EP105: Define & Target Your High-Value Customer—with Charles Fred
To grow a small business, you need more customers. But did you know that too many of the wrong customers is what keeps a lot of companies stuck?
According to Charles Fred, low-value clients are high maintenance, hard on your people, and they take up 75% of your time. That’s why it’s so important to define your high-value customers and bid only on the RFPs that fit those criteria.
Charles is the Cofounder and CEO of TrueSpace, a research firm founded to support small businesses and help them grow. In his 40-year career as an entrepreneur, Charles has led three companies from the startup phase to the middle market, generating $220M in enterprise value.
On this episode of The RFP Success Show, Charles joins me to explain why it’s crucial for small businesses to define and target our high-value customer, describing how low-value customers are a drain on our time, talent and resources.
Charles challenges small business to focus and ‘get boring fast,’ finding a place in the market where you stand out and bidding only on business that aligns with your unique value proposition.
Listen in for Charles’ insight on planning for turnover in your customer base and learn how to define and target the high-value clients who will help your business grow.
Key Takeaways
TrueSpace’s mission to help small companies grow and create new jobs
Why it’s crucial for a business to FOCUS to conserve its time, talent and resources
How to find a place in the market where your company stands out
What differentiates a high-value customer from one that ties you down
Why getting rid of low-value customers is a prerequisite for growth
How most sales team incentive systems drive the acquisition of low-value customers
How the narrative around rapid growth is a roadblock to identifying high-value customers
Why high-value targets change over time and how to plan for turnover in high-value relationships
Charles’ first steps to identifying your high-value customers
The red flags that a company has not identified its high-value targets appropriately
What Charles learned about identifying talent from The Art of Possibility
RFP Success Show EP105 Transcription
Speaker 1 (00:00):
You're listening to the RFP Success Show with eight time author, speaker, and CEO of the RFP Success Company, Lisa Rehurek. Tune in each episode to learn what today's Capture and RFP teams are doing to increase their win percentages by up to 20, 30 and even 50% and meet the industry trail blazers that are getting it right. Let's get started.
Lisa Rehurek (00:24):
Hello everybody, and welcome to the RFP Success Show. I am your host, Lisa Rehurek, founder, and CEO of the RFP Success Company. So I'd like to introduce you to our guest for today's episode. His name is Charles Fred, and we're going to be talking all about defining and targeting your high value customer. So Charles, welcome to the call.
Charles Fred (00:43):
Lisa, thanks for having me. One of my favorite topics and with one of my favorite people. So-
Lisa Rehurek (00:47):
Ooh, how fun is that?
Charles Fred (00:49):
I'm excited to do this with you today.
Lisa Rehurek (00:51):
Yeah, this is going to be a really great conversation. So let me tell you all a little bit about Charles. I'm going to give you the formal stuff and then a little more informal stuff. But Charles Fred is an entrepreneur, well, first of all, he's CEO of a company called TrueSpace. So he's an entrepreneur and researcher best known for a body of work that positively influences the success of small businesses. He has inspired a movement to help entrepreneurs create conditions for sustainable growth and through this effort to stimulate thousands of new jobs. Over his nearly 40 year career, Charles has founded and led three companies into the middle market generating over 220 million in enterprise value. So it's super impressive, everything that he's done, but the reason that I wanted to have Charles on is I know Charles really well, my company is actually part of TrueSpace and Charles personally mentors me.
Lisa Rehurek (01:44):
And he's just brilliant and everything that we do in our businesses and certainly around proposals, I don't care if you are a small business, a medium business, a large corporation, it really stems from knowing who we are and who our client is, who our high value client is. So I thought this was a really timely and great conversation for us to have. So again, Charles, welcome. And I'm going to jump right in to the first question, which is really your company, TrueSpace, is a coaching company and it's unlike anything that's come before it, unlike anything that I've ever seen. So tell us a little bit about what makes it unique and talk a little bit more about this high value clients.
Charles Fred (02:26):
Sure. Yeah, I'm still trying to get over the 40 year thing in my introduction. Well, thank you for that. If anybody wants to do the quick math, the late '50s, early '60s are the beginning of my life and this earth. Thanks again for having me, first of all. I think the people listening to us today, there are some nuggets that we can share mostly from depth of research. So I'm not coming to you or your audience today with a bunch of opinions, I'm much more of a journalist and researcher. And I have a body of work that I think is interesting. TrueSpace, the firm that you talked about is the space between businesses in the United States that have between one million and 10 million in revenues.
