Yes, it really is that simple.

In fact, remember the 3 ways to grow a business, from my last email?

We talked about the ‘what’…

But what about the ‘how’?

How do you bring in more customers through the front door?

How do you increase the average order value?

How do you increase the frequency of transactions?

Influence.

There’s a famous book all about this topic called “Influence: The Psychology of Persuasion”.

In it, the good ol’ doctor Cialdini explains why people say ‘yes’…

He lists 7 factors that play a role in getting that ‘click’ to happen in someone’s brain where they decide to take action.

Over the years, I’ve added a few more factors and come up with the ultimate list.

Here we go…

• A hungry market

Sorry to start with a tricky one. You might be thinking “how do I control how hungry my market is?”. Well, the easiest way is to choose the right market.

Unless you’d rather sell ice to an Eskimo, you really need to choose a hungry market. What does that even mean?

It means your prospect tosses and turns at night because they have a problem that’s driving them mad.

Or they have an urge that cannot be contained.

Or they have insecurities and fears that they can’t turn off.

What do you think Louie Vuitton sells? If you said luxury bags, it’s a good thing you’re here. Because I’m about to get meta.

LV sell status. The bags just happen to be product they chose to deliver the status.

So what’s the market LV sells to? People who desire status. And is that a hungry market? You bet it is.

Now, before we move on – I will say this…

Yes, it’s possible (but very hard) to manufacture desire, or essentially to ‘create’ a hungry market. But that’s not the road you should take, unless you’re a billionaire.

Just for fun, let’s come up with an example. 

And while we’re at it, let’s make it an evil example.

If you have a product, but it doesn’t solve a problem – one could CREATE the problem. So if you sell weapons, you could instigate a war. Or if you sell medicine, you create release an illness.

That reminds me, I should really catch up on conspiracy documentaries. Been a while…

Anyway, whether evil or good – manufacturing a market is not something I would suggest you pursue.

But when you choose a hungry market, who needs a solution to their desire or problem – you’ve already put yourself on the winning path.

Don’t be the person trying to market something no one cares about.

The more it’s a NEED, the better.

• White-hot desirable offer

I wish choosing a good market was good enough. But in today’s environment, it rarely is.

Unless you’ve stumbled into a field with no competition and endless demand, you also need to have a good offer.

An offer is simply a value proposition.

The more the value equation is enticing in the mind of your customer, the easier the sell.

The critical thing to remember is this:

It’s about perceived value. It’s not an objective science. And it’s certainly not just about price.

Apple might be more expensive than their competitors, but in the mind of their customers – they offer more value. 

So what contributes to the value equation?

• Perceived quality
• Ease & simplicity
• Reputation & status
• Guarantees
• Bonuses (stacking more value)
• And many more factors

If I could sum it up succinctly, it would be like this – 

How do you craft an offer that’s irresistible? An offer so white-hot, that a customer would feel an uncontrollable urge to act on it? An offer so sizzling hot, they would feel stupid to pass up.

And of course – an example… behold! The offer that built an empire…

“Fresh hot pizza in 30 mins or less… or it’s free!”

Yes, that offer really did build Dominos into an international success story. Of course, they stopped it when people started dying from car accidents – but many experts believe it was that offer that provided the momentum for what it is today. 

By the way, you should never eat the so-called ‘pizza’ from Dominos. If you do, you should really unsubscribe from my emails

• Authority

The third element of influence is authority, real or perceived.

This one is simple. People trust authority figures.

It gives us an easy easy way to filter information so we can decide what to believe.

When someone in a white lab coat speaks, we tend to take their words a little more seriously.

Or if they have some letters before or after their name.

Or if the company has certain certifications or if they’re part of a certain group.

Even the way people speak will affect how much authority we assign to them.

So there are many factors. You simply want to stack as much authority as possible.

• Social Proof

Social proof is a very powerful one. From “as seen on” logos, to celebrity/influencer shoutouts, to customer testimonials – people want to see what the community thinks of you.

Much of this can be manufactured and manipulated. But it’s important to understand, because all of these factors will unconsciously affect how your prospect feels.

• Scarcity

Yet another one that is often manufactured and used unethically. Scarcity is when you limit the supply of your product of service. You make it ‘scarce’.

This should always be done honestly, otherwise people will eventually stop trusting you.

But if you have a limited quantity, or limitation on your time or other restriction – then you should communicate this and play on it to increase demand.

