Rapid Niche Development

The fundamental mistake is who is it? You need to define that very, very clearly. In the scenario, I could go to several markets with the product that I developed that does.

Event gallery

Event media files

… missing out on thinking about who’s actually going to buy or invest in this product of service [inaudible 00:00:14]. There are so many ideas that are sitting on shelves in the startup market that will never realize their capital because they forgot to actually speak to the customer. The person who’s in love with it is the person who’s creating it. What I’m suggesting is don’t fall in love with the product, fall in love with the market, because that’s going to give you your opportunity for growth.
The fundamental mistake is who is it? You need to define that very, very clearly. In [inaudible 00:00:41] scenario, I could go to several markets with the product that I developed that does [inaudible 00:00:46]. However, I targeted financial markets that have investments that they’re packaging that are between 10,000 and 50,000 plus. That niche there, can anybody guess how many financial planners there are in the United States? One point two million. There’s probably about 500,000 in the U.S. Not too bad, about half of that. They are very easy to find. They’re really easy to fine, really easy to talk to. There’s already market access.
On a global level there’s more than about 2 million financial planners on the planet, registered financial planners, these are securities registered, that would ideally benefit from this specific product. However, this product also works in service-based markets or markets where you generate quotes or RFPs. It’s the same sort of product. If was launching this product I could say, “This works for anybody that does this.” The problem with that is I dilute my message. The reason why I chose financial planners is because they understand conversion. They understand that they’re writing deals all the time and because they’re writing so many deal, they never capitalize.
One thing they don’t realize is this concept of opportunity cost. Let me explain, do you know what opportunity cost is? For those of you who don’t, it’s a really simple concept. If I had ten people come to me and I pitched a 10,000 dollar product or a service and only two of those people bought, my conversion rate would be 20 percent. Say ten people came, looked at a 10,000 dollar product at a pitch, only two people bought. The opportunity cost is the 80,000 dollars that I missed out on in conversions.
My strategy is to minimize the opportunity cost, where the real profit is. Here’s the funny thing about the math that I just shared with you, if we have a person who’s converting two in ten deals, if I just convert one more deal, I’ve increased the revenue of that business by 50 percent. Does that make sense? If I improve the conversion by 40 percent. All I’m doing is a ten percent conversion or it’s actually a 20 percent conversion. If I double, if I get two more deals and take that to 40 percent, I’ve doubled the revenue of that business.
[inaudible 00:02:54] operates on the principal that if, at a minimum level, if I can convert one more deal at a high value item based on an average of a 20 percent conversion I will give you 50 percent more revenue in your business. Good proposition? I’ll even guarantee it, because I know it works. The reason why I know it works is most people in the market, in that side of the business, never communicate or never follow up or never re-engage the customer that they’ve actually shown or shared a deal with.
If I have a system that can take care of that for you and you don’t have to lift a finger and it can actually generate ten, 20, 100 thousand plus every week for your business. Multiply that over a year. Multiply that over five years. Would there be anybody who’s in the financial market that wouldn’t invest 12 to 24 thousand a year for that service. It’s a no brainer in terms of service. Know who your market is, clearly define who will benefit from that market, understand their motivations in that price. It makes it a lot easier for you to penetrate and sell your product or service.
I just want to share this particular group. There is an association in the United States, it’s also a global organization, and this is an association for association executives. There are 10,000 niche markets that this association is responsible for. There are 10,000 CEOs, CFOs, CIOs, there are more … Actually, globally I think they have about 300,000 members, but all these people are leaders of the largest communities in the world, both not-for-profit, profit, government and corporate. This is one of the largest bodies.
If I was looking for a niche market and this is the market that either has money or has opportunity, I would look at the list of this particular group. The American Society of Association Associations, an association for associations, basically. That’s essentially what it is, but the funny thing is, in the public area, there are also faster ways to access research and markets that are readily available. It’s a very expensive website. It’s called the Google. If you actually ask it to search for some specific things for you, you’ll be very, very surprised at how fast you can find buying markets.
I’m going to share with you a couple of things. Where do they hang out? The people, your customers, you’ve got to find out where they hang out. Right now, from a social perspective, social media is an easy place to connect with your client base. If you’re looking for professional markets, you’re looking at LinkedIn. If you’re looking at consumer based markets, you’re looking at Facebook. If you’re looking at foreign markets, you’re looking at Ning, you’re looking at other types of social networks that actually have large connections.
For example, if I wanted to test an idea in a niche market, and I work in the consulting world so one of my businesses is to help consultants launch their businesses and target much higher value customers in a consulting world. My niche market sits in a group of 180,000 people in LinkedIn. I don’t need 10,000 customers to make several dollars in that market. I only need a handful of people that like the idea that I’m sharing, but I can literally directly go to that market and directly access by just using one social media application. It’s very easy to get into decision makers or people who are actually purchasing product or services for your market, for your product in the market. There’s no shortage of customers and social media is inexpensive enough to be able to access those markets, to actually draw them in so you can create a platform, build authority, and connect with the market.
I’m going to share two lists with you. The reason why I like these two lists is they come from a very public forum and this is the Inc Magazine that you can see online at inc.com. They publish two lists every year. They publish the fastest growing companies in Europe, the fastest 5,000. They also publish the fastest 5,000 companies in the United States. At the moment, they haven’t released the 2015 figures, but we do have the 2014 figures. The thing I like about this particular list, these 5,000 companies, two and a half thousand of these companies are turning over 10 million plus dollars. Their average growth rate in their markets goes from 50 percent up to 480 percent in the last three years. Can you imagine the pressure that you would incur on a 100 to 200 percent growth rate every year three years running, as a business?
