202: Why Positioning Your Business Is Crucial To Its Success With John Paul Mendocha
Success leaves clues, but so does failure. Sometimes, it is just difficult to spot them, even if they are showing themselves right at the onset. Guest and turnaround consultant, John Paul Mendocha, also known as Dr. Speedselling™, learned this the hard way. When his business crashed and left him bankrupt for three years and down into rock bottom, John discovered who he really was and how he would move forward. In this episode, he joins Mitch Russo to tell us about his journey and the true superpower he discovered about himself: speed selling, which, at the heart of it, is all about positioning. He talks about the importance of understanding who you are and what you want first before taking any action. With his latest book, Most Businesses Fail in the First 5 Minutes, John shares why businesses that don’t position themselves at the very beginning end up failing right then and there. Dive deep into this conversation to learn more about how to build, fix, and grow your company that is positioned to win.
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Why Positioning Your Business Is Crucial To Its Success With John Paul Mendocha
Do you know any other podcast that’s a two-way conversation? You can talk to me anytime you want and I’ll respond right back. I’ve had voice messages from all over the world. I want you to click the button on every show page that says, “Speak to Mitch.” Tell me what you think of the guests, what you’d like, and what you think of me. It’s totally okay. This episode happens to be sponsored by VEA, the Virtual Entrepreneurs Association. For you who are staying at home and are trying to make the best of your life not leaving your house or your apartment for months at a time, this is a great place to go.
The Virtual Entrepreneurs Association is an online community with tools, resources, discounts, tons of education, and a way of looking for and finding people like you who are looking to grow their stay-at-home work from home business. That’s what we want for you too. What I’d like to do and what I’ve arranged for you is to get a free membership by going to VirtualEntrepreneursAssociation.com or VEABusiness.com/mitch. When you get there because you used my link, you will also get a free copy of Daven Michaels’ book called The Virtual Entrepreneur. Hurry over there and grab your free membership while it’s still free.
Onto my guest and his incredible story. While his peers were graduating high school and planning college visits, my guest had his sights set on a bigger prize. In fact, on the jackpot. He left for Las Vegas to play poker and it was there where he started his career and discovered a component or a part of his true calling. He loves to win. He became infatuated with business. He built a small but profitable financial empire. He built on the backs of pawnshops and used-car dealers while holding a full-time sales position in a local technology company.
He was thriving until the whole thing came crashing down. When bad becomes worse and when worse becomes three years of the bankruptcy court and the singular thought, “You can’t take me away from me,” you know you’ve hit bottom. From there, he picked himself up and discovered who he was and how he would move forward. In that process, he discovered his true superpower. We’re going to talk with him about his best book ever called Most Businesses Fail in the First 5 Minutes. Welcome, John Paul Mendocha, to the show.
Thanks, Mitch. It’s great to be here with you.
If you don't know what your business position is, you are in deep trouble. Click To TweetYou can tell if the business is going to fail within five minutes of opening their doors.
Before they even get to have a door, they can tell me a concept in five minutes. They make a fundamental mistake, which is the flaw that puts them on the wrong path for the rest of their existence. That is that they miss out on knowing exactly how they’re positioned and what their position is in a market. If you don’t know what your position is, you are in deep trouble. It’s like trying to build a building without a cornerstone. It will collapse and fall over eventually.
I want you to tell us all about that. Before we do, let’s go back to the beginning. I described your long and illustrious past in a few words. If you could fill in the blanks here and maybe take us back in time so that people get a feel for who you are.
In my Vegas days, I bought a book called Beat the Dealer which was about playing blackjack. What I found out is that blackjack is a difficult game to beat. You can do it, but it is a lousy job. For anybody out there who has watched one of the cool movies about blackjack, get those fantasies out of your head because blackjack is one of those things that you have to work extremely hard at. What I did was I studied and worked at it. I did not want to go home and I ended up meeting somebody who I would call a mentor. He would scoff at the phrase. He was a part-time poker player and a full-time smuggler. I spent three years with him and learned a lot about how to read people and how to deal with people. The arc of it is that in the end, I was making more money doing proposition bets than anything else. My realization is the best way to play poker is with people who don’t have cards that’s called business and use those skills in a unique way. By doing that, I was able to come back to what I would call the regular world, become successful, and not have to worry about dangerous people.