You can also ‘imply’ scarcity by the way you speak and your body language. If you seem desperate and needy, people don’t generally respond well to that.

But if you know your value, and present yourself or your service as something truly valuable, you will imply scarcity and people will naturally want to work with you.

• Liking

Yes, it really has come to this! Believe it or not, people want to buy and deal with people and brands they like! Shocking, I know.

All I’ll say about this is be yourself, be honest, and don’t be an ass to people.

• Reciprocity 

This is a fascinating one, and it could be your secret weapon in business.

You know how beauty brands give out free samples? 

And authors give out free chapters?

And service providers give out free quotes or consultations?

Well, that has 2 purposes. Not only does it give your prospect a taste of your brilliance. But there’s a deeper psychological pathway that many people don’t realize.

The law of reciprocity.

It states that when people receive value, they instinctively feel the urge to reciprocate the value.

It’s truly incredible. The more you give, the more you seem to get.

And some people have truly pushed this to the edge. But it really does hold up.

So figure out ways to provide value to you prospects and ask for nothing in return. 

Something magical will happen! Your business will grow!

• Consistency/commitement

This is a subtle one, but quite important.

And it’s the perfect segment from the last factor. When people make a small commitment, they’re more likely to take another step with you. And the deeper they enter ‘your world’, the more likely they’ll stay (unless you do something silly).

I also like to think about consistency in another way. Every interaction the prospect/customer has with you – the experience itself should be consistent. I’m talking about your branding, messaging – your overall brand ‘feel’. When you go to a Nike store, you know what to expect. Don’t make any part of your customer’s experience jarring.

• Risk Reversal

Reversing risk is most important when you’re acquiring a new customer. They haven’t dealt with you before. All kinds of ‘what if’s are going on in their head.

The fastest way to overcome this, is to simply remove the risk from the prospect, and put it on you instead.

I mean, if you’re confident about your produce or service, then what are you worried about?

You can reverse risk is many ways. Trials, guarantees, warranties, samples, using education etc.

The most powerful risk reversal is to get as close as possible to making the end result guaranteed. This is not always possible, but the closer you get – the higher your conversion rates will be.

Risk reversal is of course very related to crafting an offer. So work on offers that include outrageous guarantees. This might be a little uncomfortable, as you confront your fears – but this is how the best companies grow.

• Frictionless, elegant experience

This is a factor that has become more and more important.

Companies like Amazon have spoiled customers. They have the best engineers in the world crafting experiences that reduce FRICTION. And it works. People love it when you can take away the crap and give them a seamless experience.

If you simply reverse engineer the processes of Amazon and Apple, you’ll understand this better than most.

Then go through your own customer experience, and see where you can remove friction and create a more elegant, hassle-free process.

Despite all the noise and gazillion marketing tactics you hear about, the truth is – there are only 3 ways to grow a business.

And yes, of course there are specific strategies when we get into the weeds, but it really helps to always zoom out and get some perspective on what really moves the needle.

• The first way to grow a business is to increase the quantity of customers. 

You might think this the most important thing in business, but it’s actually only one part of the puzzle.

You get new customers by either increasing the traffic to your business, or by increasing the conversion rate. Your front end conversion rate is the percentage of people that go from being a browser to an actual customer.

You might find this hard to believe but getting the actual traffic is the easiest part of all. The real challenge is turning strangers into customers, and then hopefully – into a long term relationship.

• The second way to grow your business is to increase the transaction size.

And like we talked about in the first part of this service, that comes down to your AOV (average order value). 

And you can grow your AOV through a couple different strategies. The first is the actual price of what your selling, and the second is the number of items or services purchased. These are the only ways you can influence the size of your transactions. 

• The third and final way you grow your business is through the frequency of transactions.

So we’ve talked about the amount of customers entering the door, as well as the size of the average transaction, the only other part to the puzzle is how frequently the customers transacts with your business. 

Now, obviously this depends on your business model and industry. If you’re a plumber, you can’t force people to have issues with their plumbing. 

But you can certainly be top of mind when they do have an issue. But for some businesses, you can even change the business model entirely. 

Netflix obviously did this when they changed the move rental industry entirely. Back in the day, we would only transact with blockbuster when we actually felt like it. 

But with Netflix, you get billed every month no matter what. And many businesses have followed suit by trying to pivot their business model to a recurring or subscription based model. 

