Prioritize and niche down at five to nine people

1. The stage

Stages are counted from zero, so this is stage four, the fifth. Five to nine is too many people for you to manage on your own, and the theme moves from stabilize to prioritize.

Item	At this stage
Headcount	Five to nine
Your role	Manager: you move from training people in basic skills to managing them
Leadership structure	One layer: not your first couple of people but a fully functioning team
How many companies get here	Roughly 3 million, down from 30 million at the stages before

2. Each function at this stage

Function	What breaks	What graduates it
Product	You said yes to anyone who would pay, and feedback from so many different customers created too many product directions and offerings	Specialize the product (a second version of it) and price it for a narrower ideal customer
Marketing	Too many unqualified leads	Better free offers, more ads to raise volume, and qualification friction so the extra volume sorts itself
Sales	Speed to contact drops, and you have no sales numbers	Track basic sales numbers by hand on a spreadsheet, and raise speed to contact
Customer service	No numbers for customer success	Tracking, key numbers, and notes for each customer in one place, in a basic CRM (customer relationship management system)
Information systems	The new team is not using everything	Everyone on every platform, passwords protected, project-management and communication tools in place
Recruiting	Time wasted on bad candidates, and bad hires from a bad interview process	A two-step process: a screen, then an interview
Human resources	Employees do not know how to behave: paid time off and how to give it, sick days, what to wear, how to act	An employee handbook and policies
Finance	Cash flow is lumpy because of random one-time expenses	A profit-and-loss statement, a cash-flow statement, and basic business insurance

3. Product: specialize, and price to the narrower customer

Find your best 20 percent. Run an 80/20 analysis. In most businesses, 80 percent of customers take a ton of headache, time and resources and give the lowest return. Find the 20 percent who pay and return the most, love the product more than the rest, and have the highest lifetime value. Build a product perfect for them, and change the offer to reflect its value to that narrower customer.

Worked case. A lead-generation agency serving business-to-business services wanted to serve plastic surgeons, because it had more of them. Asked who paid the most and complained the least, the answer was law firms: the 20 percent. Though less effort went into winning them, they had almost double the lifetime value, barely used customer service, and said better things about the product. So ask: who are your law firms, the customers you probably spend the least effort finding and serving, and who like you most?

Why it is hard. This is typically one of the scariest changes for most businesses, and one of the places they get stuck. In revenue terms it usually bites between $1 million and $3 million. Say no to money and you fear you will make none. Keep accepting every kind of customer and you can never make a template: sales gets harder, because each rep has to learn every kind of prospect and product, and after the sale everything is custom. With one message for one ideal customer, reps are easy to train, the solution becomes a template, and the gains run through the whole process: margins rise, advertising works better, conversion improves. You already have the infrastructure for five times more of your top 20 percent: they are 20 percent of the business, but maybe a far bigger share of the revenue, so replacing the 80 with more of the 20 might triple the business without adding infrastructure.

Generalize, then specialize. A software joke is thought to apply to every business: all software eventually becomes a CRM, because it keeps adding people to serve and things to do. Do not become the CRM of your industry; this is where businesses slide into being all things to all people. An agency owner who thought he should probably close his clients' leads too was asked: why not run their businesses?

Price to the niche. If the narrower customer gets far more value, the price has to match: maybe that 20 percent get five times the value. Otherwise you are pricing for the customer you can barely get results for. Maybe you then need to sell only double of that 20 percent, not five times as many, to replace the revenue. The same time-management product, named more narrowly each time:

Who it names	Price
Nobody in particular	Might be $19
Sales professionals	Might be $99
Business-to-business outbound sales professionals	Might be $11,000
Outbound sales professionals in power tools and garden	Might be $10,000

The core delivery stays more or less the same; it is still time management. What it is worth rises because of who it is for. A buyer who sees one that describes exactly what they do will pay more for it, even though it is probably the same thing.

Flag: the ladder. The third price, $11,000, is above the fourth, $10,000. SOP 1, section 4 walks the same product down with $19, $99, $500 and $1,997 (its flag carries a second reading of the third rung), so the narrowest title sells at $1,997 there and $10,000 here. This page does not settle which reading is right.

4. Marketing: better free offers, more ads, more friction

• Make better free offers. What you built four stages ago is due an update. With more resources, give away things with a hard cost that competitors may not be able to afford. Say one costs four staff hours and $100 in labor to deliver: if it brings four times the leads and your cost to acquire a customer falls, you still come out ahead.
• Give them only to people who qualify. A great free offer need not go to everyone. You would give the ideal customer, with budget, authority, need and timing, a little free work; not tire kickers.
• Match the offer to the narrower customer. A business moving upmarket, from individual attorneys to big law firms, might offer a lead magnet on going from 100 clients at your law firm to 200 where it once offered one on getting your first five law-firm clients. Each attracts a different customer.
• Match the message from click to close: the ads, headlines, free offer, offer, funnels, qualification questions, scripts and nurture all speak to the new customer.
• Call out more sharply. Not "all attorneys" but attorneys with at least five full-time attorneys at the firm, or doing at least 100 cases a month.
• Run more ads. You were probably doing one piece of content, some number of outreaches, or $100 a day in ads. That fatigues, so make far more of the new, sharper message.
• Add qualification friction. Budget, authority, need and timing, generally speaking, plus the specifics of your narrower customer, added to the application.