In terms of potential buying markets and customers, this is a great list to get a hold of. They actually give you the name of the company, how many employees there are, the company’s website, what industry they’re in, what city they’re in, what location and what their growth rate, what their percentage annual revenues are. The thing I like about this list is not who’s on this list. My question is, who’s not on this list, because these people only represent a small portion of the market. Who are the competitors of the same nature, of the same kind, that I can go to on this list. The beautiful thing is, this gives out the growth pattern of the fastest growing industries or niches on the planet.
In Europe right now, energy, telecommunications, insurance, real estate, and environmental services are the five fastest growing trend markets in the world, in that Western world. It’s telling me that that’s where the growth and the pressure is and that’s where the attention is. Within those five categories I’ll guarantee you there’s probably a thousand sub niches that you could go after with a product or service in the market. Does that make sense? Okay.
Here’s the American list, which is a very different list by growth. The fastest growing markets in the United States are consumer products and services, really interesting. Advertising and Marketing, in and of itself, is one of the fastest growing trend markets in the U.S. Surprise, surprise, with the advent of digital media or digital marketing. Government services is a huge growth market. This is where government enterprise is looking at developing opportunities within the U.S., and also energy is in the top five.
Again, some correlations in terms of real estate, media and health is still in the top ten in the U.S. Between two different western markets, you can see where the growth trends are. If I see growth, I see opportunity, because if there’s pressure going into those areas, then that means that there’s forward movement, there’s plenty of money to be collected in those markets, and the other beautiful thing about this list is it’s telling you who’s got the greatest problems, because the pressure of growth in any market creates the most significant challenges that people have to overcome.
If I was developing application software, innovation, technology and ideas, I’d be looking at the top ten markets that are the fastest growing over the last three to five years. This list will probably change variably over the next five years, because a lot of the social niches are going to start to come through, in terms of market. In terms of finding markets, really easy. All the data is free. Remember that expensive website, the Google? It’s all free on that website.
Why should I buy from you? This, if you’re building a company or building a startup or you’re providing a product or service, this question is the question that you want to answer, and the two words that you want to avoid are quality and service. Those are two words that you do not want to have come out of your mouth, that “We provide great quality and we provide great service.” The third one is value, “We give great value.” Guess what you’re competitors are saying? “We do great quality, we give great service, and we’re awesome on value.” If somebody says to you, “We’re awesome on value,” they’re looking for the fastest way to the bottom because they’re telling you that they want to be the cheapest.
Here’s a funny thing, in Australia at the moment, Pizza Hut, we know Pizza Hut here, at the U.S. organization. There’s a large food chain, in Australia we have also Pizza Hut franchises, and this really shocked me, that Pizza Hut corporate headquarters … I don’t mind making this a public statement, by the way, not that I’m going to get sued. Here’s the perfect example of trying to penetrate, trying to compete with the market. Anybody heard of Dominoes Pizza? Yeah. Dominoes is Pizza Hut’s nemesis in Australia. They’re marketing and their engagement, customer engagement is phenomenal. Their cost on product is very, very good. Their margins are fairly strong.
Pizza Hut wanted to penetrate, wanted to compete with Dominoes. The only way that Pizza Hut, in their wisdom, I’m talking about people who are supposed to be smart at what they’re doing. Their wisdom was, “Let’s sell a pizza at under five dollars a pizza. Let’s do that right across the board, but if we sell a pizza at under five dollars, that’s actually selling it four dollars 50 for a pizza, for a large pizza, we’re losing 50 cents out of every sale for every pizza that we sell at 4.50.” Twenty-three franchises closed their doors within six weeks. They couldn’t sustain that loss in their business, because every time they’re ordering stock, every time they’re ordering supplies, they’re having to pay a supplier a debt as opposed to making any form of profit. Pretty soon the game of, “Let’s be cheaper,” puts you out of business.
Here’s the sad part of this scenario. Pizza Hut is not out of business. They still get a 6 percent franchise fee regardless of whether the pizza is sold at cost, under cost, or a profit. The only people that they’re hurting, ultimately, is every pizza store that shuts down basically starts eating away at their 6 percent, but I cannot believe in today’s age that price war, that price differentiation was the strategy that they thought that they could buy the market with. If you ever go down the path of try to value what you do, always, whatever price you select, up it by 20 percent. If you go to say, “This is what it’s worth now,” just stop yourself before you say that and put 20 percent above that. That’s probably going to be a more fair indication.
In my recommendation when I work with a lot of people in the consulting game, I tell them double their prices, because nine times out of ten, the customer doesn’t understand what the product or the service is actually worth. We, as owners of our product and service, undervalue what we do. That’s the danger. If you’ve got a company where you’re trying to look at pricing and margins, I always say push it up. The market will tell you whether or not they will afford or not afford your product or service. That’s going to be based on their perception of value, but this question of, “Why should I buy from you,” that’s your point of differentiation that you want to create.
If you deliver in a certain way, you want to articulate that deliverability. If you are a fast distributor, you need to articulate why and what’s the benefit of distributing quickly. If value is a proposition, now let me give you a perfect example of value. Anybody bought a Louis Vuitton handbag in the room? We’ve got Tom over here who just bought a lovely handbag probably for his wife. They never discount their product, ever. In fact, the only way, the only thing that happens with their product is actually it keeps going up. They never hold sales, ever. In the history of the company, they capitalize 2.8 billion dollars per annum and they’ve never done a discounted sale for their product, ever, yet their sales are significantly increasing in the market and people keep buying.