As the movie 21 depicted, they certainly can be. One of my previous business partners was on the actual MIT Blackjack Team. He tells the story from a different perspective in the movie. He said there’s nothing glamorous at all about it and there was probably more violence than the movie even depicted. That’s the nature of the game as you know. Getting back to you and getting back to this whole process, you learn to play poker without cards. I like that. That’s a good way of saying it. When you decided that Las Vegas and gambling was no longer your primary suit, what did you choose to do next?
What I did was I came back home. My father had a small business and I started working for him, which I would not recommend to a lot of people. What I did was attempting to position his business and I found a book, Positioning: The Battle for your Mind by Al Ries and Jack Trout. I read it three times in the first week and told my father that we should position his business. He scoffed at it because he thought it was an advertising book. What I decided to do was take the insight that they were talking about, apply it to myself, position myself, and do what I call a pivot to get to a market that paid significantly more than the market I was in. I set my sights on the high-tech industry and I liked it in a lot of ways.
Here was my analysis. First off, high-tech paid stupid money in comparison to other industries. The other thing is I was competing against those who are engineers who couldn’t sell and finally, I was selling to large corporations, which were complex. If you want to know about complexity, all you have to do is start figuring out how to play complex gambling. When you go to a major corporation, it becomes relatively easy to say, “I know how to unravel this. I know how to work through this. I know how to make this work.” By doing that, I became successful in selling high tech in a short period of time.
Your primary focus has been on sales, helping sales teams grow and coaching salespeople.
My trademark is speed selling because I could go into about any circumstance and become the number one salesperson or build a team that was number one. It became the basis for becoming a turnaround specialist because I talk about positioning. If you want to go out and make some money and become a sales trainer. There’s a limitless group of people who can’t sell. You could teach them and they’ll pay you X. If you take that, rework it, and add in a few other elements and you call yourself a turnaround specialist, you essentially can charge three times as much money. Get stock options, get all kinds of other benefits from it, and have people come in and say, “You’re working a miracle.” It’s a lot of similar skillsets, but it’s how you label it and how you position it, and more importantly, how you deploy that energy in what you’re doing.
This leads us to your book. Part of what you do and what you’ve written about is the business modeling element itself and the positioning component of starting a business. Tell us why you think that you can tell whether a business is going to fail rapidly.
The interesting part about it is that most of us want to pick winners. One of the best horse handicapping techniques I ever learned was how to eliminate the losers. If you could take an eight-horse field and eliminate three of them, now it’s a five-horse field then life becomes easier. As long as you can statistically show that those three nags were never going to make it or had such an infinitesimal chance of making it, then your methodology could then be refined and say, “How do I remove more of these?”
I took that concept and came up with what I call The Five Power Disqualifiers. This can be applied to a sales situation. The five disqualifiers on the positive side must be in place or you’re not going to get a sale or transaction. If you apply that to business as a whole and you get to a more of a macro sense, you can easily tell whether or not a business is going to be successful or not. By doing that, you can see rapidly when you walk up and say, “Is this business positioned to win? Are they going to be in the race? Are they going to be 1 of the 5 or the 4 that’s going to be in the money? Are they going to be the ones that are just going to be failures?”
A business without positioning is like building without a cornerstone; it will collapse and fall over eventually. Click To TweetIt’s fascinating because most people rarely know who their competitors are. They have an idea and they come up with this great idea. We could have mentioned John’s amazing elixir cola. Great. You’re in Florida and I’m in California. We’ve got a cola idea that nobody’s ever had. We can go out there and spend a lot of money. We could have a beautiful logo and convince people to do this. However, we have to deal with the reality of, how do we position ourselves versus all the other people who are in the cola market? I can tell you that Coca-Cola and Pepsi aren’t going to be sitting there and say, “Let’s move aside and let these guys in. It’s Mitch and John, let’s let them do that.”
That’s exactly what business owners or entrepreneurs do. They delude themselves into saying, “I can step into this marketplace and start taking money away from people.” Usually, it’s not going to happen. Especially if you’re not positioned well because we need to have customers. Part of what you’re talking about is how to get to that next level. How do you get to those 1,000 or 10,000 clients or whatever number is available? You will never know that if you’re not positioned properly because what will happen is that you get lost in that noise and that process.