Charles Fred (03:06):
We call it TrueSpace because in that zone, there's 2.1 million businesses that operate there. And if those businesses were able to reach the middle markets, the middle markets start at 10 million, if just 10% of them would reach that there's 17 million net new jobs there. My mission on life is to help people like you grow and create more jobs. I believe deeply, Lisa, that the thing that we do as entrepreneurs is create the conditions for people to develop their lives and their careers by offering them work. And there's no better place to work in the world than in a business the size of yours today, in my opinion. So-
Lisa Rehurek (03:41):
Can I just interject there real quick because it's important to know. I started working with Charles probably about two years ago now and we were at two and a half employees that included me, we are now at nine employees. So proof already that what he speaks of I'm proof of that, helping grow. So it's an important conversation.
Charles Fred (04:04):
Yeah. And the key for a business like yours too, Lisa, is you might employ directly nine employees, but the number of suppliers and support systems that you have that you support are probably 30 to 50 people today across the country. So there is an ecosystem that's created by the wake effect of businesses like yours that are expanding and growing. So I guess what makes us maybe unique as a firm is that we teamed up with the Gallup organization, the preeminent research firm worldwide, that looks at the workplace. And we tried to find out why more firms weren't going from a million to two million to 10 million. Why are so many somewhat stuck or at least fixed in a position below the middle markets. And the research that we have now is in its 10th year, we spent almost 15 million to look at really the data behind that.
Charles Fred (04:55):
And in our discussion today, that's what I really want to try to share some of those nuggets that we drove out of there. So not the least of which Lisa is I got to diagnose your business with a tool that's a psychometric tool that predicts performance, it's a predictive tool of which you are now. With our last assessment of that, you've placed your business in a position to be in the top 3% of companies nationally for continuous growth and that's what we can measure. And you've pulled that from, you were basically in the top 60% and you've pulled it that far in the last couple years. So I'm really proud of you for doing that.
Lisa Rehurek (05:31):
Thank you. Obviously wouldn't have been able to do it without you, but-
Charles Fred (05:34):
Well, I don't know, I wouldn't take the credit for that because I think you've had to make all the hard decisions to get there, but by moving there, what it means is that you have a much higher chance a 97% chance of continuous growth next year. That's where our model can predict. So you still got to do the hard work, you still got to make the tough decisions, you still got to do all those crazy things that we as entrepreneurs do. But anyway, that's a little bit of what we do. Lastly, is that we can see 12 systems in your business with data and you know that. There's 11 systems in the human body, your nervous system, your endocrine system, your digestive system, and there's 12 systems in a business. And one of which we're going to talk about today, is the alignment condition by the system of focus, which includes the high value customer. And we're going to talk a little bit more about that today I think.
Lisa Rehurek (06:24):
Yeah. It's a really exciting conversation that I want to have because we continue to have that conversation, you and I, about my business and really honing in on that high value customer and intellectually I know the importance of it. We preach it to our clients all the time, but it's a hard thing as a business owner to do. It's a hard to figure out and why I thought it was such an important conversation is because as we look at, there's people listening to this podcast that are saying, "Hey, we want to break into state government. We are thinking about this, it's not been an area that we've jumped into yet. How do we even get into it?"
Lisa Rehurek (07:03):
And it isn't by just bidding on anything that you can do. And for those of you that have been in the state government space already, I would guess that a good percentage of you out there are bidding on more than you should be bidding on. And it really does all start with understanding who your high value client is. And so I want to talk a little bit more about that. What is specifically... We can all make an intelligent guess on what this means, but talk to us a little bit deeper about what is a high value customer, a high value target.
Charles Fred (07:37):
Yeah. So the system we would diagnose that has the high value customer, high value target in it, the system is called Focus. We have a noun for every one of the systems that's in your company today. There are four elements in the Focus system. I want you to think about why do we need to focus? Let's put that context out there first. We have to focus because we have a shortage of these three resources, time, talent, and capital. Every company in the world suffers from a shortage of those three resources. And if they're unfocused, especially in a business that's smaller, mid-size businesses, you will dilute those three resources if you're shooting at everything that comes by, if you don't focus those three resources. But focus to be able to do that, you have to take basically four elements in your business and really take a hard look at them.
