The Simple Exercise You Can Do TODAY, to Find Your Biggest Opportunity for Growth Ep 277

Summary Notes


In a detailed discussion on business growth, the host outlines a comprehensive framework for scaling a business from $1 million annually to $1 million monthly. The strategy focuses on two main growth avenues: customer acquisition and increasing customer lifetime value (LTV). Acquisition can be achieved through six channels—paid advertising, earned media, owned assets, partnerships, client referrals, and manual outbound efforts—each with numerous tactics. For LTV, the host emphasizes understanding true lifetime value as gross margin over a customer's lifespan, not just revenue. They suggest five methods to enhance LTV: raising prices, reducing costs, improving resell and retention strategies, cross-selling, and upselling. By identifying and consistently applying the most effective levers, businesses can significantly increase their chances of reaching their growth targets.

Summary Notes

Introduction to Business Growth Strategies

  • Speaker A introduces the topic of business growth, focusing on scaling businesses from $1 million a year to $1 million a month.
  • They mention a framework used in consulting sessions to identify and capitalize on the biggest growth opportunities.
  • The goal is to find simple, high-likelihood levers for consistent business growth.

"What are the simplest ways? What are the simplest of these levers? The highest likelihood levers that I have, and then doing this on a consistent basis and expanding the time horizon so that the likelihood that you actually achieve the result approaches 100%."

This quote emphasizes the importance of identifying straightforward and effective strategies (levers) for business growth and implementing them consistently to nearly guarantee success.

"What I want to talk to you about is something that I've been working on a lot more recently, which is helping businesses go from a million dollars a year to a million dollars a month."

Speaker A is sharing their recent focus on assisting businesses in significantly increasing their revenue from an annual to a monthly basis.

Fundamental Ways to Grow a Business

  • Speaker A states there are fundamentally only two ways to grow a business.
  • These two primary methods have several subsets or strategies within them.

"And so, fundamentally, the ways to grow a business, there are only two."

This quote introduces the concept that there are two main avenues for business growth, which will be further detailed in the conversation.

Increasing Acquisition

  • Speaker A outlines six ways to increase customer acquisition.
  • Strategies include paid advertising, earned media, owned assets, partnerships/affiliates, client referrals, and manual outbound efforts.
  • Each of these categories has various subcategories and tactics.

"One is you can increase acquisition, which is getting more customers, right, selling more units."

This quote introduces the first fundamental way to grow a business: increasing the acquisition of customers or sales.

"But there are six ways to do this. One is through paid advertising... The next is through earned media... Third is owned... Fourth is through partners or affiliates... Number five is client referrals... and finally, manual outbound."

Speaker A lists the six detailed strategies for increasing customer acquisition, providing a comprehensive overview of possible growth tactics.

  • Paid advertising is often seen as the default method for customer acquisition.
  • It involves paying for exposure to attract new customers.

"One is through paid advertising, which everyone automatically defaults, is the only way, right."

This quote points out the common misconception that paid advertising is the only way to increase customer acquisition, setting the stage to discuss alternative methods.

Earned Media

  • Earned media is content distribution on platforms that share information due to its value to users.
  • It's a way to acquire customers by providing valuable content that platforms want to distribute.

"Earned is the platforms that choose to distribute our content information because we provide value to the users, right?"

The quote explains earned media as a customer acquisition method based on the value of the content provided, which incentivizes platforms to distribute it.

Owned Assets

  • Owned assets refer to lists and contacts that a business has complete control over, such as email lists or phone numbers.
  • These assets can be used repeatedly for customer acquisition without external interference.

"Owned. This is the lists that you have absolute access to that no one can touch or remove from you, right?"

Speaker A emphasizes the importance of owned assets in customer acquisition, highlighting their security and reliability as a business resource.

Partnerships and Affiliates

  • Partnering with companies that serve similar clients can lead to mutual referrals.
  • Incentive programs can be created for partners to integrate a business's services into their client journey.

"Partners. How can we create an incentive program where we can pay you for continuity, or we can pay you per deal, or how can we integrate ourselves into your business so that we're just the second step or third step of your client journey."

This quote discusses the strategy of forming partnerships and creating incentive programs that benefit both parties and facilitate customer acquisition through collaboration.

Client Referrals

  • Client referrals involve existing customers referring new business.
  • Creating an aggressive referral program can capitalize on this opportunity.

"Client referrals, as in your own clients sending other business to you, which if we feel like that's an opportunity, that maybe we create a really aggressive referral program."

Speaker A suggests leveraging client referrals as a growth strategy by potentially implementing a strong referral program to encourage and reward customer-driven growth.

