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Jun 27 2008
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The Most Expensive Way to Grow a Business

There are really only four ways to grow a business – Get more leads, close more deals, increase your average transaction or add products and services to your offerings. Of the lot, trying to generate increasing numbers of leads is the most expensive.

Small Business GrowthNow, don’t get me wrong, I’m not suggesting that you drop your lead generation efforts, I’m simply advising you to give more real focus and effort to the other three first.

In other words – fix your message, fix your follow through, and fix your Marketing Hourgalsssm. Do that and you might actually find that you can grow your business while decreasing the number of leads you need to in order do so. Too often a lone fixation on lead generation for growth can attract the wrong kind of prospect and run your resources dry while you chase your tail looking for the next live one.

In most cases, the easiest thing to impact in a small business is lead conversion. By creating a truly systematic way to present, follow-up, transact and thrill your customers and prospects you can almost certainly expect to do substantially more business with the amount of leads you currently generate

With a message that communicates how remarkably unique your business is, targeted at a narrowly defined ideal prospect, price pressure goes out the window. Find you message, raise your prices and grow through increased average dollar per sale.

I use an hourglass image to illustrate the idea that every customer that comes into your funnel and squeezes through that small part to become a customer needs to immediately go into another expanded set of offerings (the bottom widening part of the hourglass) that includes complimentary products or services, introductions to strategic alliances and an acute focus on referral generation – that’s how you build real growth momentum.

So, fix your message, fix your follow through, and fix your hourglass first, figure out how to get bigger this way, and then turn the lead generation tap and prepare to witness a flood of growth.

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Filed Under: Lead Conversion, Lead Generation Tagged With: ,
  • Ron Towns

    I agree with the above points. From the online perspective here is how you grow your business – having a killer strategy.

    Identify your market. Before you build a site around a product or service, you should identify your market. Who do you want to target? What products and services do they buy? Once you have identified the market you can offer a product/service that will specifically appeal to their wants, needs and preferences.

    Use a simple landing page. You can sell products and services on the internet by creating a simple landing page. A landing page is a single page that allows you to focus on one group and/or topic. Using a landing page versus a full blown website enables you to have very specific information for a very specific group of customers. In example if you were selling nutritional supplements you could have a landing page for bodybuilders, a different landing page for pre-menopausal women, and yet another landing page for weight loss. Each page would only contain information for the target market.

    Multiply your traffic opportunities. To increase the traffic on your websites, you will need to go beyond optimizing your site for search engines. Take advantage of other elements such as blogs, podcasts and RSS feeds to multiply your directory listings. In this way you are able to submit to different directory listings that may not have been captured by simple search engine optimization.

    Pay attention to content. It is not enough to develop content. You must develop meaningful content. If you write articles for article banks ensure that the topic will have meaning for your target audience. You want your niche market to read it and immediately click to your website. This also applies to the content on your pages. Take time to develop engaging and persuasive messages for your target market.

    Recycle, repurpose, reuse. Once you have put the work into developing meaningful content, by all means recycle it! An article can be submitted to article banks, cut into shorter content for blog posting and recorded as a podcast. You can also take a collection of articles and turn it into an e-book. You will not only maximize your content but you will also multiply your marketing channels.

  • http://blog.bridgegroupinc.com Trish Bertuzzi

    Incredible post and right on the money! We are Inside Sales Experts that work with tech companies to build great strategies. We used to spend most of our time on the back end of the process…helping people figure out how to close more business.

    Now, we spend most of our time on the front end working with our clients to define their Ideal Customer Profile, crafting compelling messages and sales tools, building lead scoring systems that use intelligent data to define what sales resource to assign, developing best practice lead conversion methodologies that are repeatable and scalable. You get where I am going…

    You have hit the nail completely on the head. The way to make more money is to focus on converting more of what you have rather than worrying about adding more contacts to your database.

    Great post..

  • http://www.barjdcommunications.com JudyAnn Lorenz

    Quality over quantity! Huge numbers of quality leads is the perfect point, but when the numbers seem to be down, look again at the quality. The serious leads are not lost in the numbers of those who are simply filling out forms to pass the time.

  • http://www.growingmybusiness.wordpress.com David Dirks

    Excellent points John, as always. I would like to add that many businesses struggle with lead conversion primarily because of one key problem: they haven’t built a COMPELLING business model. What compelling reason should anyone, BtoB or CtoB, do business with them? Many times as a customer, I’m left wondering what’s the real difference between Business A vs Business B? Lead conversion is much less of a challenge if small businesses can find ways to articulate the value they provide customers into a compelling business model. That’s the kind of differentiation that can slay any competitor, including the Goliaths of the business world. Just food for thought.

  • Mike

    John,
    Great post but you left out the most important piece – referrals. By far the most cost effective way to grow any business is through referrals. Its a simple two step process – 1.) offer great products/services and great customer service, and 2.)install systems and processes to get referrals. Process number one is to ASK for referrals.

  • http://www.spotabusiness.com andrew

    Hi,
    We have been hearing great things about your new marketing ideas, please feel free to use our site http://www.spotabusiness.com to contact businesses and setup your own profile for FREE. Thanks Love the book!

  • http://dtelepathy.com Monique

    I really enjoyed this…it’s nice to see the focus taken off lead generation. I definitely agree that figuring out your message, product offerings and follow ups will lead to…well, more leads! Thanks for these valuable insights.