Charles Fred (08:28):
The first is market and this isn't the Silicon Valley nomenclature of product market fit. That just sounds so pretentious to begin with. It's actually finding a place where you can stand out and paradoxically focus in a market. The more you focus, the more you'll grow, especially for a business that's less than 100 million or 10,000 employees. The more you'll focus that business, the more you actually grow, the more you stand out. For example, Lisa, you recall this, but our data states that businesses that are growing consistently are winning 65 or greater percentage of their proposals. The ones that are stuck are winning 15% or less. And the mid range between those is dramatic as well, but we want to get to a place where we stand out and can win. And this is so perfect for your business and what you're trying to do to help your customers, because ultimately you're trying to help me win.
Charles Fred (09:22):
That is the reason you exist is to make my win rate change. So market's number one, we got to choose the place. So if it's state, where in the state? Where are we going? What are we targeting? And where can we actually be much different or stand out compared to everybody else? That's number one, that's the first part of Focus. But the second, once you do that is you must pick a customer that helps you build your business. So let me describe that and let's have a little dialogue about it today, because it is a bit of a controversy. I believe from the data that we have, that there's only two types of customers in a service business. There's one that helps you build your business and there's one that ties you down.
Charles Fred (10:02):
The one that helps you build your business, actually sees the value, they see that you stand out, they love the people that you have in your organization. They want to be part of your vision and your mission and all those things. And they will not only pay your price because they see the value of your business, but they lodge your business and they give you references, referrals and so forth. They're there and we can choose them and they'll help you build your business. But the contrast of that is that other type of customer, the binary's form of this is somebody who's always looking for a discount. They don't trust you, so they want to call every reference you have. They want you to do things that you normally don't do, they want it their way. They want a special way. These are the customers from our data, for every email that you receive from a high value customer, you get four emails from a low value customer.
Charles Fred (10:48):
They're high maintenance, they take a lot of work, they're hard on your people. And after you've done all those special things for them, Lisa, they leave you. That's the kind of customer that we call [inaudible 00:10:57]. They take our time, we take them because we need revenue, but they don't help us grow their business. So high value customer is number two. Three is point of view, which is a strong point of view. Yours happens to be that you're going to put all your resources to help me have a better win rate, but then you have to have the talent that the high value customer lauds and enjoys. So that's the four parts of Focus, but the most important part once you chose a market is picking the customer, the target market, excuse me, the target customer. That's the most important step that you take. And by the way, it's the heart.
Lisa Rehurek (11:30):
It is. Yeah. So there's so much to unpack in this. I want to first go back to one of the first things you said under number one is your market. It isn't just saying, well, we can work in the state of Arizona and do X, Y, and Z yet a very specific piece of gold nugget in there, which is where you can stand out, finding your market where you can stand out. And I'll tell you every time we respond to an RFP, everybody listening to this, we're trying to find a way to differentiate ourselves. And if you do that piece of it, just number one of what you've talked about, you're already getting to a point of differentiation, and how beautiful is that? I love that point. And then, oh, when you were talking about then figuring out who the person is or the company, the actual target-
Charles Fred (12:20):
Oh, it's both. Yes.
Lisa Rehurek (12:21):
It is amazing how many times we put up with those clients that really don't serve us and we think that we have to, for whatever reason. And it is hard as a business owner to turn people away. But how magical to say, and actually we are in discussion about this right now because I only want clients that are going to make my team happy. That my team is going to get excited to work on and they should only want to work with a team that is excited to work with them instead of those depleting clients.
Charles Fred (12:55):
Yeah. It's fascinating, we don't know that they're a low value customer until we get into the mix. Timing's everything when we put this together. But imagine, remember what I talked about on focus is that you have to focus so you don't dilute where you're spending your time, your capital and your talent. Well, what our research will tell us since I'm a reporter researcher here on this call today, is that you're going to spend anywhere from 75 or greater percent of your time on low value customers because they will demand it. They're going to complain, they're going to want things done their way. They're just constantly taking time in addition to all the other things, if you're a service business. Oddly enough, for our research, the high value customer blends in with your firm, they get to know, you get to complete each other's sentences.
Charles Fred (13:42):
They want to be part of the delivery because they see you as part of their value of the way they're putting their process into the marketplace. So that's the difference. Now over time, what it takes us, Lisa, is we have to start getting rid of the low value customer to grow. I know that sounds really strange and it's very controversial. As you know that a lot of our information is somewhat controversial, this is one of them that you can only grow your business with those that want to help you grow. The other ones are just going to tie your business down, they take all your resources. So one of the ways to get there is you've got to start depleting the companies that are not going to help you that are low margin, tough on your people.
