141. The secret of algorithms (as old as the hills)

Dear Erik,

Algorithms are said to be the new Holy Grail. Google’s success comes from smart algorithms, as it does for Airbnb, Facebook, LinkedIn and many more mainly internet companies. If you want to make money you have to work with algorithms. But there is nothing new about algorithms and I am sure you apply dozens of them in your company. Every business process is in fact an algorithm. So what are algorithms and how can you benefit from them?Algorithm comes from the word ‘algawarizmiat’ after the name of the Persian mathematician Al-Chwarizmi and Wikipedia defines it as a fixed chain of instructions starting with a specific state leading to a specific desired result.

An algorithm is similar to a recipe. If you follow the recipe exactly, you will get the same result every time. Without any doubt you have the following recipe at your company. If a prospect visits your office you welcome the person, you introduce him to some of your colleagues, you take the prospect to the meeting room with the best view, you do a presentation, you ask all the necessary questions, you remove any doubt and you come to an agreement.

The secret of the new algorithms is that they are precisely defined, so that every prospect becomes a client. The entire process from entering the office until leaving the office is described and known based on extremely precise analyses of previous visits of prospects. Thanks to these analyses, you know exactly which presentations work best for which prospects. And by whom. You know exactly which arguments will work and which will not.

The reason why algorithms get so much attention and are so important to success is that with on-line marketing the prospect clicks away the moment your actions and content do not meet the expectations of the prospect. You don’t get a second chance. You can’t fix a mistake, as you can during a personal meeting.

To understand what each prospect wants, you have to analyze in detail the entire sales and delivery process. You have to know who your clients are, what questions they have, which answers they want and why, what and when they want to buy from you. Are then, algorithms the Holy Grail?

No. The relentless all-encompassing analyses which are the foundation for algorithms are the Holy Grail. Because analyses have to give exact answers to the following questions. Without the proper answers, any algorithms will be useless as they will be the wrong ones.

1. Who exactly are my clients and where are they?
2. How do they act and why do they buy my product or service?
3. What are their purchase motives and doubts?
4. Which actions/arguments will remove their doubt?
5. How do they prefer to buy and at what price?
6. How long does the entire decision and sales process take?
7. What are the costs of the complete cycle?
8. What is the turnover, gross margin, net profit?

The new way of sales is fed by analyses, executed by algorithms and adjusted by analyses. It is about knowing every detail about a client, your product, the sales and delivery process and improving it constantly by relentless analyses.

Groet,

Gerard