Your Competition Already Knows This Growth Secret

0:00What if I told you there are only five ways to grow a business? Not 500, not 5 ,000, five. It's crazy to me that we do not put more and more energy into conversion than we do into lead generation. The five ways. And this is five ways to multiply the bottom line profits of your business. Repeat business equals profit. This is kind of where it gets exciting to me. All right, what if I told you there are only five ways to grow a business? Not 500, not 5 ,000, five. That's it. Every business growth strategy you've ever seen ultimately falls into one of five categories. Every marketing campaign, every sales strategy, every operational improvement, every growth initiative, every turnaround plan, every billion dollar company, in fact.

0:46Well, in fact, every startup, every franchise, every business on earth goes through the same five things. And here's the really exciting part. You don't need massive improvements. I see this all the time where companies, they're like chasing the white whale. They got to, we need 100 % growth over here. We need all this massive return on stuff. What you need is small improvements through the same five drivers, okay? That's what we got. Because when these five numbers multiply together, tiny improvements create exponential bottom line growth. Today, we're talking about the most powerful business formula I've ever taught, the five ways.

1:27This is five ways to multiply the bottom line profits of your business. Now, every time I've taught this to people, it blows their mind. So if you've got a chance today, get a pen and paper and note down the way the formula works. So the business growth equation, let's start with that. The formula of the five ways. Leads times conversion equals customers. So leads, potential prospects, potential customers, prospects in your business times conversion, conversion rate, percentage of leads that become customers. OK, so leads times conversion equals customers. Customers is then multiplied by number of transactions, the repeat business rate, how often someone comes back to make a purchase.

2:12That's then multiplied by the average sale. Again, transactions, some might come once and never come back ever again. And others might come 10, 20 times a year type thing. But what's the average number of repeat transactions? And then average sales. Some might spend$5 and some might spend 500. What's the average sale for that? So leads by conversion equals customers. Customers times transactions times average sale equals your revenues, total sales. Then revenues times margins equals profit. So that's the five ways. Leads, conversion, transactions, average sale, and margins. That's it. That's the entire formula.

2:51Every business, every industry, every country, every market, every company, the five ways. So way number one, leads. Let's start with leads. A lead is simply a prospective customer, someone who raises their hand, someone who shows interest, someone who may buy at some stage down the road. Now, most businesses immediately jump to advertising, but there are dozens and dozens of lead sources. And again, in our documented systems at Action Coach, we literally have more than 90 strategies for lead generation in a business. And yet most people in most businesses run two or three strategies for this.

3:31And it's crazy to me. A growth business needs seven to 10 lead generation strategies working, systematized working at any point in time. So if you think of all the different types of lead generation, sources, referrals, partnerships, social media, obviously, webinars, podcasts like this one, content that you create out there in the marketplace, e-books, articles, white papers, all that stuff. SEO is definitely a way. AI, getting out on AI today, that's definitely another way. Events, networking, affiliates. So when we think about it, the first question isn't how do I get more leads? The first question is, how many leads do I actually need?

4:14Because when you know that number, then you can get to the strategy. When you know how many actual leads you need per day, week, or number, the strategy becomes easier. Too many businesses, I see them going out there and I ask them, how many leads do you want? As many as I can get. That's a bad answer. You don't want as many leads as you can get. And I had a guy argue with me at this point. He said, but Brad, we're an online business. I want as many leads as I can get. I said, great. Let's say right now, 2 million people hit your website. It's going to crash, right? He said, well, yeah. I said, great.

4:48So you don't want as many as you can get. Let's be realistic about what we want. So the lead math is relatively simple, right? Let's imagine you need 10 new customers per month. And again, you've got to know that number. How many new customers per day, week, or month do you need? Not want, not desire, but do you need to have? because, again, it brings us back to a marketing point, the word only. We only accept two new customers per week. I love that about marketing sort of thing. So let's imagine you need 10 new customers per week. Your conversion rate is, say, 20 % right now. You need how many leads?

5:27You need 50. Simple. 10 customers, 20 % conversion, you need 50 leads. So we know the target. Many businesses never do that calculation. They operate emotionally and not mathematically. Exactly. Marketing is math when you boil it right down. If you know that every week we can handle 10 new customers, like that's it. You know that 10 new customers a week is your ideal number of new customers a week. Then you can work backwards to do the marketing correctly. Okay. But many companies where they're like, oh, I want unlimited. No, you don't want unlimited. You need to know exactly how many new customers you want per week.