5. Sales: count, then get more people to the call

You might once have reached leads the same day; now it is seven days later. And you might not know your close rate.

The basic numbers. Track them by hand on a spreadsheet (Google Sheets is named), for the team and for each rep, and track the absolute amount of sales and the percentages every week, across everything.

Level	Numbers
Basic	Contact rate, schedule rate, cancellation rate, show rate, offer rate, close rate, cash collected
Advanced	You could track scheduled-call-to-close percentage, and you could track opt-in-to-close percentage. They are freebies if you already track some of these, as some people do by now, maybe because they come from sales

Get calls booked.

• Sell the booking. Give the booking page a headline that sells the call. It could use scarcity or urgency; the line preferred is to state the facts and tell the truth. You probably have only so much capacity, so many products to sell and so much ability to fulfill: use that in the headline. Stretching the truth is not the advice.
• Put the scheduler above the fold, and give people as many chances to book as possible.
• Open more times: 15-minute slots, 7 days a week, 9:00 a.m. to 9:00 p.m., given as "from PST to EST". In one company's data, availability was the number one correlation with companies that made more sales. 3:00 might not work for someone when 3:15 will. Doing all three can raise throughput dramatically. One person need not cover it all; staff a schedule that does.
• Pay setters 3 percent of each sale from a call they set that closes.

Remind them. A personal reminder always beats an automated one; both beat either. Say plainly that automated reminders are automated, so the personal ones are known to come from a person. The manual ones go "24 hours out in the morning and one hour prior"; setters on 3 percent can send them. In the same software data, the chance a lead showed was still twice as high when a rep sent the messages as when the software sent customized automated ones.

Flag: the manual reminders. SOP 89, section 5 sends three: the night before, the morning of, 60 minutes before. Its first lands the evening before, not a full day out. This page does not settle which reading is right.

Praise the leading numbers. Give daily kudos for show rates and for the work behind sales: reaching out, reminding, nurturing, following the script. For example, use a Slack channel for shout-outs; people will do more for status than for money. In huddles, ask the people praised what they did; the answer, "just following the process", shows the others are not.

Why show rate matters. Going from a 35 to a 42 percent close rate is a 20 percent rise, and it might not feel realistic. From a 50 percent show rate you can absolutely reach 80 if you do everything needed to work leads, which is far more than a 20 percent lift. Few look at show rate while many obsess over close rate, so you probably have more room there; it takes process more than skill. Every closer should work their leads for it. If you can get a 10 percent lift in show rate, it is said to be a 10 percent lift in revenue.

Flag: the revenue sentence. In between, the show-rate lift is said to give the same rise in total revenue as a 20 percent rise in close rate. With the close rate unchanged, 50 to 80 percent show is a 60 percent rise in revenue. This page does not settle which reading is right.

Reward showing up. Add something good for showing up, or take something bad away. Taking away could mean a discount or something free; adding, money or a gift card. Offers seen: a $100 gift card for turning up to a call, and a $500 credit toward a first month of software. Which works depends on who your customer is. For a brick-and-mortar business, offer a choice of shirt color or size and set one aside; it costs little, six dollars, and adds a personal touch. If they do not show, they will still reschedule.

The same ground runs deeper on SOP 85 (availability), SOP 87 (show incentives), SOP 88 (praise and pay for show rate) and SOP 89 (reminders).

6. The principle under the stage

You have unlimited options and limited resources, so the quality of your prioritization, your strategy, decides how the business grows. Solve the business's biggest constraint at any given point and you get the most return for the effort.

7. Customer service: numbers and one set of notes

Your early CRM was probably built for sales. This is where it makes sense to add features to it, expand it, or add a system for customer success or delivery, so every customer is tracked.

The numbers, outside the activation measures, introduced as probably the three looked at most:

Number	What it is
Net promoter score	How likely customers are to recommend you
Customer satisfaction score	How satisfied customers are with a part of what you sell
Churn percentage	The share of customers leaving from last month to this month
Refund and chargeback percentages	The share refunded or charged back

The entries named outnumber the three announced. Always know these. Revenue churn, tracked beside customer churn, is SOP 130.

One set of notes. Keep notes from every touch point in the CRM, so the company works almost like one brain. This is one of the key things behind a magical experience; repeating yourself to a new rep is friction. Five minutes reviewing past notes and goals before a call lets a rep build on what was said. It looks far more legitimate and buys room for mistakes. Log complaints and ideas for improvement there too: you might not be the one delivering now, and they are still the problems to solve.