Let me tell you, they’re the ugliest handbags I’ve ever seen, because they put their label all over it. You’re buying an advertising campaign with a logo. That’s the best ad campaign I’ve ever seen, but the perception of value, the way that bag is made, the way that bag is positioned in terms of its value, the fact that it will last a very long time, that they back their product significantly and then they estimate the brand, they’re building that quality, the name, the brand, makes that product very unique in the market. It competes with several other luxury brands. However, in its own market, it’s actually growing. It’s actually growing by about 18 percent at the moment.
Not every part of the world is sitting there in a position where we have a lot of expendable capital to do that. If you look at, if there’s people that are investing at high levels, there’s a reason why they’re doing that. It’s really funny, if people actually invest based on value, especially people who understand that quality scenario of what it’s worth, that brand quality, they’re willing to pay the excess. They’re willing to pay a higher price. Your clients, if you position, if you articulate your message clearly and build the benefit of your product into the way that you pitch, your clients will buy. It’ll be a no-brainer.
“I’m going to make you an offer you can’t refuse.” I’ll answer questions … Whoop. My Apple TV is not working. What I’ll do is I’ll just continue on because I don’t want to interrupt the filming. The question I’m asking is, “Are you making me a offer I can’t refuse?” Are you making your clients an offer they can’t refuse? The concept of [inaudible 00:15:57], the product that I just launched two weeks ago, that doesn’t even have a website, by the way and has capitalization, what it does is it’s saying to people that if this thing does what you can’t do right now, what you don’t have the time to do and it gives you a positive return, and that positive return is a significant positive return to you business, is there any reason why you wouldn’t want to realize that positive return?
Every person that I’ve shared this concept with where I was actually, and I wasn’t asking to buy, by the way. When I sat down and just worked that simple math, that “if you close an average of two, you’ve got eight sitting out there. If we got one more deal over the line and we did that every week, that’s an extra 800,000 dollars to your business this year. What would you be willing to invest to capitalize on that 800,000 dollars?” That’s the worst case scenario. Is that a magic bullet pitch? It’s a no-brainer. You want to find the no-brainer in your product or service. What you want to do is you want to make sure that you understand the problem that you’re solving with your product or service as intimately as possible, so that you articulate that simply to the client, so that when they see it, “I’ll just buy it.” The product should sell itself.
A perfect example of a product that sells itself is Apple. How many Apple 5s have bought the last three versions of the iPhone in the room? There’s a few of us here. I don’t know what it is, but when they bring one out, for some reason I’m drawn to that silly [inaudible 00:17:32] store and they’ll sit there and say, “We’ve got one here with your name on it,” and I believe them. I end up buying their products. They have a no-brainer product. It’s appealing, it’s high priced, higher priced than its competitive products in the marketplace. It’s not a world leader. It only has 15 percent of market penetration worldwide. I tell you 15 percent, yet it is the most profitable company in the world today, which is really interesting.
Make an offer they can’t refuse is really important. The only way you can do that is really articulate what the client’s problem or what the benefit [inaudible 00:18:10] in their eyes that they see that this is a perfect match for you. If you can find that, your products and services will sell themselves.
Not an easy thing to do because it takes time, but you need to listen to your customer base. There’s two reasons why people buy, why we, as human beings buy. We either want to avoid some pain or we want to gain immense pleasure. The gain immense pleasure is actually the weaker of the two. We want to avoid pain more than we want to gain pleasure, because pleasure is fleeting. We can only experience that in short bursts, but if we can avoid pain, we will do anything in our power to avoid that pain. Is your product a pain reliever or is it a pleasure giver? That almost sounds like an interesting commercial but anyway … I’m thinking I’m in the sex industry all of a sudden.
What is your sales process? Biggest falldown and biggest letdown in any business is that you do not define a sales process for your product or service. How do you sell the product and then how does the customer buy it? The fastest way to do this, and it doesn’t matter if you’re selling a one dollar app on iPhone or if you’re selling a 10,000 dollar or 100,000 dollar solution or a million dollar solution to the market, there is a process that you go through to actually make that revenue or make that exchange. If you don’t articulate that process, it’s very difficult for you to improve and manage your opportunity.
For example, with the [inaudible 00:19:33] it was a really simple process. I had to ask the question, “If this is a problem for you right now, are you experiencing this challenge of not capitalizing or not realizing what your opportunity cost is?” So, “What does it feel like to lose eighty grand for every ten deals that you do? How would you feel if you knew you were losing 80,000 dollars every week? You wouldn’t be too happy about it, yeah.” My next question is, “What is the profit out of that 80 grand worth to you in your back pocket? What’s the value of that? If there was a way where you could easily capture that or easily generate a return, would that be something that would be useful to you?”
Let me ask the next question, “If I had a way where we could automate that process, where you could see the results and it pay for itself, would that be useful to you?” Would everybody answer yes to those three questions? Yeah. All I’m doing is making it a no-brainer, but what I’m doing is following a sales process. If I can highlight the problem, highlight the solution and articulate the realized benefit to the client of utilizing that particular service, then it’s not me saying, “Well I guess you should buy it.” It’s them saying, “Where do I go to from here? How do I get this in my hands?”
Sales process, articulate your sales process. If you sell your product online, there is a sales process. Everybody is talking about sales funnels at the moment. Sales funnels are the thing. Sales funnels are not a new concept. Sales funnels have been going on since Henry Ford brought out the first Model T. He had a sales funnel. It’s just it was a physical sales funnel. A sales funnel is not a [inaudible 00:21:15]. It’s just a portal to take you through a step-by-step process in sales and it’s no different, if you can figure that out for your clients or your product or service, that’s a license to create money for your business, if you get that right. There’s plenty of examples on how you can do that effectively, but no sales process, you’re going to minimize your opportunity. You must understand how you actually generate an outcome.
