- miss pupik / Foter.com / CC BY
…there might be other ways to boost profits but lets stick with the legal ones for now. Minds out of the gutter. She’s probably searching the want ads looking for a good job. Could she be helping you boost your business profits?
Let’s find out.
By now you’ve probably figured out I have a quirky (maybe I’m being kind to myself) sense of humor. And I do have a little bit of a lazy streak in me (that makes me always try to come up with better ways to do things)…tied to a bit of impatience (I just want to see results now, don’t you?).
I HATE seeing good people selling great products and services, drive themselves into the ground. Running on that perpetual hamster wheel. Putting out fires left and right. And at the end of the day wondering…like the Talking Heads song, “How did I get here?”
Life isn’t meant to be that hard.
And you shouldn’t be making it any harder than it has to be. Running a small business is a big enough challenge in and of itself given that you’re doing lots of tasks that you just have to do to make sure nothing is falling through the cracks.
So if that isn’t the way to go, what is the answer?
Well before we get to the seven ways, imagine you’re the director of your small business engine. You control the switches. Sending your train onto the right tracks at the right time with a conductor’s efficiency.
You’re not pushing the train. You’re not shoveling coal or uncoupling the cars by hand. You flip a switch and it all happens automatically from there.
Isn’t that more in line with how you’d like to see your business run? So you can actually have time to enjoy the fruits of your labor with your friends and family. Wouldn’t that be nice for a change rather than arriving home after a 14 hour day. Exhausted. Falling into bed. And waking up at 1 a.m. not able to fall asleep again due to all the unhandled tasks bouncing through your head.
It can be better. So lets jump in.
Secret #1: All clients are not created equal
The Pareto Principle states that 80% of the effects come from 20% of the causes. Now think about that for a second. In your business life I’d be willing to bet that your probably working the inverse of that equation. Namely, you’re getting results at the 20% level by working at the 80% level. Basically you are running yourself into the ground for little or no benefit.
But when you decide to say screw it. You’re not going to work for less than minimum wage because you’re not going to work insane hours for little pay. There is a way out.
So step one is to make notes of what you do for an entire week. Yes, carry around that notepad you use for doodling. And jot down every task you do each day for a week. Then that Sunday review it.
I think you’ll be shocked at what you found out. How much of your day is spent doing stupid stuff that is just wasting your time? What could you delegate to someone else? What work is repetitive that you must train others to do? Or what could you automate using available computer software or apps? Take a hatchet to those tasks that aren’t getting you closer to your desired goals. Be brutally honest with yourself in this exercise.
Then make those changes. Even if you only implement one or two each week for the next 90 days, I guarantee you’ll see enormous change for the better.
Okay, step two is this. Divide your clients up into two categories (based on sales or profits or alignment with your business, or all of these). Category #1 is the top 20%. These are your whales. Your ideal clients. These are the clients you MUST nurture often. You’ll find they generate 60-80% of your business. And yet you probably treated them just the same as someone in the 80% group. STOP! They are different. Profile them. Yes, it is okay to profile in this situation. Just do it. And now start treating them like royalty. Make them more exclusive offers at higher dollar levels. They’ll love you for it. They’re probably your biggest fans. Talk to them often. Learn from them. Cater your offerings to their needs and wants.
And the other 80%? Devote 20% of your focus to them. Automate everything you can with those clients so they are still getting a great experience but it isn’t tapping you out. You don’t have enough hours in the day for that and something’s got to give.
In some cases this means joint venturing with others to run their products or services through your client pipeline. Let them do the heavy lifting and you just collect the money based on your asset’s value that they don’t have.
Secret #2: Focus on reselling existing clients
Although getting new clients may be exciting, and is still a necessary endeavor, it is much more cost effective to resell your existing clients.
It costs 6–7 times more to acquire a new customer than retain an existing one – Bain & Company
Why would you spend all your time playing around with new internet marketing techniques and spending a boatload of money on pay-per-click advertising when the money is right in your backyard?
Whether you make seasonal offers, or reactivate clients with a special offer, or give them a discount coupon at checkout or in the package you mail to them, you must make the most of your already responsive client-base. They are already predisposed to buy from you. And you can offer them more to improve their buying experience. Why sell a suit without a shirt and tie? Why sell a TV without the cables? Why sell a gym package without an introductory personal training and massage session?
Look at your own clients first and you’ve find a goldmine.
