Recently I was involved in a conversation on producing business growth.
The discussion revolved around what to measure about the business in order to keep track of the growth.
A few things to start:
Don’t make things complicated. Be sure that you’re measuring the right things. Historical data has some value but the good stuff – the transformative stuff – tends to revolve around things that indicate future behaviors (or not) of your customers.
When the conversation started, I referred to a few blog posts to help the conversation move into the right frame of mind about how to be thinking about growth, including:
In these conversations, there’s often a struggle with *where to start*. Ask yourself what’s important.
The answer in this case? Getting more customers.
Working on the assumption that “customers” meant getting new ones, I asked what cluesÂ prospects give that they are going to become a customer.Â Remember last week’s discussion about “invisible” signals? Customers/prospects give signals as well.
I didn’t really get what I was looking for regarding buying clues, so I started thinking about a way to reword the question. Why? Because lack of good answers tends to indicate that I’m not asking my question with the right words (think about that positioning vs. the more common “my customer is an idiot” framing that some default to).
Before I could reword the question, I was asked how one finds out what a person does before they become a customer.
A few answers might be: They become a lead. They join your email list. They ask you to send your newsletter. They call and ask for a brochure or prices. They stop in and kick the tires. Each of these sometimes subtle behaviors will signal where they are in the buying process.
Speaking of subtle, there’s a notable case where incoming Google searches in plural (ie: “guinea pigs”) were almost always new leads just starting to investigate the topic and singular searches (ie: “guinea pig”) were almost always searches done by people who were ready to buy.
You can’t get much more subtle than that. Paying attention to what your leads and customers are doing at that level was enough to substantially transform a website user’s experience and vastly improve sales. That’s the kind of signal that can transform everything.
If you think about these behaviors, you can come up with the things people say to you when they contact you or visit your business. They might say “Yeah, we just had a new baby so we’re looking for a new car / looking for a new house / buying carpet / selling our motorcycle or however they do business with you.
You know the clues, but you might not be thinking of them in that way.
Getting a plan
It’d be great if there was a single “golden spreadsheet” that every business could use to figure out these things. Unfortunately, it doesn’t really work that way.
While numbers like cost per lead (CPL), cost per customer (CPC) and lifetime customer value (LCV) are absolutely critical for every business because they tell you which lead sources send you the highest quality customers, how much you can afford to pay for advertising and much more – they don’t tell the whole story.
Many businesses ignore LCV and try to pay as little as possible for advertising. Trouble is, LCV is a very important number in the big picture of your marketing and metrics because it reflects buying behavior.
That behavior is what you have to decipher. Like the analysis of lead sources, such as which leads give you customers with the highest LCV, which leads give you the customers who have the most returns; behavior of your existing leads and customers helps you find more of the “right kind” of customers.
Customers and prospect behavior frequently falls into patterns. While there are always exceptions, it’s wise to identify a sequence of behavior – particularly for the folks you most want to have as customers.
Getting more customers is sometimes (not always) the easiest way to raise more revenue. The other two most common ways to increase sales are sell more to your existing customers and sell in bigger transaction sizes. To do that, you have to know more.
Study what your most profitable customers buy, how often they buy and how long they wait to buy after you introduce a new product (or make an offer) to them.
Sometimes these folks simply buy everything you make, it’ll depend on your business. Sometimes they buy the best products you make. Your order data will reveal much more than the Magic 8-Ball.
These steps will often help you understand who is, but hasn’t yet transformed into, that ideal high-profit customer.
We’ll hit this topic more next time.