Income generativity. This is something that I talk about a lot to a lot of businesses because one of the things that I’ll ask people is, “What’s your expected growth rate for the next 12 months?” The average business in America that I’ve spoken to, their average expectation of growth is “ten percent of what I did this time last year.” That’s their average expectation of growth. If you’re expectation of growth is ten percent on what you did this time last year, you’re actually going backwards, because you’re not taking into consideration indexation, interest rate changes. You’re not taking into consideration margin changes or costs for supplies to deliver. If you don’t take those things into consideration, your ten percent is actually going to cost you money rather than make you money.
Here’s the next question that I ask business owners who say, “I want a ten percent increase.” I say, “Do you have a strategic plan that you monitor on a consistent basis so that you’re actually hitting that objective?” How many people do you think have said yes to that question that I’ve asked, and I’ve asked literally thousands of business owners all over the world. How many people, and I can show you on a show of hands how many people said yes. Very few. Less than 0.03 of a percent of the people I’ve spoken to actually had a strategic plan to make a lousy ten percent, to make a loss in their business.
You know the fastest growing companies that I talked about a moment ago on that Inc 5,000 list? Every single one of those companies have a strategic approach to have a 50 to a hundred to a 200 percent growth rate and realization for their business. They plan for that growth and they live and breathe their plan on a day-to-day basis. They’re actually monitoring. They’re growing in markets where their competitors are actually declining and they’re actually growing, and they’re also charging higher prices, or higher value than their competitors in the market. How is that possible? Half the market is depressed. The other half the market is making it happen. What’s going on?
The reason why is they’ve actually got a focus and attention towards hitting that objective. What you focus on most and what you take action on most is going to become real to you. If you take shitty actions, what kind of result do you think you’re going to get? You’re going to get shitty results. If you take focused, consistent actions towards outcomes, you’re going to have a much strong- … You may not hit you objectives, but you’ll come pretty close and in some cases you’re going to surpass them every single time.
Income directivity in business, absolutely vital. The number of businesses that I talk to, I actually ask this question, “How many hours do you invest in income directivity for your business, to generate revenue?” Most people cannot answer that question. Some people say, “Oh, we’re doing it all day long.” I’ll guarantee you that most businesses, when they actually do an analysis on this, are spending less than an hour a day. Some people are not even spending an hour a week. Some people are spending less than two hours a month on generating income for their business.
If you look at that concept of focus and consistency, when you actually say, “This is what we’re aiming for and this is the objective we want to achieve and this is the strategy and these are the things we’re going to replace to move ourselves or to propel ourselves forward to that objective and outcome,” then in most cases, they will do what they’re actually focusing on. One or two hours a day on income directivity in the business will significantly change your revenue, if you have that focus.
I have this thing where people say, “I don’t have enough time. I have too many fires to put out. I’ve got these problem people called customers to take care of.” There’s all these sorts of issues in the business. All of that is the process of doing. How many people here have been to a doctor’s appointment recently, any doctor, dentist or anything like that? When you’re in the dentist’s chair, do you pull out your iPhone and start having a conversation? No. When you’re in the doctor’s and the doctor is telling you, “Here’s the results of your tests.” Do you sit there and say, “Hang on a second, I just want to check my email.” You’re paying full attention.
If you want to make a change or a difference in your business from a revenue perspective, turn off the iPhone, turn off the email, block out one hour of time and focus on what you need to do to actually generate revenue, and you will rock your socks off when it comes to making money or growing something.
Presentation and pitch. For me, how do I get to mass markets? I can use the internet to leverage through online training or webinars. How do I get to mass markets in niche markets? I can actually create events, go to events. I can actually present. I can create authority within markets by going into making sure that I’m presenting at all times. One of the companies that I work with, they started their business about 18 months ago, self funded.
They’re in the personal training … Sorry, not personal training. They’re in the physical therapy market. They’re generating just under 1.6 million dollars worth or revenue in less than 18 months, fully self-funded from scratch. What they do is they’re running perpetual presentations in the physical therapy market to educate, nurture, and add value so that they’re actually converting clients to their software. They’re perpetually selling all the time. They’re building a massive reputation and they’re pissing a lot of their competitors off, because they’re doing what their competitors are not doing, basically.
Lead generation very, very important. You’ve got to be constantly out there, looking for who is going to buy. The more you understand that market, the more sales you make. You need to be engaging. You’ve got to be opening conversation with your market as much as you can. You can leverage communication and conversation. You can allow the market to drive the conversation. That’s one of the fastest ways that you can actually penetrate, is actually allow the customer to evolve your product. The company I just mentioned, their product was developed by the client, not by the company who innovated the product, or by the market by themselves.
Strategic Alliances. This is one of my favorite, favorite strategies, to gain leverage and penetration. You don’t need to go and buy customers through advertising and marketing. You don’t need to look at expensive campaigning and long-winded processes or investments to actually get out to your markets with your products and services. There are people who are like-minded to you or have affiliated or associated products or services that already have a relationship with your customer base. All you’ve got to do is develop a value-added relationship with that company and that company will expose you to an entire market for your business. You don’t need to do the hard work.
Somebody else has already done the hard work for you, but if you look at ways of pairing up, and I’m going to share with you an iconic example that only happened recently. I only saw this about six weeks ago when I was in Austin. It just really tweaked for me, it demonstrated a point, but it demonstrated on a grand scale. I actually just got the figures for this the other day, when I found out how successful the campaign was, but the company I’m talking about is Uber and Capital One. Unfortunately, I can’t show you the slide. Anybody seen the Uber and Capital One commercials, where if you have a Capital One Platinum card you get 20 percent off for the rides on Uber? Anybody seen that?
