091: The Lifetime Value of Online Tools with Theresa Baretta

On today’s episode I’m talking with Theresa Baretta.  Theresa is the CEO of Loop Link. Loop Link is an operations management coachsulting firm. Loop Link provides integration and implementation services to creative agencies.

Theresa and I met through a, now, mutual client where I was hired to do a tech implementation. Theresa had come up with the strategy of what we were going to do and needed to find someone who could actually implement it.  And my name percolated to the top of the list. The next thing she knew, I had implemented it. And I had a new “systems friend” in the process.

So let's talk a little bit about what Theresa does for her clients, how that integrates technology in their businesses, and just makes their businesses run the way it needs to.

Theresa was excited about this subject.  Because oftentimes, it's not something where it's like, “Oh, you're this and people connect with that.”   As we are growing in this online space, new things, new services, and new capabilities are being provided every single day. And so how Theresa likes to describe it is that she actually serves her clients through providing them with fractional leadership.

So she doesn’t come in as just a consultant or a service provider.

She comes in as a strategic partner with them, where she is working with them in the depth of their business. So she goes really deep with them in their business and understanding what their goals are.  She helps them understand their aspirations, the vision of the business, and really synthesize that into a project plan and a strategy where we can achieve them effectively and efficiently in the most profitable way.

Along that journey, they put out a lot of prayers and figure out how to make sure it doesn't happen again, or minimize that cycle.  Because as we continue to grow, there's always going to be new fires that we have to approach. And so that drives Theresa towards, “How does tech women do a lot of all of this?”  

Theresa likes to consider herself as a techie.

She does a lot of research on tech tools in her free time.  And she thinks that's one of the attractive reasons why her clients hire her on is that she loves getting into the thick of understanding how specific tools function and whether or not it would be a really good match for her clients and their business models. She often finds that being the matchmaker of it all is fun!  It's fun in that sense, because then they know, what would be the lifetime value of that tool that matches with their business.

I really like that term, the lifetime value of that tool. So let's let's bring that into practicality. Because I don't like to keep things theoretical on the podcast, I want someone to be able to say, “Oh my goodness, Jamie and Theresa were talking about the lifetime value of a tool. I think that this tool or that tool might be reaching the expiration date in my own business.” 

So let's dig into that. When you say the lifetime value of a tool, how do you classify, characterize, and utilize that in decision making?

Theresa shared that when they get started on this journey, they typically like to understand what are some of our biggest goals? So for example, if one of the biggest goals is to double your profits, how are you going to get there?  What kind of tech tools or software platforms methodologies will get you there?

She shared that they often can just  “ad hoc” a bunch of platforms together by building the bridge through, for example, Zapier. Or do we go with a platform where it does have the higher price tag, but it's going to carry us through the storm into where we want to go?

So for example, let's talk about like a bigger tool with a bigger price tag such as Salesforce or a more business management type of tool.

Now, with those types of tools, they often have a higher price tag on a monthly basis or even an annual basis. And sometimes we might get frightened of how much that tool really costs. But we take a look at how much that tool actually contributes to our efficiency, performance, or knowledge transfer.  And we look at our ability to react quickly or even be able to proactively plan. Those all add towards the lifetime value of that tool. 

So typically, I always like to put the benchmark of any tool that we take on at a three year plan.

Because in the first year, there's going to be lots of waves. There's lots of trials.  And there's lots of kinks to work out before you really start optimizing on that tool.

Then you start seeing the major effect of that tool by year two where you're running sufficiently with it.

You're running efficiently. And it's making you profit as well. It's contributing to your bottom line. So in year two you start optimizing and really working in alignment with that tool,  You're fine tuning and everyone is on board. And everyone is optimizing that tool so you're going to see that reflected in your bottom line.

Now in year three, depending on how fast you have scaled your business, you may have found that you're starting to outgrow that too.

Or maybe that you might need to go on to the enterprise level or that next level up for that tool. If not, you might have to start evaluating whether or not that tool will carry you through to the next three years or even five years.

Sometimes you can stretch its lifetime value to year five before you need to switch over.

But typically, large organizations, that's how they work.  In order to really maximize their investment into that tool. They want to be able to at least reach that five year mark with that tool before they consider another month or tool to carry them through to the next five years.

So I really like this concept of lifetime value of a tool and it goes into even when you're deciding on a tool.

You can say, “Okay, I am going to commit to this tool for three years. I'm not going to commit to this on a month to month basis.”  Because you have to put your brain in the right mindset of how is this tool going to serve my business and help me toward whatever goal you have.  For example, if you're trying to double your profits, and the tool costs 10% of what your profits are right now, you don't have to double your profits.  You have to double plus that extra 10% that tool cost you. Why? Because you have to realize that you're really only going to get to 90% in order when you're implementing this tool.

Let's think about a simple, relatively inexpensive tool like Zapier.

Zapier has three or five zaps that you can do for free. I can't remember at the moment, but I think it's five.  But it's five linear tools. And you can do those zaps for free. The cost of that tool, the lifetime, that tool will last and it'll do what it needs to.  But it's not doing very much for your business. It's not going to help you towards your massive goal. It's more of a crutch.

So when you go and you say, “Okay, I'm moving to Zapier at the starter level.” All of a sudden you're taking money out of your business on a month to month or annual basis. And you're saying this is now a valuable asset. It's no longer a crutch. It is a fundamental component of your business. You’re going to have this tool lift some weight in the business.

Then you get to figure out if that piece of technology, if Zapier or whatever other tool you might be looking at, is going to stand the test of time of those three years.

Year one might be making all your zaps and seeing which ones work and which ones don't.  You may be turning this one on and turning that one off and all sorts of things like that. Or you may be tweaking them as they go through.  Then in year two, you might be saying, “Hey, this is smooth sailing.”

And then by the time you get to year three, you will keep bumping up against the upper limit of the number of zaps you can do.  You will then have the choice of, “Do I upgrade from the starter level to the next level and pay Zapier more so that I can increase my efficiency?  So I can increase the power of this tool or not?” Theresa shared that Zapier is definitely one of those prime examples. The point is to think about how far do you want to take something before you realize that it's no longer serving you as well.

Another way to think of Zapier.

Let's say that you're using Zapier in the free version.  You could set up three different zaps that act on the same trigger to do three things. Or you could set up one zap on the paid version that does all three of those things nice and succinctly.  I think that for the growth of anyone's business, that going into the paid model, where you have fewer processes and more efficiencies just make sense. That may be justification unto itself.

So I feel like that's really the power of having this right hand gal or a director of operations in your business.

They can see how things work to make your business run,.  As opposed to, I want to do this as the business owner. Or this tool looks great or so-and- so is using this tool, maybe we should be using it to as well.

Theresa shared that one of the biggest powers that she always love doing and providing to her clients is the evaluation of those tools.  And really understanding if it does really match up with where the objectives are. And if profit is a huge matter to you and your organization, then you may not want to have a high subscription with the fancy tool.  You may instead like going with a tool that may not be as well known, but serves the same purpose.

Theresa