LEAD GENERATION BY THE NUMBERS
“You miss 100% of the shots you never take” –Wayne Gretzky
You have probably heard it said many times that Sales is a numbers game. That has certainly been our experience here at E-Myth Benchmark, but just what does that mean? I mean seriously, in real numbers what does that mean? If you were in front of 100 potential customers who were all within the demographic model of your most probable customer, and you offered them an opportunity to buy whatever it is you sell, how many would you expect to have immediate interest?
Actually, there is a fairly consistent answer, regardless of what you are selling. It’s about three percent. That number has come up several times in recent quantifications we have done both internally and with clients. It is so fascinating (to those of us who are fascinated by human behavior and the sales process), that I recalled reading about it several months ago and went back to review it. “It” is a book by Chet Holmes, entitled “The Ultimate Sales Machine” (Forward by the one and only Michael Gerber), which I highly recommend.
In it, the author describes his experience and twenty years of research which revealed the same conclusion over and over—about three percent of potential buyers at any given time are buying now. He tested it out in a lecture on the subject in front of 1200 CEOs. He asked how many people in the audience were in the market for a car right then. About 30 people raised their hands. “How about tires?” A different 30 raised their hands. “How about furniture?” Another approximately 30 hands went up. “How about home improvements?” Another 30 hands. “How about office equipment?” Again, about 30 hands.
His research further showed that another 7 percent of potential buyers are, at any given time, open to the idea of buying what you are selling. They may not be satisfied with their current provider or situation and are not opposed to change but may not be ready to buy right now. The remaining 90 percent, Holmes goes on, fall into three roughly equal categories. The top third are what Holmes calls “not thinking about it.” They are neither against it nor for it, they’re just “not thinking about it” right now.
The second third are what Holmes calls “think they’re not interested.” They are not really neutral, and they have the potential to become interested at another time or under other circumstances. The final third is “definitely not interested.” They are happy with what they have or the way things are, and have no interest in change.
So, your challenges and opportunities should be clear. With even average scripting, together with determination, discipline and persistence, you can find and begin to convert the three percent in your universe of prospects who are ready to buy now. It is an even greater challenge, and certainly an opportunity, to discover ways to infuse a greater sense of urgency in the next seven percent who are open to the idea of what you sell, but not ready to buy now. Depending on your product or service, that takes a clear message that communicates it is worth buying now, and not waiting. This may be a value driven message, such as a discount, or one that promises immediate relief based on credible testimonials, or the like.
An even greater challenge, and again, opportunity, is to turn the heads of the next 30 percent who are “not thinking about it,” and even the additional 30 percent who “think they’re not interested.” This takes a careful examination of what are called the psychographics of your potential customers, or “why” people buy from you. What drives their emotional decisions? What are their buying preferences? Then, it takes carefully crafted scripting and channeling of the message to peak their interest and attract them to a selling conversation.
Are you interested in a message that begins with “let me show you the wonderful variety of carpeting we have to offer,” or one that begins with “let me describe what research has found to be the five most important things you can do to increase the value of your home?” The first statement might attract the three percent who are interested in buying carpeting now, but that’s it. How many more might the second statement attract?
Posted by emyth benchmark at 4:56 PM in Business Coaching Tips, Lead Generation | Permalink | Comments (0)
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Thursday, March 03, 2011
What’s Your Business Value Strategy?
Have you ever wondered what your business is worth? I don’t mean what you would like to get for it; I mean the amount someone would actually pay you for it. Do you know what conditions or attributes make your business more valuable? How about those that make it less valuable? As best-selling E-Myth series author Michael Gerber said, “The only sane reason to own a business is to sell it”. It might be tomorrow or 20 years from now, but creating a highly valuable and saleable business is, after all, one of the principal goals of business ownership. Not only that, it’s an activity that begins the day you open for business and never stops!
So, let’s give it some attention. There a number of ways businesses are valued, depending on the industry and type of business, whether it’s a service business or one that is capital intensive, such as a manufacturer, or whether it is a business with a recognized formula for valuation. Without going into detail, businesses are most commonly valued as a multiple of a certain calculation of its net earnings. In other words, a buyer is willing to invest a certain amount of money to get a certain return from the earnings of the business, and the amount they are willing to invest depends on the earnings. Simple enough.
The return on investment the buyer is willing to take will depend on many factors, such as the risks associated with the business, its growth potential, the ease of learning how to run it, and so on. There are many factors which make a business more valuable, and of course, many that make it less valuable. We won’t be able to address all of them in this short article, but let’s look at the top six in each category. As you read them, check the circle in front of the ones that apply to your business currently (be honest). Then, add up the number of “Detractor” check marks and the number of “Builder” check marks and subtract the first number from the second. If you get zero or a negative number, you have a lot of work to do. If you get a positive number, there still may be opportunities to significantly increase the value of your business.
The Value Detractors:
- Over the last 3 to 5 years, the revenues have been flat or declining, or the business is not profitable;
- The business depends heavily on the owner or certain key people to operate effectively;
- Finances are not well documented and there are too many “off ledger” financial activities;
- There are no clear and documented marketing, organizational and operating strategies and systems;
- There is a negative trend line in market share, with few new customers each year and a very large percentage of repeat business, especially coupled with an aging customer base.
- There is little to distinguish the business from its competition—it is a commodity (in the mind of the buying public—not yours).
The Value Builders:
- The business is profitable and has had a steady growth in revenues, or has a specific written and credible strategy for increasing revenues;
- The business has documented systems for all of its critical functions and it is the systems that run the business, with people running the systems;
- The owner could leave for periods of time without the operation of the business being impacted in any significant way;
- The financial and accounting records and the business tax returns are consistent and well documented;
- There is a positive trend line for market share advances and both new client acquisition and existing client retention percentages are high.
- The business has developed consistent and predictable customer relationship processes that are difficult for its competition to replicate, thereby creating a sustainable competitive advantage.
If the “Detractor” listing described one business and the “Value Builder” listing described another, which business would you be interested in buying? How many more buyers with deeper pockets do you suppose there are for the business with the second list of attributes? Are you spending time developing your business’ value, or just spending time working IN your business?
Isn’t it time to get busy doing the right work and addressing the right issues in your business? Begin to redesign it now, not just when you are thinking of selling. When you do, you will not only create something of significantly greater value upon sale, but you will have a business that gives you value, joy and satisfaction while you own it. And above all, get a Business Coach! It has been quantified many times over that your chance of taking your business to the next level on your own is less than 4%, and with a Business Coach it is greater than 80%! Why take chances with what is potentially the greatest asset you own.
“E-Myth Mastery is incredible! My business was disorganized chaos, and now I am able to take a different approach and look at my business more systematically. It’s given an insight into all aspects of the business, from the simple to the complex. I understand and know more about operating and financial statements. I know and understand my cost. I have a more definite idea of who my customer is, how they make a decision, how to market to them, and how to put together the right mix, with the right words, with the right media. It’s already made a direct impact with my radio ads….The investment I am making in the E-Myth Program grows my business and my profits, and at the same time it’s getting me to a point where I can be free from my business…It has over exceeded my expectations!”
- Quality Water Services, Inc.
Posted by emyth benchmark at 9:24 AM in Business Coaching Tips | Permalink | Comments (1)
Technorati Tags: business coach, business coaching, business value, E-Myth, E-Myth Coaching, selling business
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