Cost
Reduction Versus Income Growth
So many businesspeople
focus their whole life on cost reduction. Working long hours and
cutting costs just to make ends meet. Now don't get me wrong, keeping
your costs down is still one of the most important areas of business,
but …
If you really
want to make money, you've got to generate more income. Making ten
times, or even a hundred times more profit than you do right now
is more about increasing your income than it is about decreasing
your costs.
By the way,
if you were to cut your costs by as much as you possibly can and
still leave your company running, you'd probably only add about
10 or 20% to your bottom line. Yet through building your income,
the bottom line jump is limitless.
Distribution
and Marketing
Distribution
and Marketing, both are equally as important as each other.
You've got
to put 50% of your time, effort and investment into getting your
products and services to the market place and the other half getting
the market place to come to your products and services.
The challenge
is that most business owners put about 90% of their time into distribution
and only about 10% into marketing. You've got to market if you're
ever going to make real money.
Focus
on Cashflow
If you're
not focused on creating cashflow, then you're wasting your time
in business.
Anyone can
create a business that's no more than a job and make a living from
it, but very few will ever create a massive cashflow goldmine. If
that's what you're after then you've got to understand that profit
is the difference between cash flow in and cash flow out. Neither
is more important than the other, but the in flow is where you get
exponential growth.
Marketing
- Expense or Investment?
Most accountants
will show you that sales, marketing and advertising falls into the
expense side of your business, and I know when you're signing the
cheques it can certainly feel that way. Yet, when it's done properly,
marketing is your best investment.
Think about
it. If you were to run a $1,000 advertisement that returned you
$2,000 in profit in a matter of weeks, then you're doubling your
money. And what's more you can run that ad as many times as you
like, because it never costs you anything. Marketing is only an
expense when done incorrectly.
Test
and Measure
The only way
to become a marketing genius is to test and measure. Ask every prospect
you ever deal with, this one simple question; "By the way, how did
you find out about us?"
And, simply
keep a tally.
This way you'll
very quickly find out what marketing works, what pays for itself
and what is just an expense. Then, for exponential growth, re-focus
every dollar you spent on what didn't work, on those that do, and
every dollar you spend on marketing will make you more money.
By the way
measuring turnover, costs and profit is a waste of time.
Acquisition
Cost
Let me show
you how you can have an unlimited marketing budget, and buy - that's
right, buy - as many customers as you want.
In business
most people think that you just invest in the stock that you sell
- but the exact is true of customers.
In fact,
from a marketing point of view, the only thing you've got to buy
is new customers. The question is, how much are you paying for them?
If you've
put $1,000 into advertising and had 100 phone calls, then you're
paying $10 for a lead. Then if you only sell to 1 in 5 of those
leads, you're paying $50 (5x$10) for a sale.
Once you
know how much it costs to buy a customer, and as long as you make
more per customer than the acquisition cost, you're ready to start
reaping the profits.
Buying
a Customer
When you switch
from selling to new customers to a focus of buying new customers
then you'll start to see a whole new unlimited world of sales and
marketing results.
Try to see
the entire function of your business as nothing more than a customer
buying exercise. Then the only real question you've got to ask is,
can I buy customers for less than they'll spend with me over the
lifetime of buying?
Wallet
Share Vs Market Share
Chasing market
share in today's business world is a guaranteed formula for chasing
your tail. Market share, or a focus on new customers comes with
the assumption that you're in the business of buying products or
services and selling them to customers. If, however, you swap to
the idea of buying customers, you're no longer chasing market share
your chasing wallet share. Then the issue becomes, how much, how
many and for how long can you sell to each customer you buy?
In this world
of business, where customer loyalty is everything, if you've already
spent the money to buy a customer then it makes total sense to make
sure you get a full return on your investment.
Chasing wallet
share is a simple as remembering you've got a loyal customer base,
so what else can you sell to them?
What
Business Are You In?
Most business
people define their business by what they sell. Like a fruit shop,
an accounting service and so on.
Change from
a product or service point of view to a marketing point of view
and, you'll realize you're now in the PROFIT-making business.
Lifetime
Value
Think about
this for a moment, how much are you going to spend in your lifetime
on something as simple as toilet paper? Thousands of dollars?
So let me
ask you this, how much will the average customer in your business
spend with you over their lifetime?
Let me give
you an example. In my dog food business the average person will
spend $800 a year on their dog, and the average dog lives for 10
years. So, assuming a customer only stays with me for half of that
time, 5 years, then they're worth $4,000 to me.
Then, what
if they refer to me two new customers in their first year. Now they're
worth 3 times $4,000, which equals $12,000.
What if they
also then referred another two every year, and every referral sent
us another two customers a year. How much are they worth to me now?
Hundreds of thousands? Or, more to the point, how much are your
customers worth to you over their lifetime of buying from you?
You must
establish this long-term view of their value before you can appreciate
how important it is to develop a relationship with customers and
ensure everything is done to keep them for as long as possible.
A
Promotion Versus a Business
Many business
people own a promotion and go through life thinking it's a business.
Let me explain… In a promotion, you have to go out and find yourself
another customer. That's an ongoing marketing promotion, NOT a business.
On the other
hand, a business is where you buy a customer and then sell something,
or many things, to them over and over and over again.
By the way,
who ever said you can't sell someone else's products and services
and get paid a commission for the referral? Strategic alliances
with other businesses can be a very powerful way to increase your
customer base for relatively low outlay. And, what's more, by linking-up
with the right businesses, you can target the exact type of customer,
which offers the best return on your acquisition cost.
In
Summary
From now on
you should think of marketing strictly as an investment, customers
as something you "buy," and start spending at least 50 % of your
time in this area of your business.
I've seen
these simple instructions completely transform thousands of businesses
that have been stuck on the treadmill of traditional thinking. It's
time to get off the treadmill and start getting somewhere.
P.S. Ask yourself…
What would serious wealth mean to my business and me? … If it means
anything other than a dream come true, then don't even contemplate
coming to my Billionaires In Training Seminar… if however,
you want to make your dreams a reality and experience true wealth,
then call 1800 670 335 and book your seats for the one of the February
Seminars NOW!
P.P.S. The
Billionaires In Training Seminar will be in Brisbane 5-6
February, Sydney 11-12 February, Melbourne 13-14 February, Adelaide
18 February and Perth 19 February.