Three depths of customer data: deep is focus groups and interviews; medium, surveys with typed answers; shallow, where to start, the quick scores (the names of the others beside the net promoter score are not established on this page).

Net promoter score. One question: on a scale of 0 to 10, how likely are you to recommend us to a friend or colleague? A 9 or 10 counts as a plus; 7 or 8 are neutral zeros; 6 and below is a detractor. A 6 might feel fine, but it is someone telling people not to come. The score runs from -100 to +100, not 0 to 100, and the average company is, by one impression here, roughly -2. It is probably one of the most popular measures for customer service in general, with benchmarks for many industries you can search. It is the preferred score in one practice here, as the most sensitive; a five-star score can make you feel better than you are.

Customer satisfaction score. A five-point scale from very dissatisfied to very satisfied, asked straight after a customer gets value from one part of what you sell: after support, after onboarding, after using help materials. It gives real-time feedback on the part you are trying to improve.

8. Information systems: same tools, shared

Tool	The move	Named
Chat	Stop using phones and text messages; use a work chat tool	Slack is the best option experienced, and called a great option; you could also use Zoho's chat tool, and there are others
Passwords	Stop saving them on computers; use a central password tool. When someone leaves, deactivate them and all their access; your own access follows you, not the device	LastPass, used for probably a decade, unendorsed
Projects	Replace individual to-do lists with a project-management tool, so several people see the same work and progress	Asana, ClickUp

A project tool will not work well unless everyone uses it: if four of seven people on a project respond in it daily, you might as well not have it. The key is responsiveness. The move is from siloed to shared technology, with more security, more platforms, and formal tracking.

9. Recruiting: a screen, then an interview

The two steps check four kinds of fit: expectations, culture, skill and potential.

Step	What happens
Step one: screen	A quick call of five, 10 or 15 minutes to check expectations fit: pay they want against pay you can give, relocation, set hours (9 to 5 in the example), and whatever else the job requires
Step two: interview	There are not many people on your team, so one person runs one interview for three kinds of fit: culture (your core values, if you have written them), skill (usually the top three to five skills a job breaks into) and potential (can they move up or into the role you have next, or is it a role you want them to stay in indefinitely, which might be collections or a staff accountant)
Step two, continued: select	The interviewer decides whether to offer the job, and references are checked

Check references. You would call five families before hiring a babysitter, and your business is arguably less resilient than a child, yet for many hires barely one reference is checked. A little digging is called worth its weight in gold: an hour, maybe 2 hours, against a big monthly bill. You would probably research $7,000-a-month software closely, then hire a $7,000-a-month employee on trust. You are probably not the judge of character you think: people have more practice lying than you have detecting lies.

10. Human resources: the employee handbook

New staff go over the handbook, read it, and sign that they agree. The sections, in order:

Section	What goes in it
Welcome statement	An introduction to the company: its history, mission statement and values
Employment policies	Whether employment is at will, how the job is classified, and what happens to employee records; templates exist online, or pay a service such as LegalZoom
Code of conduct	Professional behavior, conflicts of interest (working elsewhere), confidentiality (what information may not be shared outside the company), ethics, drugs and alcohol, fraternizing
Work schedules	Working hours, attendance, punctuality, remote and in-office rules
Compensation	When and how people are paid, salary grades, overtime, what qualifies for bonuses, salary increases
Benefits	Whether you offer them, and the details
Leave policy	Paid time off, sick days, vacation, a death, a pregnancy: what happens, told ahead of time
Employee performance	How performance is graded
Safety and health	Sickness, and keeping people safe at any in-person site
Anti-discrimination	Preventing harassment based on discrimination, which could be on religion, gender, sexual orientation, origin, age, disability and the like
Technology use	Internet and social media use, privacy, what happens to a company-issued computer when someone leaves
Resignation and termination	The guidelines and process, whether notice is required, whether there is an exit interview
Acknowledgment of receipt	The employee's confirmation that they have read it

You are heading toward 10 to 20 people and need to look like a business. New staff arrive playing chess and find checkers; the handbook states your rules. Some will read it closely, some not at all; keep it accurate so you can point to it. Every item on it is said to come up eventually: in one practice here, all of them, probably in the last six months. Classification, at-will employment and discrimination are legal claims made here; the law is not covered on this page.

11. Finance

The statements and insurance for this stage are on SOP 150.

12. The bottom line

The constraint is trying to be everything to everyone. To graduate, niche down to serve only people like your best customers; everything downstream adjusts to that. The next stage is 10 to 20 people, with the theme productize.

13. What this page does not decide for you

• The ladder's third price. This page does not settle which reading is right.
• How net promoter score is calculated beyond its bands. Not established on this page.
• The names of the other shallow scores. Not established on this page.
• Whether manual reminders are two or three. Not established on this page.

14. What this page does not cover

Job descriptions and résumé review are SOP 148 section 8. Hiring for high-volume roles is SOP 253. Interview questions are not covered on this page.