Let’s say you have a service that you offer and it seems like the world is awash with business coaches. You decide, “I’m going to be a business coach.” Talk us through the process of qualifying or positioning ourselves in that field and what most people would be missing once they start.
If you’re going to say, “I’m going to be a business coach,” and we map that out on a quadrille pad which is what I like to use, the first thing I’m going to say is, “What kind of coach are you going to be? Are you going to be on the high end? Are you going to be specialized or broad-based? What are you going to do?” Having had the opportunity to coach lots of people who want to become consultants, coaches, and experts, “Tell me exactly what your expertise says and why that expertise is worth a lot of money. Why is that worth something? Why is somebody going to do that?”
I’ll go quickly through The Five Power Disqualifiers. The first one is money. Money has got to be the number one factor. If your mindset is, “I’m going to be the cheapest,” then good luck because there’s probably always somebody cheaper. There’s a guy somewhere else. There’s probably a business coach in Bangladesh and they’ll do it for $2 an hour. The second thing is what I call the big benefit. You could call it a USP but it’s the big benefit. Why are you here? What is the purpose of it?
When somebody comes to me for coaching, they’ll come in and say, “We want somebody who’s street smart, done turnarounds, and has dealt with real problems.” Those are usually the kinds of customers and clients that are going to come to me because they’re going to take my reputation and what I’ve got. I ask people, “Tell me what is that?” We can use the phraseology superpower, but maybe that’s not clear enough. We’re not looking through a telephoto lens. We’re looking through a microscope. Tell me exactly what you do that’s going to make me go, “This is what I do,” and this pushes me into this spot.
The third thing is urgency. What is the urgent need for this? Most people will say, “I’m going to become a coach because I’m now on the street.” A perfect example is I was doing a coaching program for somebody that’s rather famous but I was doing the backend coaching for him. This guy came to me and he had spent 28 years in the semiconductor business doing process control. I know just by saying that, there are many of your readers who got a little tingle. This guy had decided that he was going to learn how to become a Google AdWords consultant. I don’t want to rain on anybody’s parade but I don’t know how many 28-year experience process guys there are versus Google AdWords consultants. I tried to explain to him that he should take what he’s good at and not try to acquire something. There may be a need for Google AdWords consultants, but how are you going to differentiate yourself, and then why is there any urgency?
Number four is decision-makers. Who are the decision-makers? Who are going to be those people? If I sit there and talk to somebody because I have a hard edge, and that’s one of the things I work off. That hard edge or sharp edge means that there are people who are going to love me and there are people who aren’t going to love me or dislike me. The people who don’t like me will go through a fifteen-minute initial consult and be like, “I don’t know if this is going to fit.” I usually say to them one thing, “If you don’t know if it’s going to fit, you probably should go to somebody else.” Could I use the money? Of course. Does it make sense if it doesn’t fit? No, it doesn’t. I’d rather talk to a decision-maker and say to them, “Let’s make the best decision because we’re going to have to live with that decision.” Whenever you sell something to anybody, you’re living with the decision that they’re going to make and we’re living with that.
The final one, number five is big plan. How does it fit into the big plan of things? When somebody says, “I want to be a business coach,” I say, “You have to explain to me a lot about why you are unique, why you can differentiate yourself, and what do you bring to the party that somebody will say, ‘I need to give you money to do this or not.’” Giving somebody standard basic stuff, maybe you’ll get a few clients. What you won’t do is you won’t build a position and what you’ll do is eventually, you’ll slowly but surely peter out and be done with it.
Let me see if I can summarize it because this is important. What you’re saying is that you need to understand by leveraging your past experience and potentially your reputation in that area. What you do is bring to the table something that needs to be urgently needed. It could be a sign of the times or an evolutionary process in business. Whatever that is, you must bring something powerful and urgent to the table. At that point, you have to find those who are capable of making the decision to do business with you because you’ve identified them as desperately needing your services.