  • http://www.MarketingTwins.com MarketingTwins-Randy

    I was just in a meeting where we discussed this very model that I’ve heard you mention before. The old model is the funnel. Get ‘em in is the mantra! Then then become squeezed down and then just drip out with unfortunate retention deficit! I love the hourglass idea – they stay in but go to a deeper level of responsibility, commitment, and they are no doubt equipped to be better referral sources! I guess you could continue the metaphor and say that some clients need to be shaken up some and turned on their heads so they act like new (and vibrant) customers again (or we at least treat them like we used to!)

  • John Jantsch

    @Mike – I agree completely and while it may have looked like I left that off the list, that’s a big part of the hourglass idea and I’ve written about that often here.

  • John Jantsch

    @Ron – Wow – great comment – thanks for taking the time to put the post in the context of a strictly online business. I do think, as you displayed, the principles are much the same, but people really benefit from hearing them in their own language.

  • http://www.lindasbusiness.wordpress.com LindaBusiness

    This was a great post – I get inundated with emails about “lead generation” with nothing about customer retention and referrals – happy customers gladly give referrals if asked…in fact, happy customers do that “word of mouth” thing! I’m curious, though, at what point do you ask for the referral? The second time the customer buys from you, or the initial? I’m “assuming” that it’s better to wait until you find out if the customer is, indeed, happy and coming back to you for seconds?

  • John Jantsch

    @Linda – what if you did it before they even became a customer – what if during the lead conversion process you said, “we know you are going to be so thrilled with the results of our service that at the end of 90 days we are going ask you to introduce us to three other you know need this same result.” Make it an expectation, thrill them and set the meeting in 90 days.

  • http://www.thelanegroup.blogspot.com Sacramento Mortgage

    I like the post! I think there is a lot to be said about increase income per transaction. I also think that if you specialize on a certain niche of your business the increase in income per transaction will increase naturally.

  • Mike

    @John – I know that referrals are deeply embedded in your approach. I wanted to add the concept to the discussion because the topic is “Expensive ways to grow a business.” Since referrals are arguably the “cheapest” source of new customers, a focus on referrals should be a core design element of any marketing plan rather than an afterthought. This notion ties directly to your next post about the lifetime value of a customer “when you include their potential referral value.”

  • http://blogbuildingu.com/ Hendry Lee

    I use a similar analogy all the time. I think of it as a bucket of water. Every suboptimal phase during the lead nurturing process is like a whole in the bucket.

    There will always be holes. Not people will be interested in my product or service (100% conversion), but at least I try to minimize the hole so I still have some when I finally arrive home from the river side (where the water originated).

  • http://www.TornadoMktg.com Adrianne Machina

    Your timing is PERFECT. I have a new client who’s battle cry is “more leads, more leads, more leads!” However, they already have a full pipeline. What I suggested is that we start emphasize those tactics that will enhance our credibility and will increase our conversion ratio. I forwarded this post to all my clients.

    Adrianne Machina
    Duct Tape Marketing Coach in Orange County, CA
    http://www.tornado-marketing.com
    http://www.tornado-tools.com

  • http://www.ppc.za.com PPC

    Wonderful post. Thanks for this one, John!

    It is a given that generating leads are the most expensive part of one’s marketing process and it follows that making the most of the leads generated, rather than being wasteful and then trying to generate more, makes the most sense.

    In the same breath, by upping your conversion rate on leads you are keeping your customers close at hand, happy and satisfied. Giving an arbitrary sales spiel to a potential client, and them coming away unimpressed is a double edged sword, as they surely will regale friends and associates with the unsatisfactory experience that was had when they interacted with you or your sales staff.

    So cherish those leads, and strive to convert them into business as optimally as possible! Thanks for a great post yet again!

  • http://www.netage.co.za web Content

    As with everything, more isn’t better… Aiming for quality, rather than quantity, is the only way to go… Boosting your number of leads is absolutely pointless if they’re not leads that are highly qualified for optimum conversion..
    Great post john

  • http://businesscoaching.typepad.com Paul Simister

    John I must admit to being a new boy to your ideas and I only started reading your book last night.

    This analogy of the business to an hour glass is really powerful.

    Like Jay Abraham’s famous Power Parthenon model it shows how unstable a business can be, in Jay’s case relying on one or two lead generation techniques and in yours without the backend where real money is made.

    It’s looking like a very favourable review on my business coaching blog for your book so far.

  • http://www.blog.totalmarketingsolutions.co.uk Mark Brewerton

    Hi John,

    All good stuff but I think that you have missed out a 5th way to grow revenues & one that is very often overlooked, particularly by SMEs, and that is ‘fix the leaky bucket’ and reduce your customer churn. All to often I find with our clients that they spend very little effort looking at their customer attrition rate & understanding why they lose customers. Now of course some level of attrition is unavoidable but we have found that by shinning a light on this area (normally by talking to lapsed customers directly) we are able to uncover issues with our clients proposition that causes them to lose customers. Frequently these turn out to be fixable issues but our clients simply hadn’t realised the that the issue was a problem and therefore hadn’t focused on it. Surprise, surprise when we help our customers address these issues their sales start to go up! Focusing on reducing customer churn is a much overlooked opportunity to grow sales!

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