There’s a lot of ads going around online, off line, with media and marketing, but what they did was Uber did a deal with a credit card company, essentially, with Capital One and in that deal that they promoted was that for every ride that you use the Platinum card, if you attach your Platinum card to your Uber account, you got a 20 percent rebate. Is that a good deal for Uber items? Yeah, and what is the number one connection to financial reward for Uber? Is that not your credit card? Yeah, 300,000 new credit cards in the space of six weeks. Uber saw new customers it never had through the relationship with Capital One. That’s on a grander scale.
I want to take that back to an even smaller scale. We’re talking small business now. The company I just talked about that built their capitalization to 1.8 million, what they did was they partnered with a leading player within the physical therapy market. They didn’t have connection or exposure when they went to that market, but what they did was, they got better penetration by somebody who already had authority within the physical therapy market. They worked with that person who had the connection and that person connected or actually exposed them to the greater market.
Here’s the funny thing about their market. They’re not after the individual physical therapy person that’s running a small clinic. They’re after the guys that are running multimillion dollar clinics. That’s who their customers are. That customer base cuts their market penetration to about 2,000 customers. If they capitalize on those 2,000 customers, which they won’t. They’ll never get everybody, but they’re doing a pretty good job at the moment. If they capitalize out on those customers, that company will probably be worth about 100 million dollars with only 20 percent of the penetration of the market.
That’s the campaign that Uber ran with Capital One. You can develop strategic alliances with people who already have your market, look at ways of adding value, look at ways of partnering up and collaborating. In the online world, we call that affiliate marketing. It’s not different in the offline world. If you’ve got new product or service and you want penetration, the fastest way to get penetration is go and talk to somebody who’s already talking to your client base, quickest way to do it.
Be a sales driven organization. I don’t want to harp on this too much, but if you are a sales driven organization you’ll have everything you ever want and need to capitalize or grow your business. Most companies are not sales driven. They’re not sales focused. They’re very reactionary. They’re hoping that the customer will come to them, in a lot of cases. A lot of these companies don’t last a long time. There is a mountain of startups out there that never focused on this part of their business. That’s why they’re on the pile. They’ve raised capital.
I was talking to a company a few months back. Unfortunately, they’ve collapsed, but in their first, A round of funding they raised 23 million dollars, in their A round. That was phenomenal. They burned that in six months. No more money. Twenty-three million dollars and in six months it’s gone. Can you imagine the parties they had? Understand and unfortunately, this organization was not sales driven. This goes back to making sure that you have this focus and intent to actually capitalize, to engage. Your business isn’t worth anything until a customer buys something from you. This is the biggest mistake that a lot of startups make. Go to the market. Get somebody to buy. That validates your product. If you can validate very quickly, then you’ve actually got something that you can build on very rapidly.
[inaudible 00:32:44] to business. I like to talk a little about this because a lot of people get confused. Some people may accuse me of being a capitalist, sales driven, commercialized bastard and I’ll happily own that, but what my real purpose in life is, is to give as much value as I can to the people that I serve or the people that I share or the people I engage. The more value I give, the more that I can present that and the more that I can over deliver, the more revenue and the more opportunity and the more resources that I generate for myself and what I do. Every business needs to focus on this type of purpose. Be great to your customer base. The greater you are to them, the more they’re going to love you, the more they’re going to talk about you, the more they’re going to turn you into an icon.
We can talk about all the exceptions to the rule of companies that have done exceptionally well in a very short space of time, but there are literally thousands of companies that are around that are doing great. They’re not iconic, but they’re doing really well. They’re self-funded, because they’re awesome to their clients. That’s the purpose but here’s the thing, your goal is to make as much profit, to generate as many resources as you can from being great to your market.
Most people get these two things the wrong way around. Most people think the purpose of their business is to make some dollars or make some profit. That’s not the purpose of your business, because if that were the purpose of your business, I could walk up to anybody and say, “Hey, I’m really cool. I just need some money so I can make some profit. Is it okay if I have some money?” That’s the wrong way around. The stronger you are on purpose to add value, the stronger this works.
One of the things is you need to have a definable moment. You’ve got to create monumental moments of realization of your profits. Most business people that I know and I’ve made this mistake in my business in the past, where I used to sink all the money that I made back into the business, back into investments, back into the business, because I thought, “Hey, one day I’m going to enjoy it.” I can’t buy back the time that I’ve lost by not taking my profits. The goal is to take and realize and enjoy your profits. Spend your children’s inheritances. Don’t store it or hoard it. Maximize your opportunity.
With that, you rock. I want to thank you for listening to that, but I will take questions. I’m happy to answer any questions you’ve got, but what I’ll do is I’ll repeat the question just for the purposes of the camera. It would be great if you could just stand up and I’ll answer. Hi how you doing?
It was really weird because it was accidental. I gave the idea for [inaudible 00:35:37] away. I didn’t want to do anything with it and in actual fact, it wasn’t [inaudible 00:35:42], well there wasn’t a [inaudible 00:35:44] two weeks ago. This is a brand that’s just appeared, but I gave this idea away to several people that I know in the development or the innovation community and startups and said, “Hey, here’s a simple idea. This is a problem that’s consistent. You can set something up, you can run with this, and you can capitalize fairly quickly,” and I wasn’t interested.
Then a good friend of mine said to me, because I saw somebody develop a product from concept of problem to idea, an actual Y frame within about an hour and five minutes. When I looked at that, I thought, “That was just so complex.” It was a problem that was out there that was to be solved but by the time you actually got to the point of seeing the outcome, I’m thinking, “No one is going to do that. It’s too hard.” I said, “It’s easier if you,” and my mouth went to, “I had this idea a couple months ago,” and in 25 minutes I could pretty much map out, get the solution and I could probably find a third-party application to do it.