Secret #3: Develop several consistently-applied referral and testimonial-generating systems
When you look at your best ways to generate new clients, too often people overlook what is right in front of them. What is better to generate a warm lead than a happy client?
But do you ask for a referral when you’ve delivered a great product or service experience? Or do you let that opportunity pass? People love sharing great experiences with friends and family. And if someone is looking for a similar product or service, they often go to people they know for ideas and suggestions. Shouldn’t you and your company be their suggestion?
So where are those touch points? Those opportunities to ask?
Well there is when you are performing the service or as you complete the sale. Or there could be a discount offer for a referral that is given to them when their sale is completed or product box delivered. Or you can have exclusive special events that they can bring a friend to.
Don’t let those opportunities pass by. Make sure everyone in your organization is prepared for those referral opportunities.
Secret #4: Market to those who have your prospective clients as clients
Why do all the heavy lifting yourself? You have client lists that are very valuable to you. They are also potentially valuable to others who have a similar client profile. And theirs could be the same for you.
For instance, if you’re marketing to dentists, if you could put an ad or direct mail insert into the dentists’ trade publication mailing, wouldn’t you likely get better results than a general advertisement in the local newspaper?
Similarly if you’re a landscaper but knew someone who owned a housekeeping business, couldn’t you both do an endorsed mailing to each of your customer lists for the other person to generate new business? Since people who hire landscapers are more likely to also hire housekeepers, and vice versa, you could both make out like bandits.
Secret #5: Know the lifetime value of a customer
How much is a customer worth to you? Have you evaluated that? What does it matter?
Lets start with how to calculate it.
Lifetime value is: Average profit per sale X the number of sales per year X the number of years a customers continues to buy
What that gives you is the profit that customer is worth to you.
What do you do with that information? Well it tells you how much you could spend to acquire a new customer. So if the average profit is $10 X 4 sales per year X 2 years = $80 lifetime value. So you could spend up to $80 to acquire a new customer.
So if you looked at your marketing and you spent $1,000 to acquire 10 new customers ($100/customer) then that won’t work for your business model.
But if you go 20 new customers for that same $1,000 then that would be $50/customer and since it is less than $80 you could still come out ahead.
Obviously the higher the lifetime value the more marketing avenues you have available. So high ticket items might be your solution if the low priced items don’t pencil out.
Secret #6: Get personal
Too often it is easy to get comfortable communicating by email, internet ads, automated delivery methods.
But a personal touch – particularly in person or by phone – can turn a so so situation into a home run.
If you’re a consultant you’ll often find that phone or in person discussion with a potential client will turn what might have been a marginal service into a much more impactful one. And when you do that your referral and testimonial opportunities and goodwill is so much higher than if you just sent emails back and forth.
In this digital age it is easy to forget that.
You’ll also find that higher end packages require, or are more effective when the in person element is added. For example a professional golfer with a great caddy is much more effective than one with a simple GPS rangefinder. The caddy knows the pro’s game. He knows what his personality is like and how it affects his judgment. They can work as a team to handle the unexpected situations. No electronic gadget can come close to that level of service. Don’t you find you’re the same way? If you have a problem isn’t it much better when you get personalized service to make your problem go away?
Secret #7: Delegate and outsource low value tasks
As an entrepreneur you have vision. You have incredible skills. You bring people and ideas together with tremendous action to create things that didn’t exist before. And you’re good at what you do.
Should you be doing everything you’re currently doing? I’d hazard a guess that you’re doing a lot of tasks that you could pay someone a lot less to get done for you. To free you up for the high value tasks that only you can tackle to generate more sales and bottom-line profits.
So why are you continuing to try to be Superman or Wonder Woman? Why wouldn’t you outsource the accounting, the administrative tasks? Why wouldn’t you have someone else tackle your I.T. tasks?
How much more money could you generate a year if you weren’t saddled by low value tasks? Could you have a driver take you to and from appointments? Could you have a housekeeper free up your off hours time so you could spend more enjoying your remaining family time without having to handle all the domestic duties yourself? Could you have certain repetitive procedures handled by other staff in your company?
These are the things that both get you back your time as well as increase your company value by generating more profits with less time and effort.
With the end of 2015 around the corner, spend some time this holiday season to evaluate what you’ve been doing and see what can be done differently in 2016. You’ll be glad you did.
And if you’d like help guiding you around that corner, showing you what you might be missing, shoot me an email and we’ll figure it out together.
