How To Dramatically Accelerate Growth With 10% Wins [Part 1]
By: Pete Williams, author of Cadence: a tale of fast business growth.
This week we released the hardcover of my new book Cadence: a tale of fast business growth.
We’re really proud that it’s already won 5 awards, including ‘Best Business Book 2018’ at the International Business Awards
Cadence is the story of a business owner and triathlon coach named JJ who left his stable job as a teacher to fulfil his dream of becoming an entrepreneur. Unfortunately, two years after opening his bike shop, Cadence, JJ finds himself in a place that is all too familiar to most business owners — struggling to stay afloat. That all changes, fast, when an athlete he coaches in turn teaches him how to turn the store’s profitability around with seven key “10% Wins”
As part of launch week, we’ve bent the publishers arm to giveaway earlier access to the audiobook for those who buy the hardcover. Details at: www.CadenceBook.com/audiogift
These three articles tell the story behind the story …how we discovered the first 10% wins and developed the framework we now call ‘The 7 Levers’, and how we have applied the lessons shared in Cadence in my real-world companies.
It all began in 2006 when my partners and I started a business phone systems hardware company, Infiniti Telecommunications.
Back then, Google had reached its tipping point in Australia and, to capitalize on it, we focused all our energy on growing our business via the search engine.
We created our own Minimum Viable Product (MVP) — not that we knew what one was back then — and concentrated on just two things to grow the business: Traffic and Conversions.
We didn’t even handle the actual hardware! (We outsourced all the installation and support to third-party subcontractors across Australia.)
Instead, we basically functioned like an online marketing company who just happened to sell phone systems, and it seemed like a brilliant strategy to grow rapidly.
Problems, however, soon arose. In our naive enthusiasm, we were hitting revenue ceilings, losing steam, and leaving heaps of money on the table.
Turns out we were overlooking huge areas of profitability — like getting repeat purchases (not just one-and-done). In fact, because of our single-minded focus on Traffic and Conversions, we were actually helping our subcontractors “steal” all our newly acquired customers.
It hurt, but we knew we had to re-evaluate our business model; this time looking at our entire business to uncover what we were missing, and how we could produce sustainable profits.
1. There are plenty of “metrics” to track, but only seven drivers of profit in all businesses.(Outside of these seven, nothing else matters.) These are what we call the 7 Levers of Business.
2. Small and incremental improvements across these areas (rather than “big wins”) actually doubledour profits and led to long-term sustainable success. These small improvements are what we call 10% Wins — and this it the “secret sauce,” so to speak. (I’ll explain why it’s only “10%” later.)
Together, the 7 Levers of Business and 10% Wins provide the backbone to the 7 Levers Framework — a system I later created to grow many successful businesses for myself, my friends, and my consulting clients across many countries and industries.
The rest, as they say, is history.
In this article, I’ll show you exactly how the 7 Levers Framework works to increase profits without breaking a sweat. To support this, I’ve included case-studies (with templates and scripts) of the actual tactics I’ve used in my own businesses and those of my friends and clients.
The 7 Levers of Business
Often, we’re taught there’s only three things to pay attention to if you want to grow your business:
- Get more customers
- Increase the average value per order
- Increase lifetime value through repeat sales.
Yes, these things will improve the revenue of a business, but they won’t necessarily improve the profitability or sustainability of a business.
We had the first two pretty much sewn up at Infiniti, but after our deep-dive into the business, we realized there are actually several moreareas that influence profit.
You’ve probably already heard of (and worked on your own) “Customer Journey”, so I’d like to introduce you to the Profit Journey: The seven things that influence profit in any business.
These are the 7 Levers of Business, and are defined as follows:
1) Suspects: Anyone who visits your website or walks into your store (Basically, whatever you call “traffic”: first-time visitors or enquiries)
2) Prospects: People who take some action, beyond “just looking” (On a website, it could mean email opt-ins; in a store, it might mean trying on a garment)
3) Conversions: The percentage of your “prospects” who buy something
4) Average Item Price: The average price of the items you have sold across a period
5) Average Items Per Sale: The average number of items purchased in the transactions across a period
6) Transactions Per Customers: The number of times, on average, your customers make repeat purchases across a period
7) Profit Margin: Your overall profit margin of all sales as a percentage
These seven levers are responsible for allyour results — everything else is a waste of your time, energy and money.
I know, I know, noneof them are a total revelation. Heck, you probably know about most of them already; and you’re probably rolling your eyes at another use of the number “7” (“7 Habits…”, “7 Sins”, “7 Dwarfs” …)
Trust me, there are seven because there are seven. 12 years and a lot of data later, there’s no filler here. Nothing’s been added to make a “nice number”, or renamed because it “sounds better”!
