Harken unto me as I reveal THE secret shared by highly successful entrepreneurs, sales professionals and marketers that is completely missed by the masses. This IS the difference between businesses that enjoy above-average results and even extraordinary success and the vast mediocre majority. What is it?
They are obsessed with the care, development and management of their LIST.
Without a doubt, your list is the single biggest asset in your business. If you were to sell your company, what is the buyer REALLY buying? Your software licenses? Your employees? Your office furniture? Nope. They’re buying your CUSTOMERS, which is another way of saying your “list.” The more productive a relationship you have with your list – specifically how responsive they are to you – the easier, more lucrative, more stable your business becomes.
But is YOUR list an actual asset?
If it’s neglected and in disrepair, no. Many cannot even produce a list of clients that is accurate. Rarely do I get a confident, correct number when I ask a business owner the simple question “How many clients do you have?” Mostly I get deer in headlights or a WAG (wild-ass guess).
One CEO I’ve talked to multiple times over the last few months regarding a project related to his list has given me radically different answers every time we talk. Initially it was 35,000. Then 2,900. The last time we talked it was 18,000. Which is it? It’s kind of an important piece of data for any CEO to know.
So why does this matter? Because without knowing exactly who and how many people are on your list, as well as the characteristics of those individuals, you have no way of accurately, correctly forecasting sales or planning any other marketing-related activity.
All smart marketers rely on known percentages to estimate response rates and to accurately construct a plan for the achievement of sales goals. We know we’ll get a 20% open rate on e-mails, a 5% purchase rate off a launch list. We know we’ll close 25% to 30% of a room of clients, less if a room of suspects. We know roughly 14% of all clients go lame (refund, turn delinquent, go out of business, die, merge with another company, aren’t a fit, etc.), and therefore we have to take that into consideration when setting a growth goal. You start out 14% in the hole (also known as attrition).
If you do multi-day events like we do, you can count on about 70% to 80% of your most productive clients to attend, and 5% to 15% of your least productive clients to attend (companies, not total registrations), and every company brings 1.3 people. Therefore, if I’m attempting to fill an event or even plan an event, it matters if I have 3,000 or 35,000 clients.
It also matters how engaged they are. Clients who are highly “productive” (meaning they have RECENTLY purchased or are FREQUENTLY making purchases or are on a subscription) are far more likely to respond and buy than if they bought one time three to five years ago and haven’t been heard from since.
Other critical formulas, such as profit and revenue per client, average transaction size, average contract size and ascension percentages, lifetime value of a client, ALL rely on having accurate numbers to work from.
Your percentages may differ wildly from mine, but that’s not the point. The point is I know my numbers and therefore can accurately, intelligently plan for growth goals, hitting them with accuracy and confidence, which in turn allows me to invest ahead in people, tools, processes and resources, knowing – not guessing, not hoping, not praying – that sales will be what I estimate and the ROI will be there.
Know this: There’s nothing more demotivating than constantly MISSING goals you set for the company. You need to be able to intelligently, confidently forecast what is possible based on FACTS.
Further, not being able to segment your clients and prospects into intelligent buckets for marketing communications and suppression, sloppily treating them all the same, is a recipe for massive waste and low response rates. If you send a campaign to your list and get low to no response and fail to hit the ROI you need, you might never do that campaign again – but the PROBLEM might not have been in the campaign, but rather the targeting and segmentation. Getting five buyers from 5,000 clients or prospects may be an abysmal failure, but five buyers from 50 is a home run.
Another common stupidity: NOT suppressing the unproductive, slow-paying, delinquent, pain-in-the-arse clients (and prospects) to avoid wasting time and money inviting them to the party again. Another: FAILING to identify and put MORE resources toward the clients who ARE paying you the most, who have the most potential, who are highly productive.
This is a BIG topic so come back next week for part two: Five List Management Tips That Will Make Your Marketing And Your Business More Valuable.
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