Top 10 Easiest Ways to Focus your Business for More Profit in just 7 Steps
The Pareto principal, more commonly known as the 80/20 rule is really an investing term. Named after economist Vilfredo Pareto, it specifies an unequal relationship between inputs and outputs. The theory is that 20% of the invested input is responsible for 80% of the results obtained. A common “rule of thumb” in business is that 80% of your sales come from 20% of your clients.
So how does one figure out who those 20% are? That’s fairly easily discovered by sorting through a stack of paid invoices or is within a few clicks inside your accounting system. Figuring out how to copy those profitable 20% to effectively grow your business is the challenge.
Businesses that have found success by applying the Pareto principle to their sales, marketing/client-acquisition and even their internal process for cost control have done so with focus: aka specialization.
A business can specialize in any number of ways with countless combinations. Let’s take a quick look at 10 ways that your business can specialize:
- Geographic: Area, climate, population size, or even within your client’s facility
- Demographic: Age, education, income, marital status, household size and composition, gender, stage of family cycle
- Occupation: Industry, trade or profession
- Behavior: Attitudes, buying patterns, product or service usage, frequency
- Psychology: Lifestyles, motivations, personality characteristics
- Timing of service: Nights, weekends, short notice/on-demand, weddings/events, holidays, stages of life
- Specific solutions: Cash flow, customer retention, drug abuse, employee turnover
- Method of delivery: Face-to-face, via email, by phone/FaceTime/Skype, live seminars, print
- Size or type of client: Small business, schools, restaurants, law firms, boutique services
- Pricing: Premium, bargain, value
It is becoming easier to find data about your marketplace thanks to tools such as Google Analytics which can instantly tell you about your website visitors and Facebook which can show you hundreds of behavioral and demographic variables about local audiences.
Developing an internal process that helps an organization identify, duplicate and leverage their “best” customers (those elusive 20%) is the key to strong growth using specialization.
McCabe Media recommends the following steps to get started right away:
- Ask your ownership/investors and key sales personnel to put together a persona of your ideal client. A persona is a set a characteristics such as income, location, buying patterns that identify a group of people. Ask that their list be backed up with both real data such as paid invoicing, project timelines, profit/loss data as well as convincing anecdotes that align with your overall mission as a firm. [1 Week]
- Hold a meeting to reach agreement as to the ideal persona — your 20%. Use the Top 10 method above to drive discussion. [:30 minute meeting]
- Distribute the persona(s) in a written/visual form to all of your key account sales and service team members [Within 24 hours]
- Ask your marketing/IT/sales people to run reports from your internal systems such as Google Analytics, HubSpot, Salesforce, etc. to compare to your ideal 20% persona(s) target relationships with all of your existing customers [Within 3 days]
- Hold a meeting to discuss the contrast of what your business is currently selling and servicing vs your ideal client. Numerous anecdotal and data-specific differences will emerge [1-hr meeting]
- Use the outcomes of this process to develop guidelines for both your sales and service team that would encourage improved services and more appealing strategies that focus specifically upon your ideal client persona [30 days]
- Compare the outcomes over time from your internal metrics — rinse and repeat
Creating a sales and service culture with a focus offers the business three key targeting tools which drives continued efficiencies:
- Personas Allow for Targeted Marketing: Aligning your organization to focus on acquiring or duplicating your best customers saves marketing-related costs over time while delivering improved sales
- Cross-Channel Focus: When sales, marketing, IT, service, management and more are aligned for common goals it lowers the overall response time to market, streamlines service efforts, compresses communication and provides a framework for strategic pivots. All are cost saving tools.
- Improved Client Retention: An organization that is both highly aware of their client’s needs and tuned to deliver those outcomes wins on client retention and overall satisfaction.
What does McCabe Media do?
- Craft connected stories that engage people with your brand
- Provide tools that streamline how people get products and services from your business
- Empower a community around your business for constant, measurable improvement they makes you more money now and in the future