Manual Outbound Efforts

  • Manual outbound strategies include cold calling, cold emailing, and messaging on various platforms.
  • These tactics require direct outreach to potential customers.

"And then finally, manual outbound. Okay, so those are the six ways, right?"

The quote concludes the list of customer acquisition strategies with manual outbound efforts, which involve directly contacting potential clients to generate business.

Key Theme: Marketing Strategies

  • Marketing strategies are essential for business growth and can be categorized into three main types: organic, partnerships, and paid advertising.
  • Organic strategies focus on creating content or utilizing SEO to naturally attract customers.
  • Partnerships involve collaborating with others to leverage their audiences for mutual benefit.
  • Paid advertising includes a variety of subcategories such as Google Display Network (GDN), Facebook ads, Instagram ads, YouTube ads, pre-roll ads, and search ads.

And then maybe at some point in the future you'd be Alex, you know, I'd love to have you help me go from a million a year to a million a month, etc.

This quote indicates a hypothetical scenario where a business owner seeks to scale their revenue significantly, suggesting that marketing strategies can play a critical role in achieving such growth.

Key Theme: Increasing Customer Lifetime Value (LTV)

  • Increasing customer LTV is a crucial aspect of the business backend.
  • LTV is often misunderstood and poorly defined, leading to miscalculations in business strategies.
  • A clear understanding of gross margin over the lifespan of a customer is essential for accurately determining LTV.

Now the backside of the business is increase customer LTV.

This quote introduces the concept of customer LTV as a key focus for the backend of a business, emphasizing its importance in the overall business strategy.

Key Theme: Misconceptions of LTV Calculation

  • Misconceptions about LTV can lead businesses to make incorrect decisions based on flawed calculations.
  • The example of a meal prep business demonstrates how overlooking the cost of goods sold (COGS) can result in a misunderstanding of the true LTV.
  • Gross margin, rather than revenue, should be used to calculate the LTV of a customer.

And so the delineation, the thing that needs to be peeled off here is what is the gross margin over the lifespan of the customer?

This quote highlights the need to focus on gross margin rather than revenue when calculating LTV, underscoring the importance of understanding profitability over the customer's lifespan.

Key Theme: Lifetime Gross Profit (LTGP)

  • LTGP is proposed as a more accurate term for what is traditionally referred to as LTV, especially for businesses with tangible goods.
  • The concept of LTGP emphasizes the importance of calculating profit rather than revenue over the customer's lifespan.
  • This redefinition aims to provide clarity and prevent the common mistake of equating revenue with LTV in businesses with significant COGS.

I might even redefine it as LTGP, which is lifetime gross profit.

This quote suggests redefining LTV as LTGP to better represent the true profit generated from a customer over their lifetime, highlighting the need for precision in financial metrics.

Key Theme: The Importance of Word of Mouth

  • Word of mouth is a powerful marketing tool that can be more effective than traditional advertising.
  • The speaker does not use ads or sponsorships, relying solely on organic growth through audience sharing.
  • The speaker encourages the audience to share the podcast to help it grow, emphasizing the value of personal recommendations.

The only way this grows is through word of mouth.

This quote stresses the reliance on word of mouth for the growth of the podcast, suggesting that personal recommendations and shares are crucial for organic reach and audience expansion.

Paying It Forward and Good Karma

  • Encouragement to share the podcast as a form of support and to generate positive outcomes for others.
  • The act of sharing can be seen as a way to pay it forward and spread good karma.

To pay it forward to whoever showed.

You or however you found out about.

This podcast, that you do the exact same thing. So if it was a review, if it was a post, if you do that, it'll mean the world to me.

And you'll throw some good karma out.

These statements highlight the concept of reciprocity and the social impact of sharing content that one finds valuable, suggesting that such actions can have a beneficial effect on the community.

Increasing Back-End Business Profitability

  • There are two primary ways to increase back-end profitability: getting customers to buy more frequently and getting them to buy complementary products or services.
  • A deeper analysis reveals five tactical ways to enhance business on the back end.

There are two ways that you can increase the back end, right? You can get them to buy more times. You can get them to buy. To cross helps.

This quote introduces the initial concept of increasing back-end profitability by focusing on purchase frequency and cross-selling.

Five Tactical Ways to Enhance Business Profitability

1. Increase the Price

  • Raising prices can directly boost the lifetime gross profit from a customer.
  • The approach involves maintaining the same product or service quality while charging more.

Number one is you can increase the price. Very simply, you do the same exact thing, but you charge more.

This quote outlines the first strategy for increasing profitability, which is self-explanatory—increasing the selling price of goods or services.