Charles Fred (14:24):
We looked at turnover, we worked with Gallup on turnover. Very interesting nugget here. But people leave organizations like yours, not because of the traditional reasons, they leave because they're wildly stressed out. If you look at my book, The 24-Hour Rule, that research that's in there, that's the key reason people are leaving the business. Well, where do they get the stress? Probably from a low value customer that was just banging their head against the wall every single day, asking for things that we don't do normally, putting sleepless nights into us. You can't build your business that way. So the alternative is make the hard decision, move to a higher value customer, find more high value customers and your business starts to flourish.
Lisa Rehurek (15:03):
Well, it sounds easy in theory, but what do you say to the leader or the business owner that's saying, but I'm going to leave money on the table. And how do they shift that mindset to go from you're going to eventually get more money, but it might be a little clunky along the way?
Charles Fred (15:21):
Yeah. It's a balance. When you're building a business like yours in particular, sometimes you got to grin and bear it. We need revenues, we need to pay our bills and our people. All I'm saying is that you have to intentionally start moving toward a higher density of high value customers if you're going to get bigger. At the same time, the only way to grow any business, and when we're talking to your customers in particular, they got to where they are frankly, with some courage. And courage to make these hard decisions, you'll see the benefit of it very quickly. And the other thing you've got to do, so let's go all the way back to how did we get in this situation in the first place?
Charles Fred (15:57):
I think our incentive systems at the sales side drive low value customers. Another controversial part of this is that commission sales people with no boundaries will bring anything in the door because they're paid by the people coming through door. They're not paid by the type of customer it is. So you've got to change or look hard at that when you're building your business because our reward systems develop the things that we have, our businesses are perfectly designed to produce the results that we see. So if you're getting a high number of low value customers in the door, go back and look at the very essence of the way in which you're compensating the people bringing them to the table.
Lisa Rehurek (16:37):
That's a great point. I love that point. And what's interesting too something else that you said, it isn't just about, I think when we look at business school 101 or whatever we generally see when we're looking at target market and who our ideal client is it's very demographic heavy. What industry are they in? What location are they in? But you talked about things that were a little bit more psychographic, why do you think that that's so hard for companies? Do you think that they just don't know that they need to be doing that? But why do you think it's so hard for them to be focusing on those kinds of things too, what's the roadblock there?
Charles Fred (17:14):
One of the roadblocks is the narrative across the country is rapid fast growth. I think it's a concept and a theme that our research completely demystifies that the faster you attempt to grow, the less you learn. So we know that speed or hustle or whatever you want to call it is the enemy of predictability. And yet predictability is the only way to create a great business and build value. So what we get ourselves into, Lisa, is a hurry fast, quick, more. Just think about a lot of businesses that you and I work with, we make these mistakes ourself, I've made them a thousand times. But we reward things that are episodic, we reward things that landed on our lap by chance. And when you do that, you end up building more and more low value customers because by their very nature, they're dropping into your business taking what they can because you set that in motion to go fast and fast is measured by revenues.
Charles Fred (18:11):
So the thing that you know from working at TrueSpace is that the CEO's job is to create the capability to become predictable. And I know that sounds boring, but boring businesses are the best businesses out there. They're good places to work, they're highly valuable. You pay your bills well and you create wealth, that's the concept. I think it's speed that actually gets us in trouble. You think about good old Ben Franklin who wrote us Poor Richard's Almanack as a pseudonym, he was the original tweeter. So the Almanack was delivered to 10,000 people in the 13 colonies, to all 10,000 people that could read 100% distribution. But all his little sayings in there and haste makes waste is one of his most famous tweets per se, from the it was 18th century. Anyway, fascinating stuff, right?
Lisa Rehurek (19:01):
Yeah. And it really is because again, if we go back to something that we preach all the time in our company to our clients is that stop bidding on everything. Just because you can do it doesn't mean you should do it and it's not about quantity. People will say, well, we want to increase the quantity of the RFPs that we respond to. And it's like it's not about quantity, it's about quantity of winning. And in order to win, you can bid on 50 RFPs in a year and win 5% of them and kill your staff and burn everybody out, or you can be a lot more methodical and thoughtful about it. And I know you said that predictability seems boring, but really at the end of the day, it's not because it becomes this scalable business that you can see grow and you can see that you're hiring more employees and then there's more innovation that can come into play. I would bet that a company like Apple, which doesn't seem boring at all is probably boring if you look at it from that perspective, right?
