When we talk growth I suspect that most of you envision selling more new equipment. I appreciate that view. A couple of years ago a distributor that represented 18 different manufacturers told me that I’d be his friend for life if I could figure out how to keep those manufacturers from calling him all the time.
The hard part isn’t knowing what to do to grow your distributorship’s revenue. You’ve already got most of that figured out. The hard part is knowing how to do it. That’s the part that bothers you most. If you don’t know how to do it, then how can you be sure that we do? That’s the real dilemma.
In a letter to Berkshire Hathaway’s shareholders, dated March 2, 1990, Warren Buffett introduced a concept he referred to as the Institutional Imperative. Since he introduced the ideas, hundreds of articles, many of them scholarly, have been written about his observation.
Then one day it dawned on me that a sales transaction was really only a one-time event. You got a lead, you survived the competition, you got the customer and your reward was a single sale. If my goal really was to increase revenues and business equity then I needed to make a change. I discovered that if I flipped my focus I could reach my goals faster.
Instead of focusing on customers in order to generate sales I focused on sales in order to generate customers. I could reach my goals faster because customers have the potential to generate streams of future revenue, rather than a one-time sales event. By focusing on my most Ideal Customers I could reduce sales expenses while maximizing revenue.
I’ll be selling my interest in the business in a few more years. While the assets on our balance sheet will form the basis of the selling price, the life time value of our customer base will have the greater value in the final valuation of my business. If you want to increase the value of your business, start focusing on customer acquisition, rather than transactions and increase the value of each customer, and the final valuation of your business.
We are Growing Marketshare 365 and we are the largest provider of Unlimited Exclusive Leads to equipment distributorships throughout North America. If you are ready to have a conversation about how we can collaborate with you to substantially increase your distributorship’s revenue growth, click here.
On May 6, 1999, Simon & Schuster released a little book written by Seth Godin. The book was entitled, Permission Marketing. The idea behind the book was that the most efficient way for a business to grow was for the business to first seek permission from its prospects to engage with them. The central idea behind the book is that a business can turn its prospects into friends and its friends into loyal, long-term customers. People buy from people they know, like and trust.
Are you as trusting of people today as you were 25 years ago? I’m not. As dishonesty, shortcuts and greed have increased, trust has become more and more scarce. Yet the trust of your customers and prospects is an essential ingredient for growing your distributorship’s marketshare. How important is trust to you when you make a major purchase?
Question: What does revenue growth and baking a cake have in common?
Distributorships often make the mistake of trying to increase revenues with a one-ingredient recipe. That single ingredient is new equipment leads. That’s like trying to bake a cake with just flour. Based on volume flour is the most important ingredient, but if that’s all you put in your cake pan you’re going to be disappointed. If new equipment leads are all you’re using to increase revenues you’ll end up continually disappointed.
Most of the people who read this growing idea will be familiar with the Pareto Principal, or as it is more popularly called, the 80/20 Rule. Few, if any, have ever put a pencil to it. If they had, and applied what they learned, they would likely have understood how to achieve substantial revenue growth.
There are few things more powerful in our lives than asking. Think of all the things that you wouldn’t have if you hadn’t asked for them. Asking is powerful.