6:02So way number two, conversion rate. This is really where fortunes are made because most business owners focus way too much on lead generation. Very few focus very well on conversion rate. If you had 100 % conversion rate, you need a lot less leads. Imagine this, 100 leads, 10 customers, 10 % conversion. Now, take that same 100 leads and get 20 % conversion. You've just doubled your sales. It's crazy to me that we do not put more and more energy into conversion than we do into lead generation. See, without spending one extra dollar on marketing, you can double or triple or quadruple a business.

6:43This is why conversion is one of the fastest growth levers in business and usually one of the first ones we work on when we start coming into a new business. When people come in, they're like, oh, Brad, and if you think back to the formula, they're like, well, I need more leads. I need more this. And most of them, unfortunately, say to me, I want more customers, more revenues and more profit. And the problem in the formula is they're the result of the five levers. OK, so we've got to make sure we're using the growth levers, not the end result. So the biggest mistakes I see in conversion, most people think conversion is selling.

7:17It's not. Conversion starts before the conversation. It starts with trust, positioning, authority. It starts with reviews, testimonials. There's a massive part of conversion in testimonials and reviews, awards that you've won, your website, your social proof. The sale begins long, long, long way before the sales call. So when I start working with a business and I start looking at their conversion, often your salespeople are saying, well, we're not getting good quality leads. And you go back and take a look at the marketing and you can see why. It's not positioning them well. It's not giving them the right information to be able to be a good customer, to be able to make a fast decision with clarity, sort of that type of thing.

7:59So if you're looking at conversion and you're looking at to improve it right now, you've got to ask yourself some questions. So you think about things like how quickly do we respond? In today's world, speed matters. OK, how well do we follow up? Not just once or twice, but do you call them five, 10, 15, 17 times? Do you do combination follow ups? Do you follow up on the phone and on LinkedIn and on Facebook and Instagram and text message and an email? You've got to follow up in all the different ways. Like that combo follow-up is so important today. Next question, how much trust do we build? Are you just getting a lead or are you actually giving them enough information to build trust?

8:41How clearly do we communicate our value? That, my friends, is a massive part of what our conversion looks like. How effectively do we handle objections? Again, if the objection keeps coming up, your new sales process is wrong. So every small improvement increases conversion. And every time you increase conversion, it's found money. You're already getting the leads. That's why I work on it first with most businesses we come into. So number three of our five levers, way number three is number of transactions. And this, my friends, is where profit lives. Repeat business equals profit. Most businesses focus on acquiring customers.

9:19Elite businesses focus on keeping customers. The lifetime value of a customer is the most important thing. Repeat business is the easiest business to get. The cheapest sale you'll ever make is the second sale to an existing customer. You already have the trust. You already have a relationship. You already have permission. You've spent the marketing dollars to get that customer, invite them back, do the work, keep them coming back. So let's think about the power of retention and why I say repeat business equals profit. Let's imagine you acquire 100 customers. They buy once. Now compare that to 100 customers who buy on average four times.

10:02Same acquisition cost, same marketing cost, same advertising spend, same lead generation out there in the marketplace. but four times the revenue that my friends is leverage working on repeat business and again in our documented systems in the abos system which abos stands for the action coach business operating system if you haven't installed it yet please reach out to an action coach in your area hit actioncoach.com we do the first two weeks coaching for free check it out look at installing it because you shouldn't run a business you should run the software that runs the business so Install the operating system.

10:36So questions to ask yourself about this. How often do our customers buy? If you don't know that, you better learn that and you better learn it fast. How could they buy more frequently? What else could we offer? What can we do to upgrade them type thing? What else could they buy? Do you have a subscription? Do you have a membership base? How do we create continuity products or continuity offers? How could we do that? How do we increase retention of our existing customers, increase the retention, increase the upgrades to make sure we get it. If you think about it, let's use actually Netflix as a lesson on this.

11:10Netflix understands repeat business. They understand the number of transactions. They don't sell you once. They sell monthly, every month, every year, every decade. Subscription businesses understand something that most businesses don't. Frequency compounds. Why does Netflix keep giving you more suggestions? So you keep using it. You get more value. The more you use it, the more value you see, the longer you stay with Netflix. It's phenomenal. When you get the level of frequency they have, it compounds the profitability of your business. Why are SaaS businesses so profitable, software as a service?

11:45Because they're built on the model of repeat business. All right, way number four, average dollar sale. This is one of the most overlooked growth levers in all the business. When you look at a driver, average dollar sales should be right up there on the list. Again, most businesses never ask, how can we increase the size of the transaction? They focus entirely on volume, not value. So we think about the upsell, and I mean, McDonald's is a great lesson of the upsell lesson. They mastered this decades ago when they asked, would you like fries with that? Would you like a drink? Would you like to supersize it?