Charles Fred (20:03):
Yeah. Especially if you took Apple and you distilled it down to its component parts, it's definitely a predictable business. The way in which they launch a product, by the way, is scientific. And so our businesses of course are not that big, we're a microcosm of those things. But on the topic of this whole thing around finding the right customers, let's go back to what you just said about flooding the place with RFPs and hoping that one hits. Imagine running a manufacturing process where you had 95% waste by the time you got a final product out, that's what that means.
Charles Fred (20:38):
So with that much waste in a proposal process, I can guarantee you that you're not very sustainable as a business. So we have to be as much more accurate with where we're going to win, where we can stand out, the type of company we actually want to work with. And I know that you espouse this with your work with your customers because increasing the win rate is ultimately the reason you exist on the earth. So the more focused we can get, the more targeted we can get before we spend time, talent and resources and capital on this, the better the business is going to be. And by the way, no matter what size you are.
Charles Fred (21:13):
I look at some larger businesses in the space that you're supporting today and they got there because they got boring fast. They didn't drive revenue quickly, they got boring quickly. They figured out where they're going to stand out and they did so. The ones that are in and out, you get to see these a lot that are flying in, throwing everything at the wall and saying, "Oh, that piece stuck over there. Let's go do more of that." They're not very sustainable because they don't know why it stuck. They threw it all there and they don't know why it stuck there, so they can't replicate it. And now they're back at the same thing, throw more stuff at the wall. So I think in essence, you're trying to help people with that.
Lisa Rehurek (21:47):
Yeah. And it's fascinating when you frame it the way you did that it's like 95% waste, that's gut wrenching if you think about it from that perspective. And many companies just think that that's okay because RFPs are a losing proposition. So many people have that mentality. So I love that you brought that into play there because that is a different frame of reference with it. And 95% waste, nobody should be accepting that in their organization. So we're going to take a quick commercial break. We're going to be back with Charles Fred in just a couple of minutes.
Speaker 1 (22:25):
Is your company looking to break into state government contracting but you don't know where to start, the RFP Success Company is here to help. From knowing who to target and where to find bids, to being prepared for that first bid that hits your desk, we're your go-to source. Learn more by scheduling a call with our experts at findrfpsuccess.com.
Lisa Rehurek (22:49):
All right everybody, welcome back. We are talking to Charles Fred about high value clients and getting all sorts of great, wonderful insight on how important it is and the importance of focus and predictability in your business. And of course, as a business owner, this is something that's very close to my heart. But for all of you listening out there, this comes into play with RFPs absolutely, because if you're bidding on anything that you can bid on, you're missing the point of focus and predictability. So we're having a really great conversation. So here's a question for you, Charles, is company's high value target set for life? Once you set it, that's it, or does it change over the course of the lifetime of a business?
Charles Fred (23:30):
I think it's constantly changing actually. In fact, the responsibility of high value is on our shoulders, not the customers. We have to constantly be innovating and creating a condition and a relationship that is of high value. Now the good news is if they were once there, they're often there, but things change. I'll give you an example of a number of your potential constituents that might be selling to school districts, statewide county districts, superintendents change I think every three years nationally across the country. So relationships at that level that change when you are contracting with a district or a school system, those are things that we have to get ready for as a business, because the dynamics of that is something that we need to go say, look, there was a high value relationship, high value customer that just walked out the door.
Charles Fred (24:19):
How do we replace that? How do we prepare for it? So what we espouse with the data sets that we have, and you know this Lisa from your business, but we have you planned for that. It's in a playbook that plans for some level of relationship turnover in these high value relationships, because I haven't seen very many RFP projects today that are two months in length. There's a few of them, but most of them are long term. If it's long term, you've got to manage the relationship well through that process, especially if what we really want is some follow on business, some follow on maintenance and support. So I don't think it's for life. In fact, I think a really poor operating assumption would be that everything's going to be fine forever. And you can apply this to everything, marriages and all kinds of stuff. You got to keep working at it. And that's the data that we saw in our ethnographic work, ethnographic of course, is the anthropology side of our research. But these constantly change.
