Archimedes of Syracuse (c. 287 BC – c. 212 BC) was a Greek mathematician, philosopher, scientist and engineer who first popularized the power of the lever.
The lever is such a perfect tool. It is about getting a maximum result with minimum effort.
Leverage is the recognition of that force and applying it more broadly. A couple non-business examples come to mind.
The Greatest Invention Ever…
The remote control. Change channels without having to get off the couch and move your nachos or your beer while the football game is on on Sunday. For couch potatoes everywhere this was the most revolutionary item of its time.
This was then followed by PIP (picture in picture). This allowed you to see two games on the same TV at the same time.
This was later replaced by the DVR. Who wants to stare at a tiny picture in the corner or your TV screen to see when something big happens in the other game. Just watch both games…or even more by recording those games on the DVR and then fast-forwarding through the commercials and in between plays. A weekend football fan’s most joyous contraption. And for those who aren’t as dedicated…or where the spouse has honey-do lists to accomplish…you can still catch the game and not miss a minute.
So that is the power of leverage. People are inherently lazy (or at least if they can find a way to do less work they will). So businesses that recognize this fact and cater to it have an inherent advantage over those who don’t.
Let’s go deeper
But what I want to talk about today is much deeper than that. And for you who own or manage businesses, let’s focus on how to gain more leverage from the power you already have in your business that you might not be maximizing. And if you are struggling with stagnant sales, tight cash flow, and to-do lists that are bringing you down, today’s discussion of leverage might just be the ticket you were looking for.
So where in your business might this leverage be hiding?
Let’s look at the three most common today.
Let’s first look at your existing clients. Nurturing and selling to them over and over should be your #1 priority. With existing clients your marginal costs to sell them the next item are significantly less than the cost of acquiring a new client.
But what typically happens is once you get a new client you neglect them. The sale is over and you move on to the next new client.
You need to be constantly nurturing them with additional educational communications to help them see the value you provide (over and above what your competitors do). You also need to be communicating regularly with them so they don’t forget about you when they have a need for your services in the future.
This can be done through e-zines, mailed newsletters, monthly invoicing, surveys, etc.
You also need to look at how much in sales and profits (both initially and on an ongoing basis) those clients provide. This profit potential shows you how much you can invest in acquiring clients and also in keeping the relationship alive.
People often look at an advertising budget as a cost. And as a result they try to minimize it (keep their costs down). But if, for example, you find that for every dollar you invest in an advertising source generates two dollars in profit on average the first year, and another three over the next year, wouldn’t you increase your advertising spend? Assuming the cash flow model worked out and your infrastructure could handle all the new business.
Also look at different client profiles. Are some more profitable than others? Are you selling them more impactful service levels or product combinations? Who are your top 20% clients and top 10% clients? Are you treating them more special than the rest of your client base? If not, why not? Shouldn’t you invest more in a client who spends 5 or 10x what everyone else spends? Couldn’t you through parties for your best clients? Or have private viewings or private sales just for them?
Offers are another key leverage factor. When you look at the product or service offering, are there holes? Do you have a high-end offer but are neglecting a low-end or medium-level offering? Are you losing out on clients that way who may not fit your high-end-only offer?
If you’re advertising, have you tested different headlines (like coming up with 100+ headlines and testing the top 20)? Even if you make offline offers, you can still test online with Google Adwords or Facebook advertising just to see what pulls best.
Have you tested different offers to subsets of your client list? If you’re not continually testing you could be leaving double the sales and profits on the table.
If you are advertising, have you split test offers and followed up when prospects visit your store? What are you doing with those results? Or are you like most businesses who don’t even track or look at the results of their marketing efforts. They spend and hope.
In the offline world most people don’t think of their competitors as critical business partner opportunities. They too often won’t even talk to their competitors. They think their competitor will steal their ideas or clients or staff. So they don’t find ways to mutually benefit. People come from such a scarcity perspective that they cut off tons of opportunities. What kinds?
Joint venture opportunities for one. Joint ventures with competitors is standard operating procedure in the internet marketing community. They market their products and services to their competitor’s client lists. And both companies mutually benefit from expanding their reach. It is rare that both companies have the exact same client lists. This is the essence of affiliate marketing.
Also could you acquire a competitor’s low end product to fill a gap in your offering (like if you sell a high-end software). Or could you offer the same to them?
What else could you do?
You could sell leads you acquired, but aren’t a fit for your current product line, to another business for a share of the profits.
Or you could buy leads from a competitor the same way.
Or you could share someone’s extra office space. Or their administrative staff. Or their warehouse space. Or use their buying power to get better discounts from suppliers. Or share their HR resources or accounting. You name it, if someone else does it but isn’t fully utilizing it, there’s an opportunity.
And the biggest thing here is many times you’re dealing with getting more sales and profits from the same or a reduced overhead (why add overhead if you don’t have to, right?)
Did you learn something? Then take action now…don’t wait.
If any of these ideas hit home, apply them right away. If you wait you’ll find you’ll forget them and be in the same place next month you are today.
If you’d like to learn more about how they can be applied in your business specifically, and tailored to your unique situation, contact me. We can start with an assessment of you and your business and uncover many of these opportunities and likely many more.
I’ve found most businesses are using only about 25% to 30% of their potential. Why limit yourself?