The real money is made in desire. Click To TweetThat’s a good summary. The thing that you need to be able to say is when somebody says, “I’d love to do business with you, but I can’t afford you.” What I always explain to somebody like when I do events is, “My events are expensive. I don’t have low-end events.” When people say, “I love to come to it, but I don’t want to spend $8,000, $10,000, $15,000 or $20,000,” I say, “Great. I understand that.” “John, what are you going to do that’s cheaper?” Let’s put it this way. If you’re going to own a Ferrari, you’re going to go in and buy a Ferrari, but nobody goes in and buys a key fob for a Ferrari to start off the process. Not everybody can afford a Ferrari. Not everybody can afford what I do.
One of the points of doing the book is making it more accessible to other people. Having said that, you have to decide where you’re going to live in this food chain and live in that spot in the food chain. The most different called aspect of it is being willing to know that there are some people who are not going to be tall enough to ride the ride. When that happens, you just say, “That’s part of life. I planned on that because that’s the position I have.” The biggest mistake people can make, and companies do it all the time, is they say, “If we could expand our offerings and build a cheaper version of this, maybe that would work.” It might work if you’re in the software business and you can remove half of the offering. You can do that. Usually, it doesn’t work when you go and cheapen a brand and say, “If we can only make a cheaper version, we’re going to get more business.” In all likelihood, you won’t. What will happen is you’ll just cheapen the brand.
Let’s take a real-world example here. You mentioned that you were familiar with the software company that I founded back in the 1980s called Timeslips Corporation. You said, “Mitch, you had thought about the position carefully.” You told me that you thought that our product was well-positioned among other things. You then said, “I don’t know if you did that deliberately or not.”
The reason why I said that is that oftentimes, some of the most successful organizations stumble into something. They do it and they find the right mix. I’m hoping you did it intentionally but for those of you who don’t know what Timeslips are, it’s simple. You tell me, this is my experience of it decades later. One of the things I do for fun is when my wife will go shopping in a department store, I’ll go to the housewares and sell stuff to people who are there because nobody else is going to take care of them. Why shouldn’t I? I don’t get paid commission but I do sell stuff.
I’m sitting there talking to these guys and they’re telling me that they have to keep track of their time. I had heard about this thing called Timeslips. The neat metaphor of it is that if you had a little slip of paper that you put Bob Smith, start time and end time, this is the activity, this is billable or not billable, or do this, and then you had that and then you could click the button. It would go off to your software and you just track of that fifteen minutes of billable time. You solve this major problem, which is at the time, people had logs that they were keeping. They would always have Shirley who they could trust. She had to have glasses and she would go through in and painfully figure out the billing every week or month for these professionals. What yours did is it replaces that. Shirley now could bill faster and they lost less time. Did I capture it?
You did, but here’s the missing element that most people missed back then that was not lost on my partner and I. We knew that time and billing was a back-office function. You said Shirley and you’re exactly right. Upfront, we had lawyers and accountants, particularly lawyers, who do not have computers on their desks. My partner and I sat down and we decided that we had to understand the future before we can come out with a product in the present.
The future for us was that computers would get cheaper and people would want them on their desks to use them in their daily work. Now, that sounds like no big deal but back then, that was a stretch because computers were $3,000. Lawyers, in particular, did not go to law school to sit around and play on keyboards. That was “woman’s work.” That’s what I was told by many lawyers. Our thinking was that if we could make this compelling, and here’s the thing that’s always compelling to lawyers, we could help you make more money. You make more money by capturing lost time and the only way to truly capture it is to do it yourself. The only way to truly do it yourself is to have the computer right on your desk. We had stacked a lot of premises into one business proposition thinking that if we got anyways near right on the path of computers and the future and the desire for attorneys to make more money, then our product would be successful.
What you were talking about is a fundamental barrier to getting more mass adoption. I completely agree with that. I’ll give you the corollary in 2020 though. The corollary in 2020 is that everybody will probably be emanating out to have a computer on their desk and they feel good about it. What percentage have dual monitors? How many of you have multiple computers? I do. I have multiple computers because when people say, “I’m trying to multitask, but my computer isn’t doing what I want to do.” Computers are cheap, so why don’t you have more than one?
When I say that to clients, it blows their minds like, “What?” If you don’t want to have a notepad and you want to keep it electronically, why don’t you have another computer? Another laptop costs you $500. All you need to do is remember one thing that saves you from a misunderstanding or helps you have something, so why don’t you that? It’s astonishing and blows their minds. To me, that is the equivalent of what you were going through back then, but people don’t do that. They go, “I’ll just have the one little laptop or I’ll have this.”
