Where 98% of Businesses Go Wrong
Hello, I’m Robert Clay from Marketing Wizdom. This is the first in an ongoing series of business transformation videos. It shows you how you can easily double your business using the geometry of business growth. It’s a great way to work smart.
Let’s start with some context: Over the last 21 years I have carried out considerable research into what makes businesses market leaders in their niche. In that time, I’ve taught more than 600 established businesses how to harness and apply these principles which has enabled them to outsmart the 98% of businesses that don’t.
This first video and blog will show you how you can double your business (or much more!), with up to 80% reduction in:
Only 3 Ways to Grow a Business
When you distill it all down there are three and only three main ways you can grow any business. But 98% of entrepreneurs focus almost all of their time, effort and attention on growing their business using just ONE of those three ways: increasing their number of customers. That’s the first of three dimensions.
The First Dimension
In choosing to grow your business only by growing your number of customers, you are also choosing the hardest, most stressful, expensive, demanding and time consuming approach to growing your business.
Compared with the cost of acquiring new customers, the cost of selling more to your existing customers or selling to them more often is trivial.
So how would you double your revenues without focusing purely on getting more customers?
Imagine you have a business with 1,000 customers who spend an average of £250 every time they do business with you, and they buy from you twice a year. Your annual revenues in this instance would be £500K.
So, let’s say you decide to double your revenues from £500K to £1M a year… Where would you focus YOUR attention?
Yes, you CAN double your business by doubling your customers. But there’s nothing quick and easy about it. It costs a fortune. And it takes a long time to attract that many prospects, then build interest, then trust. And then you still need to persuade them to do business with you.
So, what’s the problem with this? In short … Nothing!
However, in doing it this way alone you’re choosing the hardest, most expensive, most demanding and time consuming route. In fact … you only need 25% more clients to double your business. But before I tell you how to do that, you need to know about the other two dimensions.
The Scary Cost of Acquiring New Customers
The cost of acquiring new customers can be very scary when you work it out, particularly so if you’re seeking to double your business by doubling your customers.
Until we got them to work it out, a few years ago, the world’s largest membership organisation for chief executives had no idea what it cost them to acquire each new member. Their membership fees, at the time, were £9,000 a year. But they were shocked to discover it cost over £5,000 to acquire each new member.
Using some smart strategies that figure was eventually reduced to less than £500. But the point is, acquiring new customers can be both time consuming and a lot more costly than you’d expect.
The Second Dimension
The second dimension involves increasing your average spend per sale.
If you could double the average size of every sale you’d instantly double your revenues. And you wouldn’t have to find a single additional customer. It takes a fraction of the time, effort and expense to double your business than if you were to double your customers.
The Third Dimension
The third dimension is to increase your average frequency of purchase. And that’s getting your customers to come back to buy your products or services again and again.
If you could get your customers to come back twice as often, you wouldn’t need a single new customer to double your business and revenues. Again, it takes a fraction of the time, effort and cost needed than if you were to double your customers.
By doing any one of these in isolation it’s perfectly feasible to double your business. I’m not saying they won’t bring you results, however, it can put considerable strain on both your resources and your finances.
How Would You Double Your Business?
The real secret to accelerating your business growth is to work on all three dimensions at the same time.
You need to grow your customers, and at the same time increase their average spend, AND their frequency of purchase. Do this and you put the magical power of compounding to work in your business.
You Only Need 25% More Clients to Double Your Business
Let’s say that you again decide to double your business, starting with the same number of active clients, average spend and frequency of purchase.
But this time you focus on growing your business by 25% in all three dimensions at the same time.
In other words, you would focus on getting 25% more customers, who spend 25% more with you and do business with you 25% more frequently.
So, what would that look like?
You’d end up with 1,250 active clients, each spending an average of £312.50 every time they buy, and buying from you on average two and a half times a year. Multiply those figures together and it almost doubles your revenues from £500,000 to £978,000.
It’s not quite a million. But you’ve achieved this with just 25% more customers. And that means your business is far more manageable and easier to run compared to having double your customers. It really does reduce the amount of time, effort, manpower, money, and risk by about 80%.
So, what is not to like about that?
What Would Your Number Be?
Your goal should be to get your business working harder and harder for you on an ongoing basis. That means harnessing the power of compounding and putting the systems in place to grow your business in all three dimensions. Do that and you’ll build your business into an asset worth far more than could be achieved by the usual linear thinking.
Now here’s a thought… what would happen if you could find ways to double your business in all three dimensions – In the example above, that would result in annual revenues soaring from £500K to £4m.
Anyone now looking at that business from outside would see one that’s eight times larger. They’d probably assume you also have eight times as many customers. And eight times the staff and overheads to cope with all that business. But they’d be wrong. They would actually only have twice as many customers.
And that’s how you can work a whole lot smarter, not harder.
So How Would You Double Your Business? Please Comment Below
Please share with us below what strategies you currently use to grow your business.
- What are the 2-3 things you do that give you your best results.
- In what ways do you or could you increase your average customer spend?
- In what ways do you or could you increase your average frequency of purchase?
Please share them with us in a comment below.
Similarly, if you’ve found this article on growing your business in three dimensions helpful or if you have any of your own ideas, insights, perspectives and experiences to contribute, please add your comment below.
And if you have any questions relating to increasing your average customer spend, or you’d like to see specific topics covered in future articles to help you take your business to market leadership in its niche, then, again, please let us know below.
This is Robert Clay. Thank you for joining me for this, my first ever video article, and I look forward to sharing many more concepts with you that, when you put them together and execute them effectively, can take your business from arithmetic to geometric growth and to market leadership in its niche.