How to “own” more of the business your customers purchase
Welcome to this week’s Tuesday Profit Tip where we bring you real-world ways to Build-Grow-Manage-Profit from your business. My goal is that you earn at least $1,000 an hour for every hour you spend learning and applying our profit strategies.
When I was taking my technology company public, we purchased a company that was run by two incredible entrepreneurs, Jessie and Rohit. While we were over-focused on getting new clients, they were focused on maximizing the revenue per client – literally “owning” these clients. And the results spoke for themselves. They were by far the most profitable division we had, and this fact caused me to pay close attention.
You see, they learned that getting new clients was extremely difficult in the competitive arena of technology. They also learned that they could penetrate deeply and “mushroom” out (expand) into many more opportunities within these same customers, and as they did, they developed stronger relationships, had more opportunities and actually became harder to replace.
In their case they used this strategy to dramatically, and I mean dramatically, increase revenue per client. As an example, they landed a large telecommunications client (namely due to confidentiality) with a small $10,000 strategy job. Rather than send in their $90 an hour consultants (as the bid provided for) they staffed it with a $225 an hour stud (at the same price). This brilliant move ensured the client was delighted and it also enabled the stud to “ask around” and identify other projects that were coming up.
Turning $10,000 into $26,000,000 Methodically
The result? The $10,000 job turned into over $1M per month, for 26 months! That is $26,000,000 for a $10,000 job!
Mushrooming is all about focusing on meeting more of the needs of your customers. It is about:
Mushrooming applies to many types of businesses& perhaps all.
- Understanding the client’s needs
- Understanding how you (and a joint partner if needed) can meet their needs
- Building relationships with multiple decision makers
- Maintaining “stealth insider info” so you know what they are buying and from whom (and it will be you if you focus on this strategy)
- If you are a chiropractor it means understanding all their health issues and nutritional issues so you can meet more needs, and understanding their families needs as well
- If you are a parts supplier to major corporations it means finding other purchasing agents that are not buying from you – both within that physical division and other divisions/locations
- If you are a duck farmer it means getting out and visiting your customers to verify you are the sole supplier… and if not, what you must do to be that
- If you are a seasonal specialty item company that sells into large retail chains it means learning what other seasonal items the same buyers that trust you need/sell so you can create it or partner with someone that would die to have those relationships
- If you are a carpet cleaning company it means learning about their needs for rug cleaning, repair, furniture cleaning, padding, and perhaps even other household cleaning needs
Mushrooming Protects Your Market and Margins
In Jessie and Rohit’s business, the strong presence in these accounts often meant they had little price pressure. Why? They were trusted, reliable, and fair. So margins were awesome!
I used this same “mushrooming” strategy to protect my market share in my national medical record company. What started as a new concept developed by two of us quickly became a field of 1600 competitors, all who looked and sounded the same… sound familiar?
So, to protect ourselves, we mushroomed deeper by developing other services our hospital clients needed. This made it more difficult for the competitors to duplicate our offerings and it entrenched us more solidly in the hospitals we were in. We continued this year after year, which I am confident, was a big part of our remarkable 94% client retention rate over 8 years.
So “own” your customers and profit like never before. Apply this strategy and ProfitNOW™.
To your success,
Scott D Hallman
PS If you are already a Small Business Growth Club member or are interested in accessing the step by step process for fully implementing strategy going directly to http://www.smallbusinessgrowthclub.com/public/352.cfm.