Then the person made the fatal mistake and said, “Go on, show me.” I sat down and I actually stepped it out. Literally, I just went, “Here’s the problem. No followup. Opportunity cost is a massive issue. They’re totally stressed by the fact that they’re constantly proposing, proposing, proposing but the conversion rate or the focus or the way they handle the sales process is just like their competitor. They’re constantly trolling for opportunities.” I said, “Well, what if there was a system, what if there was a way to not miss out on that opportunity,” and one of the things that I have found in communication is for you to be a buying customer, and this is statistical, you’ve actually got to ask somebody to buy seven to 12 times before they make a purchasing decision.
Five years ago we used to make decisions based on five frames of reference. Google actually quantified through a concept of ZMOT, zero moment of truth, you can look it up on Google. They quantified that in 2009 the decision-making purchase, the behavioral purchase of a customer was five frames of reference. That was, check out a website, talk to a friend, see it on somebody else. There was social proof evidence and there was evidence of access to information. Here’s the thing. Four years later, it’s gone from five frames of reference to 18 frames of reference.
How many of you have found yourself searching multiple websites for the same product? Anybody do that? Anybody searching cheaper price? Now we get emails, we’re loyal to a particular brand, which we’re actually not loyal to a brand. We get emails now with a special deal which we subscribed to something and we can go look that product up and say, “Hey, who might be selling this very same product for a better deal than what this person has just marketed to us with?” That’s what we’re doing. Loyalty out the window. If we can look at value and we’re making value-based decisions. If it’s 18 frames of reference, if you ask somebody once you’re minimizing your opportunity.
If I can ask 12 times for you and you don’t have to ask, and I do it in a really nice way, in a way that helps the person to make that decision, would that be useful? That was the answer, and every single person I’ve shown that or shared that to, they say, “That is so ridiculously, stupidly simple.” It is. All it is is an auto-responder sequence. However, when you package it and you brand it and you customize it, it now becomes a custom solution and an application that is [inaudible 00:39:16]. Right now I’m preselling in advance. I’m selling yearly subscriptions for three to six thousand dollars in advance and it’s working.
By the way, I didn’t spend time with these people to pitch the idea, in terms of going through a whole lengthy communication process. These are the people that I had spoken to, in some cases, over a year ago, where I was just trying to do some idea extraction, to find out what the market was doing. All of a sudden a year later, I say, “Hey, I haven’t spoken to you for a year but I just want to run something by you. Can you just have a quick look at this?” Here’s the crux of the elegance in the solution, it’s not my numbers that I was focusing on. It’s their numbers. What I tell them is bullshit. What they say is what they believe. They sell themselves, not the other way around. It’s their idea, not my idea, and the idea came to me when people kept on saying, “Yeah, we’re just too busy. We just can’t get to them.” I’m saying, “Yeah, but there’s all this cash.”
I just had conversations, knowing that people didn’t make purchasing decisions on the spot. How many companies out there do estimates and quotes and proposals but never follow them up? They’re waiting for the customer to go, “Hey, I’m ready to buy.” Good luck. That’s how that came about. I haven’t reinvented the wheel. I haven’t got time to do that. The pioneers of our world, they’re the ones that died on the golf fields. The guy who sold the pots and pans, picks and shovels, they’re the ones that were the entrepreneurs. I want to be a pots and pans and pick and shovel seller.
I’m going to do that really quickly. The question was if I could just go through the process of what my questioning technique was, and it was really short. This is so super short. You can do this with anybody. My question was, “Just tell me a little bit about the sales process, how it actually works.” [inaudible 00:41:10]. They say, “Well, we get a lead. We do a checklist, we do a little feedback, needs analysis. Then we put together a program for them. We offer them a solution in terms of investment, and then we leave it in their hands.” Then I say, “What happens after that?”
“Nothing. If they like it, they buy it. If they don’t like it, they don’t buy it.”
“Do you call them up and ask them if they want to go ahead?”
“Have you ever called them up to ask them if they want to go ahead?”
“Oh, we’ve done it occasionally.”
“Did they go ahead when you called up and asked?”
“Yeah, that’s happened.”
“Why don’t we call everybody?”
“Well, I’ve got 300 proposals in my filing cabinet. I can’t make 300 phone calls.”
Can you see how stupid this is? “I’ve got 300 people that I can close a deal on now, and I’m worried about spending hours putting together plans on deals that I’m never going to close.” That was the irony. The only reason that came out was just by asking, “How does this work? How do you do it? What’s the process? What’s the end result? What’s it worth to you?” That’s a really good question. My next question is, “How important is it for you to actually close the deal and generate the profit or the commission or how important is that?”
“Actually vital.”
“Okay, but what happens to all these deals that are sitting in the filing cabinet?”
“Well nothing. We’re too busy getting new ones.”
“How much does it cost you to buy new ones?”
“It costs me 100 to 250 dollars per appointment.”
“You’ve already paid 150, 200, tens of thousands of dollars for those appointments, to not realize the result.”
When you share the insight, I’ll allow for the penny to drop. I had the first guy I spoke to pull out all proposals and started calling files. [inaudible 00:42:57] at the end of the day, he said, “It’s really funny. We closed an extra two deals a day. I wrote this proposal three months ago.” It’s a simple thing. All I’m doing is, “Tell me how it works. What’s not happening? How does that impact on you for it not to happen? If it were to happen in a better way, what would that look like? What do you think we could do to make that happen?”
“Oh, we should be following up.”
“Oh really? Okay, but you can’t make 300 phone calls.”
“Oh yeah. No, that’s a drain.”
“What other way?”