Free minds and free markets go well together. Click To TweetMy suggestion all the time is more screens, more technology. Don’t worry about being efficient. Not to dive back into the ‘80s. It’s too far on our wayback machine but the biggest challenge with these guys is they wanted that $3,000 back every single day. I had to explain to them, “That isn’t the point of it.” All these cats were driving Mercedes. I said, “Are you getting back the $40,000 out of your S-Class Mercedes every single day when you drive from here to the coffee shop?” No, you’re not because that’s not the utilitarian value of something.
Nobody can buy an S-Class for $40,000 anymore but that’s beside the point. John, let’s get back into the book itself. I’m going to play as the consumer. I look at the title of your book and I look at the graphic on the cover of your book. The thought to me is, “I’m going to use this book to figure out what I’m doing wrong in my current business and how I could fix it.” Would you say that’s a fair interpretation of what someone should think when they see the cover of your book?
I would guess that 80% to 90% of them are people who feel pressured that they’re not doing as well as they want to and they want to find out if they can unravel it before they go broke.
Once they get into the book, what are the core elements that would help them to rapidly understand what it is they’ve done wrong so that their business doesn’t fail?
The first thing that I do is I take people through. Here’s an exercise for everybody reading, and it is astonishing how few people do this. Many of the competitors get to at least the 85 to 90 percentile of the market in your market. If you say business coach, can you name the top 100 coaches? Can you name what these people look like? If you’re going to have a business, can you go through and define and talk about your market? Few people can do that from memory. You should be able to do it from memory but if you can’t, can you do the research and do that? I’ll give you the way that people cheat. Usually, that never works out well. They’ll go out and Google it. They’ll look at Google’s results as if that’s the correct order. What I want you to do is, what is the order? Who are the top ten dogs in your compound and what do they do? That’s the first step.
What’s the difference between them? Wouldn’t that be part of it as well?
A lot of people rank higher than they fit in the market because they have better marketing or better SEO, but that doesn’t necessarily mean that they’re number 1, 2, 5, or whatever that happens to be. The first step is to understand where you fit. The next thing is to try to grasp some clarity and say, “What do these people offer that I do or do not offer? Why are they where they are?” The biggest mistake about it is that we live in a time in which everybody wants to be number one. I want to be number one. Mitch, you want to be number one. Everybody wants to be number one. That isn’t how positioning works. Positioning is all about a biased map that we have in our heads. If you have a biased map in your head, you have a predetermined order of how things are in place. When you’re selling to a marketplace, what is that predetermined order? That doesn’t mean that everybody reacts the same way. I’ll give everybody a question. However you answer it, you’re going to pass. Name a Japanese car company.
Nissan.
Nissan is number three. The interesting part about it is that number one is Toyota. Toyota is the number one car maker and always the top quality and all that. We have Toyota, Honda, Nissan, and we drop off from there. It’s interesting that you picked that. That doesn’t make you right or wrong but if I’m going to sell to you, then that tells me a lot about who you are. When we’re out there and we’re building our own positioning questioning, we have to say, “What are we going to ask these prospects?” Oftentimes, we ask lots of leading questions that don’t get us the information we want.
I was in a room full of people and I asked people to name a Japanese car company. This woman blurted out Mitsubishi. She’s an outlier. Mitsubishi doesn’t even sell cars in the US anymore. They sell SUVs, but they’re not a car company in the US anymore. It was interesting because that was her frame of reference. We start off by figuring out where we fit in the market because wherever we fit in the market, we have to deal with that first and not where we aspirationally want to be because this isn’t about having a motivational poster. This is about where the market thinks you are at, not where you think you’re at.
Spend more time thinking about what we can do instead of envying what others may have or not have. Click To TweetYou have to understand where you fit in the competitive stack and certainly what differentiates you. You said there were five and you just named three. What are the other two?
The five disqualifiers are money, big benefit, urgency, decision-maker, and big plan where it fits in the big scheme of things. It’s having a bigger view of it. No one is in the cola business. What they are is they are in liquid beverages. Most people get stuck because they think whatever that narrow market they’re in, that’s the only market that exists but your competitors are beyond those borders. You have to understand that. That doesn’t mean that you can ignore your own niche, but you have to know where they all fit.