And again, I’m not suggesting that this would be applicable to every industry, but it does pay to think outside the box and try to increase the frequency of transactions if you can. 

And remember, the more you can increase the transaction size and frequency, the more you can spend to acquire a customer and outgrow your competition.

If you can’t, then you’d want to focus more on the first 2 methods. 

And of course, if you can optimize all 3 of these growth systems, then you’ll have an unstoppable business.

So whenever you hear about a new tactic or magical strategy, try to run through the lens of these 3 foundational growth methods, and ask yourself where it fits into the puzzle and if it’s worth your time and effort.

Until next time.

Today, I’m going to compare traditional investing and growing your own business with digital marketing.

If you’ve looked into investing into something like a market tracking index fund, you know that the average return typically is around the 8% mark. 

And while 8% is still an incredible return if it’s compounded year after year, it’s nothing compared to the ROI you can achieve through active investing, or in other words – growing your own cash-flowing business.

The best way to explain this – is with an example.

Let’s say we roll up our sleeves, and commit to going all out with growing your business over the next 12 months.

And let’s say we allocate an advertising budget of $10,000 per month. If we generate $150,000 in extra revenue per month from that ad spend, that would be a ROAS of 15 – or 1500%. 

And if you run a great business and have terrific margins, it should be a mind-boggling net return overall.

Now, many people would compare that with the returns of great investors like Warren Buffet and Peter Lynch who have managed to return 20 to 30% over their careers. And while it’s a lot of fun to play the comparison game, it’s actually a terrible comparison because returns always go down as the money pot gets bigger. And these people are managing billions of dollars.

But for a service-based business that’s not generating billions in revenue, massive returns are absolutely possible. They are very realistic with a carefully structured growth system.

So what is it that stops owners from growing their businesses? There are some very legitimate reasons and some that are not so logical.

A legitimate reason would be that you just don’t want to grow, and that would be totally fine. And I have nothing to say about that, except that you probably shouldn’t be listening to me!

Another reason might be cash flow constraints with some business models. Not every business gets paid quickly, so that can sometimes be a reason to be a little careful.

Another reason would be that you’ve already captured the whole market, so there is no one left to market to, which let’s just say – is very rare!

And of course, as we talked about previously, there are always operational bottlenecks. But since those are fixable, hopefully, those won’t be an issue in the future.

But more commonly, it’s due to the big elephant in the room, which is the big fat question – what if it doesn’t work and I lose all my money?

And while that appears on the surface to be a logical concern, it actually doesn’t make any sense at all when it comes to digital marketing. And that’s because of the level of dynamic control you have.

With digital marketing, unlike traditional advertising – you have total control over your daily budget and you can pause or end a campaign with 1 click. In addition, you can literally test dozens of angles and variations dynamically as you get feedback on what’s working or not working.

So you don’t just go from zero to turning on a switch and spending millions of dollars. Every campaign we run, we start very slowly, and only scale when we can actually see the client is making a massive ROI.

For that reason, the risk is minimised. 

Finally, I’ll end with this – I truly believe we’re still in a golden age of sorts when it comes to easy growth for service-based businesses. I say this because the level of digital marketing sophistication of the average local business is still very low. 

And that gives you a massive advantage if you’re willing to put things in motion and start building your digital assets. I’m not sure how long that will last with rising ad costs and the democratization of online tools, but as of right now – it’s still a gold rush.

Until next time!

Today’s topic might be a surprising one. It’s a rare occurrence when I speak to a business owner who doesn’t want to get more customers.

However the question I always ask, is what would happen if you doubled your business in the next 3 months?

And usually, at least for a service based business, in addition to a little excitement, that invokes a lot of fear.

Because deep down, many owners know that their operations aren’t very streamlined, so they may feel they’re not ready for that kind of scale.

One of the best books on this topic is the E-Myth. The author describes the myth that most business owners are entrepreneurs. Instead, he submits that most are actually technicians turned business owners. So for e.g. you may have been a great mechanic, and so one day you decided to start a repair business. 

Or you were a great barista so you started a coffee shop. You were a great carpenter, so you started your own construction business and so on.

But being a technician is one small part of the business, specifically in the product or service delivery department. It has nothing to do with the vast majority of what’s required to successfully operate a business.