12:20Tiny increases, massive impact on the bottom line. And nowadays, they don't even have to ask you, would you like a drink with that? You have the packaged meal deal. They get you. You walk up and say, I'll have a number three. And it includes everything on there type thing. Increasing the average sale. There's so many methodologies that do this, but people don't focus on it. And even like the simplest one of all, raising prices. Now, you don't have to raise prices on everything, but there's certain areas of your business. If you haven't raised prices in the last six or 12 months, you should be doing this.

12:52I meet companies where they haven't raised prices in years and it blows my mind. I'm like, what are you doing? But let's look at some of the other methodologies. Again, in the ABOS system, there's over 60 strategies for increasing average sales. Premium versions, upgrades, these are great ways to do it. Bundles, packages, memberships, subscriptions, VIP offers, continuity programs. If the customer already trusts you, just help them buy more and help them come back more often. And I mean, this is what we're aiming to do. Again, there are five core drivers, leads, conversion, number of transactions, average sale.

13:31Think about if you had maybe a high end offer. You know, one of the simplest questions I ask business owners, what's your most expensive offer? Now, I was working with a client one time and she was in the consulting game and she had 15 ,000 was her highest offer. We created a$50 ,000 product, right? A$50 ,000 consulting package. And she's like, Brad, no one will ever buy that. I said, I don't want people to buy your$50 ,000 offer. That's your say no price point, but it makes your$15 ,000 offer look great value. See, if you don't have a most expensive, that's a problem. I mean, if nobody can spend 10 ,000 with you, guess what?

14:13No one ever will. The funny thing about in her case, someone did buy the 50 ,000 package. You rang me all excited. If nobody can spend a hundred grand with you, nobody ever will. Create premium level offers. Not everyone will buy them, but some will. And in fact, even if no one does, even if it just means that your next highest price becomes the middle price point, that's enough. Okay. Even if it's just a few that buy it and it increases the average sale because of the other areas. All right. Now, way number five, driver number five is margins. This is where it all becomes real because as you know, revenue is vanity, profit is sanity, cash is reality.

14:53Margins matter. The bottom line is where it's at in business. Business isn't about how much you make in sales. Business is about how much you have left in the bank. That's what it is at the end of the year. What's the profit? What's the bottom line? Okay, so the price problem. Many businesses try to grow by volume. The easiest growth strategy is often pricing. A 10 % price increase can create a dramatic increase in your bottom line profits. And often it's with no increase in workload. Yet most business owners fear raising prices. Why? They think customers buy on price. And I guess if your marketing is bad, customers do buy on price.

15:32If you're still a commodity, customers will buy on price. Most customers in reality buy on value. OK, what the perceived value that they get from your product, from your service, from being a part of your brand, from being in the community, from whatever it is, the value is what they buy on, not the price. The discounting is one of the fastest ways to kill a business. The discounting trap is obvious, OK, because discounting really is a dangerous thing for businesses to do. Let's think about this. It attracts price shoppers. It doesn't attract loyalty. It reduces margins. it doesn't increase your business's ability to do more for the customer.

16:10It trains customers to wait for the discount. It trains for them to, well, wait, you know, put your name in the thing because you're going to get an email tomorrow with a 20 % voucher on it type thing. It lowers the perceived value of your business. So instead of discounting, learn to add value, add bonuses, add services, add outcomes, protect your margin at all costs. So for example, let's say you're buying a, I don't know, a suit, right? You're a guy, you're buying a suit, a woman, you're buying a beautiful new dress. If I gave you 10%, let's say it was$1 ,000, right? And I gave you 10 % off, I've just given up$100.

16:47That's my profit, right? That's the margin gone down. And people are like, well, we still have more margin than that. No, what if instead I gave you a shirt or something worth$100, I'm adding value, but it cost me 30. Does that make sense? Give away value, don't discount prices. Give away something worth 100 that cost you 30, don't discount it by 100. That's crazy. See, the cost side of margin, margin isn't just about price and getting more for it. Margin is also cost. This is the accountant in me coming out. Yes. If you didn't know, I'm a trained accountant. I know. I have a personality. How would I ever be an accountant?

17:28Yeah, yeah. Right on. Jokes aside, can we negotiate better? Can we automate? Can we systematize this thing? Can we eliminate waste? Can we improve productivity? Productivity equals profitability in most businesses. Every dollar saved goes straight to profit. They say a penny saved is a penny earned. No, a penny saved is five pennies earned when you think about it. That's what we're looking at. Now, the magic of multiplication with these five levers, this is where it gets exciting to me. Imagine you could increase leads by 10%, conversion up 10%, transactions up 10%, average sale up 10%, and margins up 10%.