Charles Fred (25:13):
Now, other things that change by the way that are within our control are our own team members. So one of the worst things that you want to do to a team that's a highly developed team is to pigeonhole great talent on one project, even because as they "have the best relationship with the client," they can still have that, but they need to grow too. They need to grow in their careers and across your business if you're going to grow. So we have to keep that in mind too based on your question of what's the life cycle of this look like, because I've seen a lot of companies take somebody with your talent as an example, and you have a great relationship with me and you're stuck with me literally for four or five years and you haven't grown. That doesn't help either one of us just because we're connected. So those are the things that are within our control that I think can answer that question too.
Lisa Rehurek (26:02):
Yeah, it's interesting. I think we get into a comfort zone. This is comfortable, it's been working, so why change it? Now for people that are listening that are like, okay, how do I either get started or take a step back and say, how do I... This is a big question I'm going to ask you, but they maybe haven't defined the high value client yet or they need to take a step back and say, "Okay, really do we know who it is? Let's take a step back." Where do they start? What's something that they can get started doing.
Charles Fred (26:29):
Yeah. So the businesses you and I work with have been in business for a while. So when you're in business, you have these things called patterns. And I love them because if you're curious and you have a data mindset, you can go look at the patterns of these customers. One of the first places that I look is actually in relationship, I look at the gross margin of the projects that we have. And the lower gross margin projects I can almost tell you today with data, that they're also going to be the low value customer. They asked for discounts, or we had to discount our project to get it started, which means they really didn't trust us. So we actually had to throw them a bone, so to speak, to do this work. The high margin customers on the other hand are often people that not only saw the value, paid our price, but they're probably better on our people.
Charles Fred (27:16):
If they're better on our people, we're probably putting less cost against it. So it's one place to look. The place not to look if I can answer it that way, is in your CRM system. You know this controversy that I started here, I'm actually increasing this controversy. But I think the CRM systems are making us stupid and the way they're making us stupid is we're putting non-emotional, non-qualified data into a CRM system. So you see a customer's name and you see a price and you see some other maturations as they're moving through the pipeline and it doesn't give us what we need to understand. Who is that customer? What kind of relationship do we have with them at the very beginning? Is this a customer that's ultimately going to build our business or not? That's what one area of stupidity, because we see them coming through and we homogenize the group.
Charles Fred (28:08):
We put them all into one category, we homogenize them. We have to stop doing that if we really want to build the high value customer. Second stupidity piece is we put numbers next to their names and we really believe that we have some massive pipeline. And back to your point, if we're dropping 5% out the bottom, we don't have a massive pipeline. We just have a bunch of waste that we're following through the process and we're pouring more at the top. And how do we grow it? When we use a CRM system like that low value customers is we just put more in the top, hoping that X percent's going to come out the bottom. And that's just think about it's more activity, more cost, more resources, more waste in essence. Anyway, I had to throw that in just because it's my new controversy. I've had a look that people take me on now with this one, mostly because there's two places that we have controversy. That's one and the other is college professors. That's the whole other topic, but anyway.
Lisa Rehurek (29:06):
That's a whole podcast episode.
Charles Fred (29:06):
Scroll those in there for the podcast today, shall we?
Lisa Rehurek (29:08):
That's so funny. Well, and I would agree with you. I don't think that it means we should throw the baby out with the bath water, get rid of CRM systems. But I think that the consciousness of what we use that data for and how we use it and what we pair it with, I think is hugely valuable and definitely has me thinking a bit differently about the way we look at our data. It's interesting too, because we always recommend for our clients to have what we call assessment criteria.
Lisa Rehurek (29:39):
When they get an RFP on their desk, they walk through this criteria that's prebuilt. That some of it is very tactical and logistical and some of it is some of the more squishy, if you will, formal term squishy and things like is this the type of a client that you really want to work with? Is this the type of a client that gets you excited? And we strongly encourage our clients when they're assessing an RFP to be looking at that kind of stuff, instead of just, are we going to hit a certain margin in this? Can we meet the terms and conditions? Do we have the staff to do all that tactical stuff that I think most people really focus on?
Charles Fred (30:17):
Well stated and better stated probably than... I think all that data is good for us, it's just how we use it. How does it inform our decisions maybe a better way to look at it versus just the outcome of it. And if it's informing a set of assumptions that are false, we should go take a hard look at it. So yeah, if you want to go try to take your current pattern of customers and put some qualifiers against it and see if there's a binary pattern of those that are really helping you grow your business and those that aren't, I think you'd find some very interesting patterns in the customer relationships that you have.