In the E-Myth, it talks about creating standardized operations in a business. The easiest way to think about this is thinking about McDonalds or most other franchises. Because franchises are literally designed to be operated with as little skill as possible, the task becomes how to standardize every single part of the operations.

And this is of course the opposite of how most businesses operate. The majority have massive bottlenecks due to specialized knowledge being in 1 person’s head or a based on a few people’s skill sets. This is totally fine if you want to run a micro business that never grows, but the second you tell me you want to scale – that’s when I recommend you create a rock solid operational system.

The reason I’m talking about this, is sometimes you might feel that your issue is marketing and getting more customers, but in fact – many times the problem is more foundational. It’s in operations and getting your numbers crystal clear so you can know how much you can spend to acquire a customer.

The fastest and easiest way to not have your business break when we start heavily marketing, is by drawing out every single part of your operational flow. Every single step, along with who is responsible. Think of it exactly like an assembly line.

It’s a simple thing to do, especially if you know your business inside out. But you might be surprised about how many micro steps there are that you do unconsciously.

The next step is to think of yourself more as a systems designer, instead of the technician. So if you had to recruit and train brand new employees, how would you design the system for your new staff to seamlessly deliver your product and service to the same quality standard every time.

When you think about your operations from this lens, you’ll gain much better clarity.

The next step is to capture your system in the form of SOP’s or standard operating procedures. These will be the step by step process for delivering the perfect service every time.

And finally, when the wheels are turning, you simply want to observe where things are breaking and if there are still any bottlenecks. Sometimes, even well meaning staff members can be bottlenecks because they insist on doing things a certain way that can’t be duplicated by everyone else. There has to be a system because a business is not a person. It’s a business.

Not only will this make it easier for us to get you more customers, but it will increase the value of your business if you one day want to sell or bring in investors. No one wants to get involved in something where there’s a bunch of IP in one person’s head.

I hope you enjoyed today’s topic! And if you’d like us to consult with you on this or get started creating a customer acquisition machine, just get in touch – we’d love to chat.

The goal with these 3 metrics is to create a customer acquisition model that then informs every decision we make when marketing your business.

The 3 metrics are:

1. Conversion Rate (CR)
2. Average Order Value (AOV)
3. Lifetime Customer Value (LTV)

The conversion rate is a metric we use to describe the percentage of people taking a certain action. For e.g. let’s say I’m selling a car from a website like Tesla does. If I send 100 people to my website, and 2 people buy a car, then my conversion rate is 2%.

That would be an example of a purchase-based conversion rate. But we can also apply conversion rates to other goals, like getting leads, appointments, and other conversion events.

The second metric – average order value, is the average dollar amount spent by each customer. And that’s determined by how much your products or services cost, and also how many items the customer buys. 

And this is of course why McDonald’s staff are trained to upsell and cross-sell you – because when you add fries, drink, and a muffin to your order – it increases that average order value for the business. The reason why this is so important is due to the fact that it’s usually ridiculously expensive to acquire a new customer. So a business should always be trying to close the gap between the cost of acquiring a new customer and the AOV on the front end.

Now, it’s not always possible to have a massive AOV. It depends on your industry, your business model, and many other factors.

For e.g. Netflix charges about $10 for a monthly subscription. It would be incredibly difficult to get a customer to fork out $1000 initially instead of $10.

Therefore, the last metric solves that problem. It’s lifetime customer value, which tells us, on average, how much the customer will spend with the business over the course of a lifetime, or the natural relationship with that business. 

For e.g. if the average customer spends $25,272 at Starbucks over their lifetime, this becomes a vital piece of information for Starbucks, because it helps them make a decision on how much they can realistically spend to acquire a new customer on the front end.

In an ideal world, obviously, you want all 3 of these metrics to be sky-high. You want a massive conversion rate, a huge average order value, and a monumental lifetime customer value. But of course, in reality – that’s not always easy.

These 3 metrics can be applied to any business. It doesn’t matter what you do or sell.

Whether you’re a lawyer, accountant, builder, e-commerce brand, restaurant, or any other business – you need to understand these 3 metrics.

Now let’s run through 3 realistic scenarios to make this a little more concrete.

The first scenario is an accountant, the second will be an e-commerce or hybrid retail brand (I say hybrid retail because most retail brands should have an e-commerce channel), and the third example is a restaurant.

Let’s say we buy 1000 clicks from Google or Facebook ads for our client who’s an accountant.