18:07Now, most people think quickly and they're wrong. They think 10 % growth in the business. No, the result isn't a 10 % growth. If you apply it, it's a 61 % increase in the bottom line. How come? Because it's multiplied. It's 10 % times 10 % times, times, times, times. See, the revenue jumps by 46 % because it's 10 % leads, 10 % conversion. That means 21 % increase in customers. If your leads are up by 10 and your conversions up by 10, 21%. Transactions increase, average sale increase, you multiply it out, it's 46 % in the revenue is up. 61 % if you do 10 % in all areas. Now, you might not get 10 % in all areas.

18:50You might get 12 in one, 20 in another, 15 in another, 7. And, you know, it's not going to be exact, but you've got to work the five ways. That's why I love the five ways. The numbers multiply. They don't add. Small improvements create extraordinary outcomes for you and your business. Now, the biggest mistake most owners focus on just one number. Usually it's leads, okay? They ignore the other four. They spend thousands on marketing while ignoring conversion, ignoring retention, ignoring average sale, ignoring margins. That's not the way this works, okay? You don't go to the gym and work on your right arm this month and your left arm next month.

19:27You go to the gym and you work on all of it. The five ways teaches us to be in balance, okay? That's what makes the result. If you use all five areas over time. Now, again, in the ABOS system, if you haven't spoken with an action coach, you really should. In the ABOS system, we have over 500 strategies in the five ways system. So I've used this formula with plumbers, dentists, lawyers. It's crazy, but I'm sitting with lawyers and they're going, but Brad, how do we do the would you like fries with that? I said, you just ask every customer, by the way, does your will need updating? Because everyone's will needs updating.

20:06By the way, do you have a living will? By the way, do you like just so simple? I've used it with retailers, manufacturers, consultants, franchises. The industry doesn't matter. The size of the business doesn't matter. The five ways will always work because the formula is universal, okay? Write down the formula, learn your numbers, and then you start planning. How do I improve each of these? It's not that hard. And again, if you said, okay, I want to double my business, you got to go back to your five ways and work out, okay, doubling my profits, that means I got to have this increase here, this increase here, and that.

20:41So questions to ask yourself right now, okay? which of the five ways is weakest in my business right now? Okay, which one offers the biggest opportunity for growth if I can fix it? Where could I improve by 10 %? If I just started measuring it, how much would it go up? If you just started measuring conversion, measuring average sale, measuring repeat business, just the focus gets it. What if you improved all five by 10 %? What would that mean for your revenue? What would that mean for your profit? 61 % bottom line profit improvement. Yes, you should go do your two weeks free coaching with an action coach.

21:13So common mistakes. Obsessing over leads. OK, that that is one of the biggest mistakes I see in this. Ignoring the conversion, not measuring the conversion, not measuring it step by step. No real repeat business strategy like there's no strategy to build repeat business in. There's no premium offers. We're competing on price. These are the mistakes that I see way too often done by way too many companies. Ignoring margins, measuring activity instead of outcome. Oh my God, that one kills me time after time. The five ways forces you to think like a business owner, not like an operator. This allows you to work on your business, not just in your business, okay?

21:53Now, as you know, every week on this podcast, I issue a challenge to take action. There's no use just listening and learning. You gotta do something in this. That's why the company's called Action Coach, not Theory Coach. To get to your 100 million, you gotta do the stuff. So rate yourself from one to 10 in each of the five areas, okay? Leads, conversion, transactions, average sale and margins. Just give yourself a rating from one to 10 in each of those areas. Once you know what your numbers are, you see where the opportunity, right? So find the lowest score, spend the next 30 days improving that one number, okay?

22:29Don't forget the others. Don't, you know, try and do everything in one go, but get down to it. make sure you know it and make sure you do it. Fix that weakest link today. In the next 30 days, get that one done. The five ways formula works in every business always has, but you got to know your numbers and you got to have a goal to improve them to, and then you build a strategy to get there. Whew, big lessons today, all right? Most businesses are looking for breakthroughs, okay? And that's definitely going to be here. The breakthrough is already sitting in your numbers. I want you to know that. You don't need a miracle.

23:06You need small improvements in the right place. It's not about doubling any of the numbers. It's not about quadrupling. It's about getting 10, 15, 20 % in each of the five areas. You need small improvements in the right place. Small improvements multiplied together create extraordinary businesses. Thanks for joining me on the$100 million podcast. If you've got value from today's episode, make sure you've subscribed and share this with all of your friends. Never miss a strategy that could change your business and your life. And remember, the fastest way to scale is to learn from those who've done it.

23:40That's what this show is all about. See you on the next episode.