Lisa Rehurek (30:53):
Yeah. I think so too. And it's funny because we always talk about this when we've got a client that's really hard to close, they're just hard. And every time I have that little gut feeling that this is probably not the best client for us. If it's this hard now, and when I say hard I don't mean that they ask for things that they should be absolutely able to ask for, but it's if they're constantly making you jump through hoops, if they're being difficult in a lot of different ways, that's going to carry through to the client engagement. So I think we can generally tell that early on. So tell me this, what's something that you hear companies and team members say that is an immediate red flag that they have not identified their high value targets appropriately.
Charles Fred (31:38):
Yeah. Number one is when we, again, we are racing to get a deal done. It could be an RFP or whatever deal that we're working on, there's quite a bit of discounting going on or something that we have to get back to the customer that takes us out of our core. That takes us out of our secret sauce or whatever made us different. Whatever made us stand out in the process, we've now changed that. And we did it because under the [inaudible 00:32:03] of Charles, it's such a great deal or there's so much revenue or whatever. And let me tell you what we found in our four... We had a four year ethnographic study. We studied companies like yours under the hood for four full years. And what we watched is how hard those projects were after you won them. They literally were a bit of a tether to the business.
Charles Fred (32:26):
It changed the culture in some cases for some companies, because they were big wins, lots of potential revenue, low margins, turnover, hard to find people to come in and do the work. Why did we do all of that? It's the question that I ask because there's plenty of opportunity in the marketplace today. I look at the flood of the two big federal bills that we have across the country today that will supplement at the state level and the county level of course, there's a lot of work to be won and done out there. So pick the ones that will build your business. So the red flags are when literally we convince ourselves, we rationalize why we're doing certain things. And almost all of the convincing and rationalization has to do with some level of revenue coming in the company. And we even discount margin, we discount potentially net income. We do all these things because we think that's the right thing to do to build the business.
Charles Fred (33:20):
And by the way, if I can play that out for a minute, one of the best ways to compete if you have a head to head competitor is let them win those deals, I'm dead serious. I think some of the best businesses we've seen in the service space that you support is they lost a deal and they felt horrible about it. They're like, "Oh, we put so much time in this. This was a six month effort. We put our A players on this, we proposed it. We lost it." Now these are businesses that end up doing pretty well. And I looked at their competition that won the deal and it buried them, it literally buried that business. So sometimes, Garth Brooks has this song called Thank God for Unanswered Prayers. I don't want you to pray, I want you to be more predictive on what you're doing, but pick the businesses that are going to build your business, pick the businesses that fit your reason to exist and you'll do well.
Lisa Rehurek (34:11):
It's such a simple concept. Pick the businesses that build your business, not that deplete your business. And if we all think that way, I think that there will be a lot more thoughtfulness around the type of clients that we go after. Okay, Charles, so we're going to go into rapid fire, some rapid fire questions as we come to a close here. If you could spend five minutes with any company's leadership, who would it be?
Charles Fred (34:34):
You mean role wise, the role and title or what kind of person?
Lisa Rehurek (34:38):
I think the company. What company, if you could sit down with their leadership, what company would it be?
Charles Fred (34:44):
So I have a really... Is it okay if I give you an obscure answer to that?
Lisa Rehurek (34:48):
Yes.
Charles Fred (34:49):
All right. So I think you knew this, but I grew up in the State of Montana and there's still less than a million people that live in the third largest land mass in the contiguous United States. We had this famous person when I was growing up, his name was Evel Knievel. Now Evel Knievel was a daredevil motorcycle person that was, he jumped motorcycles, I guess he broke every bone in his body three or four times. And it's one of those questions like who would you have dinner with if you could kind of thing. But I was reading this thing about him the other day and he really wasn't a great, let's just say human on the earth, but he actually was quite a business person.
Charles Fred (35:26):
And so closer to his death, because he died unfortunately of some complications of all of his injuries I think, people were saying, "Well, are you a business person? What are you, how would you describe yourself?" And he says, "I'm none of those things. I'm an Explorer." And he was constantly trying to explore how far some things would go, what it was like to jump over the grand canyon or the snake river canyon, all those kinds of things. And I think what I really like about entrepreneurs or people building businesses, Lisa, is they have a lot of courage and they're explorers. And I think that's who I'd like to be with a bunch of those people, at least to have a conversation with them.
