I have worked with many businesses in nearly all sectors as a business efficiency advisor and also on my own company. One thing that I almost noticed in all of the companies I’ve worked with is that nearly all of them make a big mistake about their marketing and revenue generation and it is that they miss out on big growth opportunities by just concentrating on attraction, conversion and retention in the wrong order.
The Three Elements of Growth
If you look at any company, there are three elements to steady growth: attraction, conversion, and retention. I want to refer to them with the term “ACR.” It boils down to:
- Generating new leads via external marketing.
- Converting the leads and transforming them in to clients.
- Retaining these clients for continuous earnings.
In the described order, the majority of companies follow these three groups which is a mistake, first, they use a marketing strategy to gain new leads. Then, they’re concentrating on converting those leads. And only then can they make an attempt to keep their existing clients.
The problem, huh? That’s totally backwards.
You must only concentrate on external marketing once you have perfected retention and conversion. After all, what is the purpose of gaining leads if you can’t convert them? And what is the point of converting potentials if they exit in a month? It’s not just ineffective — it’s illogical.
Concentrating on retention, conversion and attraction — in that order — is by far the most cost-effective and productive way to build a stable, reliable revenue stream for your company. How am I supposed to know? Since, like a lot of company owners, I’ve been doing this wrongly with my own business for years. When I swiped the order around, it all started to work.
Retention: The Secret Weapon
I’ve said this before, but I’m going to say that again: revenue is a luxury metric. In most companies, customer retention and churn rate (the rate at which you lose customers) is a much more important measure, because it can demonstrate the quality of the product and how much income you’ve left on the table.
if you are missing 20 percent of your customer base each month, but you’re getting another 20 percent via marketing, is it really a smart plan or is it a mistake? Growing customer satisfaction by just 10% will increase your profit margins and prevent your company from losing sales in underperforming months and periods of crisis. The best part of it? Maintaining existing customers is almost always simpler and more cost-effective than heading out and recruiting new ones.
Jay Abraham, one of the most prominent marketing advisors in history, has a marketing theory (and book of the same name) named “Getting Everything You Can Out Of All You’ve Got.” The concept here is basic: the majority of businesses are already sitting on unexploited potential – they just don’t understand it.
The truth is that most businesses are still standing on a treasure chest of hot red leads which is their existing clients
Trying to capitalize on this opportunity implies 1. Keeping the customers as long as possible and 2. Drawing as much money out of them as you can without concentrating on external marketing. It’s much simpler and more profitable to increase your current customers’ income with up-selling and additional products than to go out, follow new leads, and convert them.
People also speak about “hot” or “cold” leads … The truth is that most businesses are still standing on a treasure chest of hot red leads which is their existing clients.
Conversion: Getting Ready for Success
Very often, I see businesses investing in shiny marketing campaigns without any knowledge of how they’re going to turn their leads when they get them. Here are some of the most important items you must have in place before you turn on your marketing campaigns:
- A conversion-optimized site that can deliver results when leads come.
- A professional sales staff with a consistent plan for coping with sales calls and other circumstances.
- An automated tracking system to draw wasted opportunities back to your business.
Think of the low-hanging fruit literally sitting in front of you. At Leverage, most of our customers want to raise their list size, and they only have a 10% open rate on their emails. Increasing the open rate is a much more effective use of time in comparison to introducing new leads to a broken network.
There’s no sugar coating: executing a marketing plan without a well-considered lead conversion method is a complete waste of time and money. There has to be a plan — don’t just anticipate leads to turn themselves.
Attraction: the Final Stage
Only after you have perfected retention and conversion, should you convert your external marketing activities into practice.
I like it to a damaged sink that’s overflowing. You have two choices: whether move faster and add more towels, or fix the problem and let the water drain. Concentrating on marketing and avoiding a marketing mistake before managing retention and conversion is like deciding to mop faster instead of repairing the pipe. It really doesn’t make any sense.