You also have to know what you’re selling. A lot of people don’t truly understand what it is that they’re trying to sell. To say, “I sell cola,” would be inaccurate in many ways and would lump you in with the bargain basement and store brand colas that are labeled cola. What you might say is you sell a guilty pleasure, a syrupy, sweet but fuzzy drink that makes you feel good the minute you drink it. That in some way is a better way of telling me what you do and who you serve than, “I sell cola.”
It’s interesting how many big companies, some are smart and some are dumb. Take the guys at Coca-Cola. They struggle every day to beat Pepsi and Pepsi struggles every day to beat Coke. However, if you go especially here in Southern California and you go down the aisle, not necessarily in the soda aisle but over in the international foods and Hispanic foods, there will be glass bottles of Coca-Cola with pure cane sugar like they used to make it. Those sell at a significant premium to the stuff that’s on the soda aisle.
That is Coca-Cola attacking themselves and tearing out a piece of that market and saying, “This is our differentiator right there. We’re going to sell you the pure stuff. Not the stuff that is mass-marketed, and we’re going to sell it at a premium.” We see this over and over again. It is not just in consumers. We’ve spent some time with other consumers. Anytime you’re selling business to business, you have to get your head wrapped around who you’re selling to and what they’re buying. Most of the time, people get fixated on the fact that they’re trying to do broad-brush and they can’t afford to do those broad-brush things.
Let’s go deeper. We talked a little bit about how someone would approach the material in the book that asked themselves the five qualifiers. What is the next step in the process, particularly for people who are in a service-based company?
What you have to do is understand what you’re going to do that’s unique, that your competitors are either doing it but you can describe it differently and you’re going to do it differently. You have to figure out how to become a unique place in the market. What is it that you offer that other people either don’t offer or they don’t offer the same way? This is where we end up where people have a middling message. You can’t have a middling message. You have to be sharp in what you’re saying you’re going to do and how you’re going to do it.
An example is if you go into Walmart, they have jeans for $9.99 and they’ve got a lot of different sizes. When I go to San Diego to my timeshare, I always go to the Lucky Brand jeans store. You’ve got to be careful how much you hang out in the store. I watch women walk in and buy jeans that are up to $340 a pair for jeans and they’re all ripped up. Can you imagine torn-up jeans being sold at Walmart? People would say, “There’s something defective,” but yet it’s a fashion statement and they’re $340. Lucky people understand where they live and Walmart people understand where they live. My question for all of you is, where do I live? Where do I fit in and what is it that I offer that then states, “This is where I fit. This is where I live?”
Let’s say I get that, I do that, and I know my differentiator. I live in where I theoretically would like to meet my ideal client. The real problem comes down for most of us is selling and the idea is attracting the right people to click that button, pick up that phone, or to send that email and say, “I read about you. I read your blog post. I saw your preview in a summit. I heard your podcast. I’d like to chat with you about my company.” How does that get engineered into the process? Does the book address that as well?
We talk about it to a certain extent. I’m going to go beyond that. The little small engine that could and we have this in the book. I carry this 3×5 card with me, which is, “Think Van Gogh.” I know that that can have some sparking for people. You have to think about the fact that you don’t have the resources that all the big people have. You don’t have those things. How do you make do with what you have and how do you use that to your advantage? How can you be faster? How can you be more agile? How can you be more capable? How can you deliver what you need to deliver?
That means that when you think Van Gogh, what I want you to do is write out your offer. What is your offer? That’s what you want to put in front of them. What are you offering to them? What does that offer look like and what does it say about you? That’s the culmination of all this effort. “This is the offer. This is what we have. This is what we’re doing.” If you have any questions about what to put down, hang out at a Starbucks and watch when they reopen, record the menu, look and say, “Why do they put the menu the way they do?” Because they understand that the offer is the end result. All the rest of it is to get people in the door, but the offer has to sell what people are going to buy.
The issue is making sure that the offer matches the need and the expression that I like to use is entering the conversation already going on inside the buyer’s mind. In my case, if someone says to me, “What do you do?” If I’m in a pithy mood, I might say, “I compress time. I could turn a year of your life into six weeks by working directly with me because we’re going to advance your business exactly a year from now in productivity, revenue, and marketing simply with six weeks of our time together.” What would you say about that? Is that positioning or is that marketing? Is that dealing with the issue on the table or am I just making up something to be clever?