2. Decrease the Cost

  • Cutting costs can increase gross margins, allowing for more funds to be allocated to customer acquisition and other areas.
  • Cost reduction can be achieved through technological improvements or more efficient fulfillment processes.

The second is you can decrease the cost. So this is one that a lot of people overlook.

This quote emphasizes the often-overlooked strategy of reducing costs to improve profitability, which can result from operational efficiencies.

3. Reselling and Retention

  • Reselling involves recurring business models where customers are continually purchasing, such as monthly memberships.
  • This strategy ties into concepts like churn and activation, aiming to increase the lifetime value (LTV) through improved retention.

Number three would be reselling. So that's within the context of like a recurring business.

The quote explains the third strategy, reselling, which is particularly relevant for subscription-based or recurring revenue models.

4. Cross Sells

  • Cross-selling entails offering customers additional products or services that they need.
  • This can be executed by owning another business that complements the primary one or through partnerships and affiliate relationships.

The fourth is through cross sells. This is where you're selling someone something else that they also need.

This quote introduces cross-selling as a method for increasing customer lifetime value by offering complementary products or services.

5. Upsells

  • Upsells involve offering customers premium products or services that are upgrades or add-ons to their initial purchase.
  • It requires a different strategic approach from cross-selling, focusing on enhancing the customer's existing purchase.

And then finally you've got upsells. All right, and I like to delineate this because you think differently about each of these things, right?

The final quote distinguishes upselling as a separate strategy from cross-selling, highlighting the need for a distinct mindset when implementing this tactic.

Increasing Customer Lifetime Value (CLV)

  • Discusses strategies to enhance the lifetime value of a customer.
  • Emphasizes upselling and premium upgrades as methods to increase CLV.
  • Focuses on the importance of customer retention and repeat purchases.
  • Outlines cross-selling and partnerships as a means to offer more to customers.
  • Suggests prioritizing partnerships over building new offerings for early-stage companies.
  • Identifies opportunities to ascend customers to higher levels of service.

"And so each of these five ways increases the lifetime value of the customer."

This quote summarizes the goal of the discussed strategies, which is to increase the lifetime value of the customer by utilizing various methods such as upselling, cross-selling, and improving retention.

"Cross sells, looking at all of the different things that a customer who's going to work with you may eventually buy as a result of doing business with you and seeing which of these things would I potentially want to create, which of these things would I would have potentially want to buy, and then which one of these things would I potentially want to just partner with?"

This quote explains the concept of cross-selling and the decision-making process around whether to create, buy, or partner for new offerings to customers.

"And if you're earlier on, I would definitely recommend doing more partnering and less building, because then you probably have too many companies and it's a nightmare."

The speaker advises early-stage companies to focus on partnerships rather than building new offerings themselves to avoid overcomplication and resource strain.

Business Growth Framework

  • Describes a structured approach to scaling a business from $1 million a year to $1 million a month.
  • The framework evaluates opportunities and identifies the lowest hanging fruit for growth.
  • Emphasizes clarity and focus in business growth strategies.
  • The framework involves two primary ways to grow: acquiring more customers and increasing their value.
  • It includes analyzing six different sources of customer acquisition and numerous tactics within each.
  • The process is iterative, aiming for consistent application and long-term success.

"And so when I'm looking at a business that we're trying to take from a million dollars a year to a million dollars a month or multiple million dollars a month, this is my framework."

This quote introduces the speaker's framework for scaling a business's revenue significantly, which is the focal point of the discourse.

"You should feel calmer after doing this exercise and focused on exactly what needs to happen in your business in order to grow it."

The speaker emphasizes that the purpose of the framework is to provide clarity and reduce overwhelm, leading to a focused growth strategy.

"And so looking at the entire business and think, what are the simplest ways? What are the simplest of these levers? The highest likelihood levers that I have, and then doing this on a consistent basis and expanding the time horizon so that the likelihood that you actually achieve the result approaches 100%."

The speaker highlights the importance of identifying and consistently applying the simplest and most effective growth levers to ensure the highest probability of achieving the desired business outcomes.

Encouragement and Conclusion

  • The speaker encourages the listener to apply the shared insights.
  • Ends with a call to action for engagement with the content (subscribe, like, etc.).

"So anyways, hope that was valuable. I hope that made sense. Keep being awesome."

This quote is a closing remark expressing the speaker's hope that the information provided was useful and made sense to the listener.

"Subscribe, like, all that stuff. All right, bye."

The speaker concludes the session with a standard call to action encouraging listener engagement with the platform or content.

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