From those 1000 clicks, 100 of them sign up for a consultation with our accountant, and 10 get onboarded as a new client. In this scenario, we have 2 conversion rates to report. 

The first is the rate from website views to consultations which is 10%. And the second is from consultations to clients which is also 10%.

Now, after chatting to our accountant, we find out the average order value of their client is $2000, which is the amount the customer spends on their first invoice.

The slightly harder metric to get is the lifetime customer value. Let’s imagine our accountant hasn’t kept great records about their churn rate, which is the percentage of clients they lose, and how long the average client remains a client. 

But let’s say they run a rough calculation and they tell us the average client stays for 13 years and pays an average of $10,000 per year for the service. 

That would be an LTV of $130,000. 

Much higher than the LTV of Starbucks. But before you think you’ve chosen the wrong business to be in, always remember that typically, the higher the LTV of a business, the smaller their total addressable market (TAM), and also typically there’s a higher service level for the customer.

The target market for Starbucks is perhaps anyone with a pulse and a few dollars in change. 

Meaning it’s a mass-market product. But the target market for our accountant is perhaps local business owners who generate over $1,000,000 in revenue and require monthly bookkeeping services, as well as tax consulting. Which obviously is a much smaller group to target.

So it’s always a trade-off.

Our second scenario today is an e-commerce or hybrid retail business.

Again, we drive 1000 clicks from online ads, and 10 people make a purchase, but in addition, 100 people sign up to the brand’s email newsletter.

So again, we have 2 conversion rates to report. The brand achieved a 1% conversion rate for the purchase event. But 10% on the email newsletter sign-up event.

Now some of those customers who bought added multiple items to their cart, and in the end – once everything was averaged out – the average order value was $85.

Now, if the product is one where the customer orders over and over again – we can also calculate, or at least estimate the LTV. In this case, let’s say it’s a supplement brand, and so the customer orders 6 times per year and stays with the brand for 2 years on average. That would be a lifetime value of $1020.

And let’s do 1 more example, which is our restaurant.

We send 1000 clicks to a special offer on the restaurant’s website – and 50 people redeem the offer.

The average bill comes out to $60, and the average customer continues to visit the restaurant on average 8 times per year for 5 years. That would be an LTV of $2400.

Now the purpose of doing all these calculations is because after understanding these numbers, we can make better decisions when it comes to acquiring new customers.

After realizing the value of your customer over the first month, year, or a lifetime – you are now armed with some data to help decide how much you are willing to spend to get a customer. Of course, you also have to know the margins in your business and your unit economics.

If your LTV is $1000, it makes no sense to spend $1000 to acquire a customer. You would need to wait a lifetime or to the end of the natural client relationship to recoup your marketing investment, and after you take out your business expenses, you wouldn’t even be breaking even. You would be losing money for the privilege of servicing that customer.

So in that scenario, the only option is to reduce how much it costs to acquire the customer or improve your metrics (CR, AOV, LTV)

Typically, you’ll find that larger businesses or international brands take a very long-term view when it comes to this decision. They’re willing to go in the hole on the front end, because they believe in the strength of their LTV, and many times, they also have investors who see that long-term vision and are willing to fund the growth.

However, if you’re a local service-based business or an e-commerce/hybrid retail brand that generates less than $20M per year in revenue, sometimes you need to be more conservative.

The best-case scenario of course is that you can be profitable on the front end directly. And this is exactly what we help our customers achieve. We want to actually spend the marketing dollars and make a profit immediately within the first month. No waiting, no hoping.

And like you can probably guess from what we’ve discussed today, there are only a few ways to accomplish that. As a marketing company, we don’t have full control over your average order value or lifetime customer value. We can consult with you on those things of course, and we can help you use technology to help with some things, but not everything. But what we can influence is your conversion rate on the front end.

So we specialise in creating conversion pages that take prospects and turn them into customers or high-value leads.

If you can turn $1 into $3 on the front end of your business, how many dollars would you spend?

If you said – “as many as possible”, then you’re on the right track.

And that’s effectively what we help our clients do every day.

Today, I’ve just given you a birds-eye view of how important these 3 metrics are, and how they inform a marketing strategy. But there’s a lot more nuance to it.

So if you’d like us to help set up a high converting customer acquisition machine for you, book a meeting with us today and we’d love to speak with you.

We can’t work with everyone, but we can always provide a ton of value in a discussion which you can use to grow your business. Until next time