The challenge of that is that those are claims and now we have to look at how you back those claims up, how you substantiate them, and make sure that those claims match up to what they’re looking for. I always ask myself which end of the business I’m in because you said, “We want to match a need that may already exist.” In lots of cases, that’s fine if that’s where you live in the food chain. The real question is, are you a need, want or desire? To me, needs are the lowest level and that’s fine. We can make some money doing that, but the real money is made in the desire to be beyond this next level.
When I work with business owners, I’m trying to find people who say, “I desire to get this business to $10 million so I can get a better valuation.” If that is the goal and that’s where we want to get to, then what I say is, “What are we willing to give up to get to that goal?” Not only what are we willing to do but first, what do we want to give up? We have to focus on that being our goal and where we want to get to. I see that people make the mistake of saying, “I want it all,” and they get none of it. Back to your statement, “This is my positioning. This is where I feel I fit.” How do we back that up? How do we nail that down?
If you’re going to do an offer in those six weeks, what are we going to do during those six weeks? How often are we going to meet? What has to take place? What is that nitty-gritty of what that looks like? To me, the offer becomes all-important. The challenge that happens in the internet space is that the offer is catastrophically high. It sets expectations that can’t be done, and then the actual other side of it is that it doesn’t take place. That collapse and that difference become problematic. Eventually, what happens is that you’re not viewed as having credibly delivered that. Maybe you can deliver that which means that you should charge a lot for doing that.
In my case, I have the testimonials to prove it and I have pages of them so it’s not a problem. When I work with clients and I’m dealing with the issues that you’re talking about, which is positioning how to discover what their client’s true needs are, what I always find is that people are simply not clear on how they’re going to accomplish what their client truly wants. I love the way you put that. What is the main desire? That’s the question that you asked. That’s the part that I’m always looking for any conversation with a potential client. Once you find that, the goal would be to remind them of it throughout the conversation, to help them remember that that is truly what they want and that you are offering a way to get what they truly desire.
What you’re trying to do is find out what is motivating them to take action. You need to know what’s motivating them to do it. That’s what I learned from my Vegas days, that is motivation is critical. When you say to somebody, “I can help you make more money,” that sounds good and copywriters love saying that but that doesn’t get us where we need to go. I’ve done this with plumbers and heating and air conditioning contractors. If I say to you, “I can show you how to double your ticket in 90 days. If your ticket is $100, I’ll show you how to get to a $300 average ticket in 90 days.” Now that’s a little clear and a little better.
When they say, “That means whatever my ticket is you can double it.” No. Let me give you the lesson. The first thing we do is an analysis and that analysis tells us what our average ticket is. What you find out is that many of them are doing low-end things and they have no upsells. They have no way of taking care of customers and they’ll accept any deal possible. I’m always trying to find their motivation. If I say everybody is desirous to make money, sometimes they’re not. Whatever that motivation is, I want to find out what that is. I agree with you. You have to tie it back to the offer because the offer has to embody that we’re going to get to that destination.
All too often it is like a Christmas tree, we hang ornaments and we hang things. “I’m going to show you how to save time and make more money. I’m going to show you how to have a fresher breath.” Let’s talk about their motivation. Let’s talk about what it is and let’s not just hang these on there. A perfect example is I was working with a software company. They had a disaster and their disaster was an $8 million company that I turned into a $15 million company. What they were doing is they were essentially giving away the software and letting people use it because they had a belief in the sampling concept. I told them the sampling concept was a bad idea because people would download the free software and then they would call up the customer service line and say, “It isn’t working and this isn’t doing this.”
What we did is we flipped it on its head. We would say to people, “You can get the free versions of software out on the web or you can buy this from us with the high-priced spread. It’s $8,000 but we’ll give you $10,000 worth of free consulting to do it.” The interesting thing about it is that if you are selling to a mom and pop, that would have been a bad sales pitch. If you’re selling to somebody who is selling to the US government and they need this, the last thing they want to do is to have that software project not be successful.
