and as always, take care, everybody.

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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