“It would be really cool if we could just do this online somehow,” and so ends the story. All I’m doing is asking, asking, asking, but I’m painting a picture, “What does that feel like? What does that look like,” because I’m not the person in the business. I’m not the person experiencing the problem. I want to open the wound and then I want to get my finger in there and I want to make them bleed as much as possible in a nice way, in a very gentle way. At the end of the day, it’s their decision. Does that answer your question? Super [inaudible 00:44:03] in the … By the way, my sales process to capitalize is to have a conversation. That conversation generally takes about 25 to 30 minutes. That is not a leverage scenario to me. There’s no way [inaudible 00:44:14] I’m going to sit there closing software deals for the year.
A leverage scenario to me is, in this questioning process, what I’m doing is formulating a very powerful sales process that will actually automate. Is it a multi-user? Absolutely. The application is enterprisable, it will be enterprisable. In fact, the second person I sold this to, we’ve already set up a multi-use structure a using third-party application. Yeah, it will expand. It will grow. By the way, by all means, you can become a competitor. There’s no shortage of people out there who will buy this. I’m not the only one at the moment but it’s working.
It’s a really good question. The question was, is there a way of, in terms of the engagement or reconnecting or getting the person to make a purchasing decision … That’s going to be contextual, depending on what product or service you sell. However, for me, I work in a market where I work with consultants who target high-volume, high-target customers. We’re talking six figure deals, high five, six figure plus deals. High five, six figure plus deals are never made on the spot. It just doesn’t happen. You’ve got to build ru- … trust. Rust? You’ve got to build to rust … You’ve got to build some trust. You have to build some credibility, and you’ve got to get to that point where the person realizes that value. The way to do that is you always want to be asking but you want to be asking in a way that’s not confronting.
The way I try and do that or look at that is, what content support, what evidence can I provide that supports the value or supports the idea that this is a way that you can improve your opportunity. Sometimes, and a perfect example is, because I work in the financial market, one of my business is in the financial markets, the way I value and by the way, don’t tell this to anybody. Those of you who are watching the recording, don’t share this, but what I do is, you have a service called Bloomberg here? There’s Bloomberg? Yeah. CNBC? You have financial papers in the country, Huffington Post Financial, CNN Money? Right. What I do is I aggregate content that I search in Google Alerts that are specific to the problem or the challenge that the market is facing, because somebody is always whining about it somewhere.
I set up a Google Alert. I don’t actually do this. I get a virtual assistant to do this for me and they curate content based on the strategic targeting of information. When we get the information we paraphrase it, we link to it, and then we’re asking for feedback. If I give you something that is of value and is relevant to you, and I’ve actually asked permission from you for you to receive that, by the way. I’m not just giving that willy-nilly to everybody. I’ve positioned the value of that. By doing that, I’m making sure that what I’m providing you is relevant and at the end of the day my question is, “What do you think and should we do something about it?”
More often than not, after a period of time, especially the high-value sales, what happens eventually is that person will come back to me rather than me going to them and they’ll say, “Hey, you know this thing that we’ve been mucking around with for 12 months, I think we need to start doing that.” You can drip highly valuable, highly targeted content automatically, by the way, to the audience. Sometimes I’ll do that with physical connection, not necessarily electronically, but I’ll send real information in a package format via the mail or sometimes, there’s a company that I’m consulting to at the moment actually based in Houston.
They’re in the energy market, and they’re acquisition cost for the sale, this is how my brain thinks sometimes. It costs them roughly, the said something really weird to me. They said, “Every time a client comes into our factory and sees our process, we actually convert a sale.” Their average sale is about 150,000. One hundred and fifty thousand is a low-end sale and a high-end sale is 1.5, 2 million dollars. They have big customers. I said, “How much does it cost you to actually make a sale? What does it cost you to buy that customer to make a decision?” The customer doesn’t just buy once. They’ll buy more than once. The customer has a lifetime value.
They said, “Well, it usually costs us about 5,000 dollars we would spend to get a customer to spend 150,000 plus on our services.”
“You just said to me that if we get a customer in our factory and they see our operations they buy. What’s the percentage rates of purchase?”
They said, “It’s 100 percent. They come and see what we do, because we can show them how it really works and how it benefits and how they get value, they love it. Straightaway they’re in. The incumbent supplier is gone.” I said, “How far away is your market?” They said, “It’s within, our average market is northeast, we’re talking Northeast U.S., Northwest and pretty much the major centers within the country.”
“How much does it cost to fly somebody to Houston from those cities? How much does it cost to put them in a really, not a crappy hotel, nice hotel? How much does it cost for you to transport that person and to educate them to show the value so that they’re going to benefit from that process?” He says, “We could do that for less than a thousand dollars a person.”
“Do you think that if we created a position where we actually invited them in a really nice way and positioned the value of coming and making exclusive to them, if we’re spending a hundred thousand dollars for customer acquisition and you said to me we get a hundred percent close rate, how quickly do you think this company is going to grow?” That’s adding value from a different level. That’s like event planning on steroids.
I can tell a story but I can’t give the secrets. I had to sign some agreements. I’ll share with you what happened when I started, I launched a startup, and this startup was in the commercial real estate market. In Australia, even in the U.S., there’s a lot of compliance that occurs around commercial real estate, leasing properties, selling commercial real estate, and I found that there was a significant problem where there was a massive manual problem within the market of being able to facilitate the listing and also the documentation for commercial contracts. It was this manual process you had to go through. The reason why it was manual is because the state legislations in each state had different compliance laws that you had to attach to each documentation or listing of the property.
The average office would spend about six hours a day just administering, and there would be three or four people doing that at any one time. It was pretty labor intensive, and I couldn’t understand because if this information was so readily available, why it wasn’t a copy and paste scenario. Just by asking the question, then they said to me, “Well, we’ve got this software that does it.” I said, “That’s really cool. Let’s have a look at it.” The software was built on all [inaudible 00:51:08] spreadsheet structures. It was really clunky and they hated it, absolutely hated it.