The pitch was, “We’re the highest priced spread, but we stand behind it, and this is what we’re going to do.” It took them from $8 million to $15 million and spun off. The $5 million of business is doing one thing and $10 million is doing another. We sold the $5 million piece for more money than they thought they could get for the entire business two years before and now they could focus on that. What they did was they grew a consulting business, which would then dwarf whatever they were doing before. The point of it is that we found what the motivation was.
Here’s the motivation. The motivation is that every single person in the business to business and anybody out there who’s trying to sell real business to business, on their business card no matter what their title says, this is their title, “Keep my job. Cover my ass.” Once you understand that, you’ll sell differently. We turned over almost the entire sales force and we recast them in essentially my image. My image was that we walked in and said, “We’re the high-priced spread and you’re going to be able to sleep at night and you’re going to keep your job.” You may say that sounds like a negative sale, but their motivation was, “I don’t want to lose my job. I want to make sure the project works.”
John Paul’s stuff is incredible. You definitely need to get his book. John, we’re at the point in the show where we get to know a little bit more about you. The way we do that is with a couple of questions that we ask all of our guests. Here’s the first one. Who in all of space and time would you like to have one hour to enjoy a walk in the park, a quick lunch or an intense conversation with?
I wish I could have that with Peter Drucker.
I don’t think anyone has yet to say Peter Drucker. Tell me why.
He’s a guy who was just a few years before gambling, smuggling and doing all kinds of sundry things, and now working for a high-tech company. I had read Drucker’s books and I had an opportunity to see Peter Drucker live. In that one day, I learned some things that gave me some insights that blew my mind. The next year, I was able to see him again, then I had an opportunity to go to a five-part series seminar and get to see Drucker. I got to meet Drucker seven times in my life. I would love to spend an hour with him.
For me, it was Tom Peters. I don’t know if you remember Tom. Tom was one of those people who would speak all over the country stage to stage. I was touched by his message and found it to be powerful and meaningful in my life at the time. I followed him from venue to venue and I just sat there in the audience as he would conduct another blistering rant that turned out to be powerful and important for me. I understand that and that’s a great choice.
Instead of going to lunch with him, what I want to do is be on that airplane flight from LA to Japan and sit there as Peter Drucker and Edwards Deming are sitting there next to each other talking about going to Japan to help them learn how to build products successfully. I would love to be in that conversation. It would be insanely interesting because both of them were extremely opinionated and both brilliant men.
That’s a conversation that I’m not going to be able to help you with. I’m sorry, but it’s a great one if you can barge in and listen to that one. Here’s that grand finale question I was telling you about. It’s the change-the-world question. What is it that you are doing or would like to do that truly has the potential to change the world?
I’m a libertarian at heart and I believe that the free minds and free markets go well together. What I’d like to do is see us spend more time thinking about what we can do instead of envying what others may have or not have. Focusing on that and becoming the best that they can become and not looking at tearing things down. I find the environment rather caustic to that, but I’d like to see if I can help promulgate that to the world.
I’ll definitely help as much as I can on your mission because the world we’re living in does not favor the libertarian, the free mind or free markets. Let’s attack that one together. I’m right there with you. You have something that you’d like to give our audience. Tell us what that is.
If you go to PositionToWinBook.com and you connect, you have to say, “Mitch sent me,” or something close to that, I will give them twelve-minutes to connect with me. You can ask me about anything you want as long as it’s not personal. I could get my schedule jam so I’ll limit how many I’ll do at a given point in time. It’s not going to be twelve minutes a pitch. It’s going to be, “This is what you’re doing. This is what you can do.” It’s going to be a little pitch. I’ll give you twelve minutes of my time.
That’s a generous offer. If you don’t take advantage of this, you are insane. You have no idea. Why don’t you look John Paul Mendocha up on the web before you buy that book or make that call? I have a feeling you’re not going to want to miss that special twelve-minute consult. John, thank you. Thank you for your time. This was a great discussion. I learned a lot from you and I’m sure our readers did too.
Thank you, Mitch. I was glad to be here.
Important Links
- Virtual Entrepreneurs Association
- VEABusiness.com/mitch
- Most Businesses Fail in the First 5 Minutes
- Beat the Dealer
- Positioning: The Battle for your Mind
- PositionToWinBook.com
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