Lisa Rehurek (36:06):
Yeah. That would be fascinating. Things I did not know about Evel Knievel. So thanks for sharing that. What's the last book-
Charles Fred (36:12):
You don't want to know.
Lisa Rehurek (36:13):
Right. What's the last book you read and what was your biggest takeaway?
Charles Fred (36:18):
There's a lot of great books out right now believe it or not for what we're doing, but I think the one that I've referred to recently in the library of books I have, it's called The Art of Possibility. It fits you and your team and your companies quite a bit, I don't know if you've read it or not. But Ben Zander, he's an older gentleman person now, more so than the 40 years that I have. He was the conductor of the Boston Philharmonic, I think he was the conductor for the better part of 30 years. His wife Rosamund is somebody who really she's a scientist that actually studies the human condition. And it's such a great book around what we talk about each day and how do we keep our heads in the game. We win some days and we lose some days as business builders.
Charles Fred (37:04):
And I think it fits well with you and your audience, but it's a good book. I just refer to it every once in a while, it's got some big nuggets in it. One of the greatest parts of course, is that he thinks we've killed ourselves by only looking for people that get As on tests and his best talent. And the Boston Philharmonic was one of the best in the country, I think it probably still is, are mostly filled with people that are much more ambitious than they are test takers. And he's got a really interesting thing that he goes through it and entrepreneurs are the same.
Lisa Rehurek (37:34):
I would love that because I did not always get good grades. I struggled with test taking, even though I knew the materials, but it was boring to me. That's not the way that I like to learn and-
Charles Fred (37:45):
Yeah, that's his point exactly. Some of the most talented people he's ever run across didn't work well in these constructed conditions like a classroom, that's why they became artists. So The Art of Possibility is a really cool book.
Lisa Rehurek (38:02):
Well, it's going on my list. I love it. Okay. So 20 years from now, what does TrueSpace look like?
Charles Fred (38:08):
Well, I co-founded TrueSpace with my daughter, Jamie. I have three wonderful children, she's the middle. She's coming up on her fourth decade now and she's really doing great job. We want to ultimately use our research to be a voice in the nation for companies between one and 10 million. There is no voice for them today. So we'd like to inform law making, economic developments, fundraising, all those things with the data that we have. So that's what it looks like. Not sure I'm going to be at the helm of this thing in 20 years, if I'm alive in 20 years. I'm a cancer survivor so every day for me is a gift. But 20 years I'd love to have another podcast with you. Let's do it-
Lisa Rehurek (38:47):
How fun would that be? What does it look retirement? Yeah entrepreneurial retirement, right?
Charles Fred (38:51):
Yes, exactly.
Lisa Rehurek (38:52):
If there is such a thing. Do we really ever retire is the question.
Charles Fred (38:57):
No. You should be prepared for not being able to do that.
Lisa Rehurek (39:00):
Exactly. Well, this has been so fantastic, Charles. So if people want to get in touch with you, connect with you or get in touch with your company, how can they do that?
Charles Fred (39:08):
Directly I'm easily accessible. My email is C-F-R-E-D, cfred@truespace, true space is one word, .com, or through you through our work together. My book is called The 24-Hour Rule, my more recent one. I did a best seller back in 2002 that's not as relevant as this other one today. So you can find that, you can find us online at truespace.com. I hope to hear from a few people, it would be fun to keep this conversation going.
Lisa Rehurek (39:33):
Yeah. And I encourage you all to reach out to him. For sure, we'll have all of that information in the show notes. So Charles, thank you so much from the bottom of my heart for being here. Yeah, great conversation. All right everybody, if you like what you hear, we love it if you shared our podcast with others who you know would benefit from this information. And on behalf of myself and Charles, I want to thank you for listening to the RFP Success Show.
Speaker 1 (39:56):
This has been another episode of the RFP Success Show with Lisa Rehurek, eight time author, speaker, and CEO of the RFP Success Company. Thank you for joining us. If you have feedback on today's episode, email us at podcast@rfpsuccess.com. No matter your business size industry, if you have an in-house RFP team or need outside support, the RFP Success Company helps increase RFP win ratios by 10, 20 and even 50%. Learn more at the rfpsucesscompany.com.