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We have made the same stake two quarters in a row and it's cost us roughly $10 million in revenue.

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Welcome to the game where we talk about how to get more customers, how to make more

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customer and how to keep them longer and the many failures and lessons we have learned

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along the way. I hope you enjoy and subscribe.

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In one of my companies we have made the same stake two quarters in a row and it's cost us

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roughly $10 million in revenue and I want to explain how we figured out what the problem was

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and it was so eye-opening and obvious, I guess, that I wanted to tell the story because I want you

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to not have to do it that. So my name's Alex Ramuzzi, owned acquisition.com, about $85 million

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a year and this is a Rona episode. So I'm a little under the weather, I'm doing it,

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to hopefully it'll still make sense. Anyways, so we just finished our quarterly meet-up

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for one of my companies and two quarters in a row we had set the same goal which was that we needed

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to add another six outbound reps. So those are cold colors to reach out. Every outbound rep

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brings in about 50 deals a year for me. Each deal is worth about $40,000 so each rep is worth

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about $2 million in production. So if I was going to bring in six more reps it would be about $12

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million more so I'm just estimating 10. And so two quarters in a row we had set this goal and we

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came back to the next quarter and nothing had happened and I was like okay and so we set the goal

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again, we came back again and nothing had happened. And so we're now in the third quarter of this

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happening and they set the goal during the meeting that they were going to hire six more outbound

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reps. And we were about to close the book on the day because you know we clarified the goals

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everyone knew what they were supposed to do and I and I something just wasn't sitting right with me

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I was like we've had this goal before like why why is this not happening? And so I was like wait okay

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manager of this outbound cell team what like why is this not happening like why have you not been

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hiring them? It's like well I mean I'm I'm taking whatever you know people HR are sending me and

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if they're qualified I'll hire them. And I was like wait a second HR how many people are you sending

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them per week? And they're like well probably about one and I was like one a week and I was like

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we're not going to hire six and a quarter for sending one prospect a week we might not even take

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them. It's like well yeah well it takes me about five interviews to get one of these guys over

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and I was like wait so you're interviewing only five interviews five people per week for this

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position when we need to get six done by the end of the quarter. And here's one of the interesting

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things depending on how your business is structured right there are going to be some roles they're

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going to have higher turn roles. So for example customer service and a lot of companies it's

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sometimes a higher higher turn position. Tax support is a higher turn position. Front line

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sales can be a high turn position. So these are positions that you'll move like people will come

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in and out a little bit more frequently right. And so just like you have churn in a recurring

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revenue business your employees in a way have churn within your company right. And so just like

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you build an acquisition system to get new clients as you grow and scale your business you will

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need to build an acquisition system to get new talent right. And so if you know let's say we

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have a team of 10 I'm just using simple math here and let's say that we churn out 10% a quarter

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okay that would mean that we're going to lose one out of the 10 per quarter which means if we just

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hire one new you know BDR for the quarter we're actually a break even right. And some of these

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positions are higher than that some of them are 20% or 25% um churn right. And so let's just use 20%

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all right. So you have 20% churn per quarter means you lose two out of 10 reps in a quarter

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to other jobs or whatever right. And so in this particular case as I was diving in after two

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quarters of failing this goal I realized and we realized collectively that the problem was not

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on the sales manager it was on the process that the HR director was following.

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Hey guys real quick for those you guys who are 100 million dollar offers fans I love you

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I added in a lost chapter that has never been released I'm releasing it now transparently I'm

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doing that to build hype for a hundred million dollar leads but you will have the unreleased

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chapter it talks about your first avatar and how to segment customers to make more money

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you can get it by going to acquisition.com forward slash leads it's O3 in exchange for your

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email so that I can email you when we launch 100 million dollar leads and so that you cannot

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miss out on it because last time I sold out for like eight straight weeks really fast so that is

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my way of making sure that y'all get first dips. And so I said okay are you doing one-on-one

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interviews with all of these people and she said yes and I was like well then that's the problem

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there's no way that you're going to be able to interview with that ratio and I was like okay so

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how many phone calls does it take you to get to interviews she was like it takes five

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four phone calls to get one interview and I said of the interviews and now I asked the sales

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major how many of these people that she passes to you does it takes you free to hire and she was

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like it takes me four to five now it's like so it takes us about 20 efforts you know 20 attempts

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to get one higher and these are all one-off one-on-one communications she was like yeah

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now it's like this is the issue so we need to be holding group interviews for 10 and you need to

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just send them all straight to the manager let him interview the first 10 people and just jump

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right over you you just run the ad and push them and get them scheduled to his calendar so that

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you're no longer the constraint and just like that we figured out what the constraint in the system

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was the reason that I think this story is is telling is because many of us as entrepreneurs are

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trying to grow our businesses and many times we're solving problems that are not actually there

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we're not solving the right problem we're solving what we perceive to be the problem which is just

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a symptom of the deeper cause the cause in this instance was that we did not actually have the

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right acquisition system for talent in terms of the process of how we're onboarding a lower level

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frontline position nothing wrong with it but just in terms of like there's it's a more volume

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position we need to hire more people and we need to have a way of attracting more talent and higher

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numbers and have a faster hiring process for that role because the onboarding that role is also

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much shorter and the cost of losing someone is also less than it is on let's say a management

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or leadership position takes longer to onboard them longer to vet them etc all right and so making

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sure that the process matches the position is important but the deeper lesson or at least for

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me that I'm taking from this is that when we're looking at the constraints within the business

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most times what we are doing is we are adding potential to our business when we're adding the things

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that we think we are solving when in reality we will always grow up to our constraints not to our

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potential the potential is always far greater than the than the constraint and what happens is

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most people just continue to increase their potential but the constraint remains the same

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which is why in the outbound team that we had that team has done the same production for two

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straight quarters and the goal has been to grow and they have not done so because the amount of

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new hires mashed the churn and so if we continue to pool on the system when you have an objective

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that's not being reached sometimes you might have to go one step or two steps deeper in the process

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to find where the constraint actually lives and it might not be the thing that you originally

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thought and so I share this story because maybe somebody some entrepreneur is struggling with

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trying to scale their company there's trying to scale their reach out they're trying to scale

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their paid ads or whatever it may be maybe you need to generate more advertisements and you think

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you're hey guys we need to double our creative but but for some reason it's not doubling if it's

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not happening then that means another constraint is there that is not seen and more questions need

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to be added and I asked and I think that that is one of the skills that a CEO and entrepreneur have

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to have so that we can ask the hard questions that move the bottle forward move the needle and move

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the ball forward so hopefully it made this nice and short and tight for you guys Rona sponsored

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episode keeping awesome if you enjoyed this hit the subscribe if you didn't love you either way

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keeping awesome motivation I'll catch you guys in the next video bye