Value Added Tax, now there’s a misnomer if ever there was one. Is it a tax on value added goods, or in fact almost anything of value? Or is it the tax itself that is adding value? It’s confusing. Is it virtually fat-free milk or virtually fat-free milk?

We pay tax on our income, we pay a national insurance contribution, and depending on the country we reside in we pay a range of other taxes as well, like the Irish ‘universal social charge’, corporation tax, property tax, community tax and inheritance tax. Nothing wrong with tax of course, as long as national and local governments are providing good value in the form of social services for the income they make. There’s that word value again.

Scandinavian countries pay very high taxes, but people are very highly paid too and those countries lay on a superb array of social services.

Value Added Tax, or VAT for short, is a huge earner for governments, and an increasingly large number of different goods and services get drawn into the VAT net. How long before children’s items and basic items are forced to join the fold?

The level of VAT varies too. In Ireland it’s 23% for example. In the UK it’s 20% but a glance at the history books will tell you that it’s been creeping up from a low of 8%.

But really it’s the name that jars with me. Before VAT was called VAT in the UK it was called purchase tax, which is much closer to the mark.

I think I’ve always preferred the US term ‘sales tax’. Because that’s what it is. Simple, really. It’s no longer a tax on ‘value added’ good and services, it’s a tax on most things that are sold.

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A while back I wrote a post called Churn or Growth for Startups, and referenced the excellent content from the VC blogger Tom Tunguz. The answer was churn.

What should be the focus for the SaaS company looking to scale its business and grow at a rate that attracts heathy valuations and juicy multiples for an IPO or an exit? It’s grown by bringing on new companies and keeping them, so surely it should keep adding new logos, right?

The beauty of the SaaS model is that on the first of the year you can count on the revenues for all your customers who are renewing their annual commitment. Going from $80m to 100m in one year may seem like a giant jump, but the successful SaaS company has close to the €80 coming in during month 1, so it’s not such a big leap and, indeed, many such companies see themselves growing at phenomenal annual rates, far in excess of the 25% in my example.

The scaling company should focus on keeping and growing its existing customer base.

Have a look at this post from Mr Tunguz, which he said in an email recently was far and away the most popular post he did in 2018, 10 times more popular in fact than the next most popular post. Which is intriguing, since the post he links to is from 2016…

So startups should focus on preventing churn, and more established companies should focus on renewals, which is to say they should focus on preventing churn…

I was asked the other day what the average SaaS customer length is. I responded confidently that I thought it was about three-and-a-half years. My customer disagreed, though not without some uncertainty, and felt it was longer.

So I checked online, as you do, and I couldn’t find my three-and-a-half years statistic anywhere. Perhaps it was a customer I’d worked with previously that I was misremembering as an average. Anyway, I couldn’t find an average figure for customer churn anywhere. That’s because it depends.

It depends, of course, on the amount of customers you lose, otherwise known as your churn rate. Your average SaaS customer length is 1 divided by your churn rate. So if your churn rate is 5% per month, your average customer length is 20 months, which isn’t great. If it’s 10% per year, then your average SaaS customer length is 10 years, which is a whole lot healthier. Naturally, you can only make these calculations with a good body of data and some history behind you.

If you’re new to the game, then you need to do some research around average churn for the sector you sell into, or the size of company you sell into. To generalise grossly, churn rates tend to be lower the larger the customer you work with, since the deals tend to be bigger, more complex, more embedded, with a higher cost of sale, to generalise on the reasons as well.

If you want to read more on this, you might find this article, this one and this one useful.

 

One of the most difficult challenges with sales training or sales effectiveness – and in fact any kind of change – is overcoming engrained behaviours. It’s only through repeated application of the new way, with all the pain and discomfort that comes with it, that the new way eventually becomes the accepted way and a second nature thing.

I was reminded of this recently in my table tennis endeavours. I’ve been playing competitively for decades, and I’ve always concentrated on putting the ball in different corners to move my opponent around. It is deeply and completely subconscious, after a million-plus repetitions.

I’ve been studying a lot of table tennis matches on youtube over the last few months, as I look for new ways to compensate for my gradual decline in fitness and sharpness due to Father Time’s relentless advances. I’ve noticed that a lot of the top players hit a lot of shots into the crossover, which is the awkward spot on the right hip – of the right-handed player – between the forehand and the backhand, effectively jamming them up.

This is not new. One of the first things we were taught as kids was hit to the corners against a short opponent, and into the middle for a tall player. Maybe twenty years ago our local club had a coaching session with a guest coach who again stressed the crossover tactic and quoted the statistic that the then star player in England, Desmond Douglas, would hit up to 40% of shots down the crossover.

I’ve been trying this with renewed effort over the last few weeks and – it’s really, really difficult! The sport is very quick and you don’t have much time to plan and execute. I find myself instinctively following my subconscious, time and time again.

The answer? As with sales, I need to practice more, and compete less, to untrain and retrain myself.

It’s well known that you pay more for branded products than their generic or knock-off equivalents. You get what you pay for, as the saying goes, but also you’re investing in the brand’s equity and goodwill, which comes at a price.

I was in a homeware specialist the other day, looking for an ‘Egg Perfect’, one of those clever things – or clever yolks as the Irish would say, and I like the pun in this context – that you pop into the water with your eggs and it tells you when they’re done to your preference by changing colour.

