This morning I met with a prospect to learn more about their business. After a few tries they were able to explain the business to the point where I could understand it. Then I sat back and just listened to them talk about their concept which is already cash flowing. In the course of this discussion they mentioned what was their most effective technique for customer conversion. At that point I sat started to focus. I then suggested an idea for how they could increase the volume of customers going through the conversion process. The executives had light bulbs go off and the energy in the room rose as they got visibly excited about implementing the idea. Then they asked me how I had come up with this idea, which prompts today's post.
What I told them is the following.
- Whenever you are trying to increase sales, start at the last step the customer completes and identify each and every step the customer goes through in order to get to the final step--completed sale.
- Then working backward, examine each step and see if there is a way to leverage that step. Leverage in this instance means either increasing the effectiveness of the step (the yield) or increasing the volume (number of customers going through that step)
- When you find a step where leverage can be increased, the company puts all its effort into improving the performance at that step; all I really did was tell them how to increase the volume of customers at one stage in the customer acquisition process
Maybe an example from retailing will illustrate the point. Analyzing a customer purchase in a retail store one quickly realizes that there are two key steps where leverage can be applied.
- Bring more customers into the store; or
- Increase the average purchase of the customer
Selling all the socks in 3-packs instead of single pairs is a simple example of leverage whereby the average transaction increases.
Customer acquisition almost always can be modeled mathematically. Anything that can be modeled mathematically is logical. Anything that is logical lends itself to a step-by-step analysis. All one needs is the discipline to break down the customer acquisition process into its steps and then carefully determine where the leverage opportunities exist. In the simplest terms, you are just trying to increase the numerical values in the assumptions.
Long time readers of this blog know I am not a marketing guru or particularly creative. What I am pretty good at is applying a disciplined approach to logical analysis. It is much easier to think about how to increase the value of a number (leverage) than it is to think up creative marketing ideas. Remember 3-packs of socks. Try it--your sales may increase!