All I asked was, and I started talking to a few other commercial real estate agents, just to find out if this was just a one-off or did everybody experience this same thing. I probably spoke to about seven or eight agencies about this particular problem and about this software, and this software was incumbent and the company was spending, the average customer was spending about 3,000 dollars a month for this software. It was antiquated. It had been around for 30 years but nobody else had come up with anything better, because it had an enterprise structure.
I said to them, “Look, this is a significant issue in your business. What parts of this to do you like and what parts of this do you not like?” They said, “Well you know, if this could do this then we don’t need that anymore because we don’t use all the other stuff. This part here, that’s the important stuff.”
“You’re telling me that if you had something that did that, made it easier, better user interface, solved that problem in a fairly efficient way, that you would leave the incumbent supplier?” They said, “Yes.”
“Saying that you’d leave, obviously the value proposition has to be less than what you’re paying right now. That would be making it more attractive?” They said, “Well yes.”
“Okay, if I go away and see if there is a way to do that and I can come back and show it to you, would you at least, I just want you to take a look and give me some feedback on it.” Within about four weeks I had actually sketched out a solution after speaking to about seven other agencies, and it basically went through and solved that problem in a simple way. I found a developer for that particular product. I sold, I presold each person. In fact, the first seven people I spoke to all became my first investors. I presold at 12,000 dollars per unit. It was a thousand dollars a month. I could deliver the solution within less than three months.
I’m happy to say how much it cost me to build the software. It cost me less than 6,000 dollars. I raised about 80,000 dollars worth of capital for 6,000 dollar investment. The other money, the 72,000 dollars that was left was going to go straight into marketing [inaudible 00:53:14], the product, but what I started doing was, I realized that the main incumbent competitor in the market, on their website they had a list of 800 customers who actually used their software. I actually started contacting their list and say, “Hey, if there was something that was easier, better, faster, and better value, is that something that might be useful to you?” They all went, “Absolutely. We hate this thing. It’s a dog.”
All of a sudden, I was still preselling before I even developed the software. It was three months in, at this stage I had 30 investors. I’d raised a significant amount of capital and then I got a phone call out of the blue, because about three months in, all of a sudden they noticed that people were cancelling on their 3,000 dollar subscriptions. If you think you’ve lost 30 customers. Multiply 30 by three, multiply by 12 and that’s a significant amount of money, considering most of that’s profit. I get a phone call out of the blue. I didn’t know who they were. I didn’t even know, I wasn’t really expecting it. I get a phone call. They say, “Hey, are you interested in selling your software?” I said, “Yes, I am, absolutely, but I don’t have a software yet.”
“Well, but you’re developing one.” I said, “Yeah, yeah. I’ve got a bit of a beta going but I haven’t enterprised it out properly. I haven’t provided the solution, but I’m happy for you to make an offer to me. No problem at all.” Then I heard nothing. I was in Singapore having a talk and I got a phone call while I was traveling. The company had called me back and said, “Hey, we’d like to make you an offer for the software.” I said, “Sure.” They blurted out a figure over the phone. I went quiet for a minute. I said, “Are you serious? Are you seriously offering me that for this piece of software?” Let me explain. When I said, “Are you serious,” are you serious about giving me this ridiculous amount of money for a software that doesn’t even exist yet, that’s about to exist in two weeks’ time? I was saying, “Holy shit, this is a lot of money for something that doesn’t exist!” I was surprised.
By the way, that’s a great negotiating technique. Anybody makes you an offer, just say, “Are you serious?” Take it as an insult, because what happened was, normally in negotiations you get to counter offer. Normally you would say, “Well you know, I think it’s worth a little bit more than that.” I didn’t even get that opportunity, because I was so, “Are you kidding me,” they said, “Hang on a second,” and then they hung up. I thought, “Oh,” I thought maybe I lost the connection or something like that. They didn’t call straight back and I thought, “Oh, okay. I don’t know.” I just got back the day … Three hours later they came back to me and upped the price by 38 percent.
Then what I said to them was, “I think I can let you have it for that,” with a caveat, the 30 investors got the software for free for five years in the deal. They had to take my development team with them and pay full rate. I gave my development team 15 percent of the deal. They were under contract. They were not investors in my deal but because they built it, I thought, “Hey, you guys are awesome.” I gave them 15 percent of the deal as a thank you. They got a contract for five years, but here’s the thing, the software got tanked.
Two months after the acquisition they tanked the software and they’ve gone back to their own software. However, 30 users are using the new product and loving it but they got five years as part of the deal. They only pay 12 grand and they’re saving themselves 180 grand for five years. That’s the story. Remember, “Are you serious,” is the negotiation tactic.
With that, I want to say thank you. I’m happy to hang around and you can ask questions. Feel free to take one of my cards. They do have my contact details. I also run a podcast called Business Unleashed. If you want real strategy tactics, I pretty much give away all my secrets on the podcast, and we publish that every week, two or three episodes. There’s a whole bunch of free stuff and a whole bunch of stuff that you can apply to your businesses. I thank you very much. I really appreciate it.
I do consult for firms. I’m a bit picky about who I consult with. People do have to go over a little bit of a process with me. For me, it’s just making sure that the people I work with to help their businesses are in the right spot to capitalize and grow. I do help out and consult but my major business is helping people take their skills and actually sell those skills to larger markets that will apply. If you’ve got internet marketing skills or copywriting skills or marketing automation, I show you how to go and find corporate clients that will spend lots of money with you for that facilitation. I also show you how to outsource that so you don’t do the work. That’s what I do. The last 18 months we did 8.2 million in revenue with about 42 new consultancies that we started. That’s my business. I thank you.