The price was €9, which I thought was a bit steep, but i’m familiar with the brand and they last ages, so I bought it. On the way home I dropped into a local store that sells almost literally everything. I’ve blogged about it before, in fact. They too had immersive egg timers, the generic versions. The price? €2.

So the branded version was 4-and-a-half times the cost of its imitator, a 350% difference. Which, I suppose, is not as bad as the difference between a Gucci handbag or a Rolex watch and their me too counterparts.

The proof’s in the pudding, so we’ll see how the two of them perform over time. Still, I did feel pained when I saw the €2 version. That’s a difference of about a pint and a half between the two of them.

I had occasion to go to Dublin for a lunch networking meeting the other day, which was nice. I was due to meet at 12 across town and the train got in around that time so I jumped in a cab.

We flew through the city, since cabs can use bus lanes and there’s plenty of them in Dublin. We got there in about 15 minutes, 12 bucks very well spent. Sometimes traffic can be snarled in Dublin, even for cabs, but at 12 noon it was surprisingly light.

After a very pleasant meeting I realised that I only had 40 minutes to get to my train. I was going to jump in another cab when a colleague mentioned that thanks to the newish LUAS extension I could now get to the station in the west of the city. I walked ten minutes to the LUAS stop and figured out my route and my fare. I got in a LUAS train in south central Dublin, went 3 stops to north central Dublin and then walked 5 minutes to another LUAS stop, which wasn’t the closest but I wanted to keep moving in the right direction.

I got on the second LUAS train at 16 minutes past the hour, and 4 stops later it deposited my at the intercity train station, at 25 minutes past the hour, giving me more than enough time to get my train at half past.

A great, fast, efficient service, at least from my experience of one data point. And all for the pauper’s sum of €2.10. A city which has a cheap, fast and efficient public transport system is a global city, in my view.

 

I skim-read a fascinating article the other day that covered an interview with former FLOTUS Michelle Obama.

In it, Ms Obama talked about what she described as Imposter Syndrome, the feeling that sooner or later someone’s going to uncover you as someone who’s blagged their way in to position of status or seniority that’s above their station. I hadn’t heard it described that way before but I immediately latched onto it.

Who else feels that from time to time? More accurately, who hasn’t felt in a weak moment that they’re one misstep away from being exposed as a fraud, or at best under-qualified for the role they’re performing?

This is a normal reaction from time to time, normal at least for people who are pushing themselves, moving up the ladder trying new things, joining new groups, doing the one thing every day that slightly scares them. It’s a natural symptom of progress. The first time you step up there’s new things to learn and uncertainty before you get dug in. Then you have to move again before you get too dug in.

It seems too that since the article above others have identified with it and shared their stories, which you can read about here.

There’s nothing like a familiar sound to bring you back and connect you with something.

The other day I heard a wood pigeon coo-cooing somewhere in the estate where I live. It’s not a very familiar sound to me now, but back when I was a kid doing my homework in the bedroom that looked out onto the back garden of my childhood home, it was a very familiar sound. It instantly reconnected me to my past in an unexpected and not unpleasant way.

Sound and the hearing part of our senses have of course always been very important to a brand. We can all remember signature tunes from our favourite shows, programmes and global brands. A few examples: the 4-note signature of the UK’s Channel 4, the 5-note signature of the McDonalds ‘I’m loving it’ campaign, and the ‘Holidays are coming’ refrain from Coca-Cola for around this time of year.

Sounds are a key thread of how we identify with a brand and of the overall brand experience, along with the sights, touches, tastes and smells of the things we like to use or consume. They evoke an instant feeling and connection.

Tack and tact. This has a lot of people confused I think. Tack can either mean a small nail, or also a nautical term for changing direction. Probably other meaning as well, I haven’t checked.

Tact is an emotional intelligence skill you acquire with other people that manifests itself in diplomacy, language and body language. So two pretty different meanings, then, for two words that look and sound similar.

‘I think we need to take a different tact.’ I heard this the other day – for the countlessth time, from someone who sails regularly and presumably done his share of tacking. You don’t want the word tact here, you want the word tack, unless your change in strategy involves ushering in some unexpected wave of diplomacy into proceedings.

The best way to remember the difference I think is from the Faithless song Insomnia, the lyrics of which go:

‘Fundamental movement, huh, so when it’s black
This insomniac, take an original tack
Keep the beast in my nature under ceaseless attack’

The tack you want is the one that rhymes with black and attack. Unless of course your context is thoughtfulness and consideration to others, in which case some tact is required.

Was that tactfully enough put to put you on the right tack?

Gaze towards the top of this webpage and you’ll see the eyes-through-the-letterbox image of a Paul Dilger looking enviably young for his 50-some years. That’s because the picture is at least 10 years old.

I’m not alone in this. The world, especially the professional world, is full of the slightly false advertising of profile pictures and avatars. Shining faces, full of hope and ambition, that belie the experience they claim to have in their bio.

This makes it somewhat tricky when you have a first meeting with someone who you’ve only met online or on the phone and whose photo you’re going by. I think if you add a decade to the picture it provides a far better calibration for your field of view. Otherwise you might be unprepared for a conversation that might spiral out of control.

‘Oh hi! I was, er, expecting someone a little…’

‘Younger?’

‘No, no, of course not! Just, a little different I guess.’

‘Different how?’

‘I’m not sure. Ah, here’s our server, would you like coffee or tea?’

It’s a tough one. Do we go with a current pic and possibly deflate the initial impression, or do we go young and have some tap-dancing to do when it comes to the meet and greet?