But the important point here is that in order to drive profits, you need to pay attention to all of them, not just one or two. When you work on all seven Levers and, more importantly, leverage them, it makes a massive difference in your profits.
Plus, when you separate the steps, instead of lumping everything into just three categories, it lets you see all aspects of your business and gives you great clarity on what actually drives profit and where to focus your attention.
As Peter Drucker said: What gets measured gets managed.
10% Wins: How To Work Less To Gain More
Along with the important discovery that we needed to pay attention to all seven Levers, there was another, more powerful shift in our mindset we had to make at Infiniti.
It goes against traditional advice, but this one mindset made the difference between stressing and spinning our wheels and boosting profits withoutrunning ourselves into the ground.
The mindset shift is this: Don’t focus on the huge win.
Yep. I said it. Don’t focus on the huge win. A small, 10% Win in each of the seven Levers will actually double your profits, thanks to the power of compounding.
Allow me to back that up with the help of some 6th-grade math.
What you can see is, although a 10% Win might seem small, when it’s compounded by the next and the next… the result is a 95% lift overall.
Suddenly those “small wins” don’t seem so small.
Here’s another benefit: 10% Wins are quicker and easier (I think we all can enjoy that). You will start to see results sooner, and with less effort.
It’s also a way of creating a kind of Build-Measure-Learn feedback loop, to make sure you keep tabs on your progress at regular intervals.
Instead of focusing all your effort on a “make or break” traffic campaign over a few months, you could spend a week (or a month) implementing a simpler campaign for a 10% Win in your Suspects, then move on to Prospects, Conversions and so on.
We also realized that focusing on just one or two Levers created imbalances. And in the case of Infiniti, if we’d carried on as we were, it could have ended in failure.
What’s more, once you achieve these easy victories in all seven Levers, you can cycle back through the levers and let the compounding effect of the 10% Wins work for you again by doubling down on your first efforts, or trying something new.
Something to remember here is that a 10% Win could be something hiding right under your nose, or it could be a technique or an opportunity you’ve overlooked because it might ‘only’ give a 10% improvement in one Lever — and so you considered it a ‘failure’.
- No need to 6X your email signups; just get a 10% win
- No need to boost conversions by 300%; just get a 10% win
- No need to worry about “slashing” costs; just get a 10% win
Not only do you not need to “go big or go home” with each Lever, you’ve got to agree that getting a 10% Win in each of the seven Levers is infinitely easier than getting a 100% increase in one.
Want to calculate how 10% Wins can help YOU?
Use the 7 Levers of Business Interactive Calculator and see how tiny improvements can make a massive difference to your bottom-line.
Why “The 7 Levers Framework”?
We call it a Framework because it’s more than just an idea, or a checklist of things to “keep an eye on”. It’s a way to look at what you are doing in your business, to evaluate strategies and tactics, to give you direction and to keep you on track.
- The 7 Levers are valid in literally everybusiness — whether you’re a plumber in England or run an online SaaS in Silicon Valley… or whether you’re making $100/mo or $100,000 — all your profits are controlled by these seven key areas.
- The mindset shift to 10% Wins means you achieve more but spend less time and effort on any one area of business.
Together, it’s a reference that helps you avoid two common mistakes made by entrepreneurs and growth hackers: Focusing on only ONE area of the business and always shooting for the fences. We learned this lesson the hard way in Infiniti. Save yourself the trouble.
But it’s not easy to take this “bigger picture view” when there’s the promise of a big win. For example, it’s all too often we see case-studies like How to Raise $100,000 in 10 Days, How to Gather 100,000 Emails in One Week or How to Create a Million-Dollar Business This Weekend, and think they are the norm.
Don’t get me wrong; it’s all GREAT advice. Yet we are always better to play the odds and work a reliable strategy — one that allows for big wins, but has its foundation in sustainability.
Look at it this way: if all you do is keep your focus on Traffic and Conversion, it’s like going to the gym and exercising just your arms; the rest of your body will lag behind.
About The Author: Pete Williams
Pete Williams is an entrepreneur, advisor and marketer who Forbes recently called, “one entrepreneur today that every marketer should be modelling,” Inc. described him as, “a savvy marketing strategist.” and Entrepreneur listed him in their recent “Today’s Top Entrepreneurs Under 40”.
His latest book, Cadence, was born from the 7 Levers framework developed inside his real-world businesses.
Pete is also a Professor of Practice at Deakin University, Australia.
About The Book Cadence:
Cadence (Amazon) is the award winning story of a business owner and triathlon coach named JJ who left his stable job as a teacher to fulfil his dream of becoming an entrepreneur. Unfortunately, two years after opening his bike shop, Cadence, JJ finds himself in a place that is all too familiar to most business owners — struggling to stay afloat. That all changes, fast, when an athlete he coaches in turn teaches him how to turn the store’s profitability around with seven key “10% Wins”