There are moments in time that have helped me develop my philosophies about business over the years, and while they were happening, I had not imagined that they would have turned out to be as beneficial as they did, in my growth as a businessperson and entrepreneur. Often while they were occurring, I was just trying to get the job done and not thinking about my development as a C-Level businessperson. Let me give you an example.
One day I received a call from the assistant of a gentleman who ran a division of a financial institution. He (let’s call him Paul) had her reach out to me because he read Winning the Customer and thought I could be helpful in energizing his business. We met for coffee and Paul expressed the desire to grow his business. He was doing very well, however he felt that there was enormous potential for growth. He was right. We agreed to collaborate.
As we worked on a deep discovery of his systems and protocols, his methods of outreach, client relations and research it was very clear that Paul’s group was spending 80% of its time on new business and 20% of its time on current customers. This was something we addressed at the Patriots early on in my tenure, so I saw the flaw in that divide. At the Patriots we built several mechanisms to ensure we were devoting an ample amount of time to building relationships with our current clients. What I didn’t have as an employee was the chance to focus on one problem at a time with more thoughtful reflection. I was doing so many different things at the team that stopping and pausing to reflect was not the mode of operation. It was addressing the problem, delegating and moving on. That’s not to say we didn’t plan or have a strategic vision, we did, but it was more macro and bigger picture oriented. We knew where we had to be, and in all our actions we made decisions thinking about three key criteria, 1) does it generate revenue? 2) does it build relationships? and 3) does it cut expenses? If the answer was yes or no to all three of those questions the direction was simple. The in-between caused more thought; however, these were solid guardrails to prevent mistakes and accomplish the vision.
So, when I had more time to focus on the specific issues Paul was facing and could dissect things in a more granular fashion, what became crystal clear in working with Paul and this financial institution is the “Why” it made more sense to spend a larger amount of time on current clients. While I knew how important it was, I now had to explain it to the group. I had to show them why their model was inverted. At the team I just told my staff what needed to be done and they followed instructions. The “Why” was so much more important now to get buy-in from the group and the company. The “Why” is important in business to get anyone to buy into a direction, especially employees. If people get it and believe in it, they will become the best at carrying the banner and getting the job done. I definitely should have done a better job with the “Why” with my Marketing team at the Patriots in some areas. Let’s face it, that’s a very important Go Docomponent and to ensure the job got done to its fullest extent.
I presented my theory to Paul and his group. They were spending 80% of their time on trying to bring in new business. They were focused on prospects. As I would lay out for them, the issue with that is prospects could only give them one thing, their business. While clients, on the other hand, could give them three things: 1) The business they are giving them currently, 2) referrals and 3) more business (meaning new money, new revenue and growth). Many companies look at new business as the key to growth, and that seems logical, however I believe it’s not necessarily new business, but new money that is crucial. A slight distinction, because new business is in fact new money, but often new money from a current client is not viewed as new business. To clarify, prospecting new clients is what revenue generators denote as new business, a new client to the firm. Why? Why does the client have to be new for revenue growth? Why does the client have to be new for it to be new business? They don’t, but people are stuck with that notion. That concept creates a barrier for those looking to drive revenue. It’s why having a consultant come in and make you look differently at things can be very liberating. Many are too close to what they are doing that they get stuck and myopic on how things should happen.
So, with that in mind, making a pivot was crucial for the growth Paul was looking for. We sliced the Relationship Architecture™ for his group in this manner:
- Clients = people who have money with you.
- Prospects = people you think can and may place money with you.
- “Friends of” = people who do not have money under management, but you have a solid relationship with them, and they are willing to help.
We took these three constituencies and categorized how they could contribute to growth:
- Clients can provide three things: Their current business, referrals and new money.
- Prospects can provide one thing: New business.
- “Friends of” can provide two things: Referrals and their money at some point.
So, this is where the “Why” became very clear. Why would you spend 80% of your time on the constituency that can bring you only one thing and 20% of your time on the folks that can bring you three things. It just doesn’t add up. Never mind spending zero time on the group that can give you two things. My advice was to build strategies for each group and re-allot time spent on each constituency more appropriately.
I realize this seems so simple and not earth-shattering, but I’ll bet if you go into most companies the 80/20 rule in new business is typically in play. It’s because people are looking at it the same as always; new business is how you grow. I say pshaw, that is only one way of many. I say the term “new business” should be completely changed and taken over by the concept of “new money” or “new revenue” if preferred.
We helped Paul and his group increase revenue by 35% in just six months taking the above approach and I further developed and built upon my philosophies on revenue generation and Relationship Architecture. It all has led me to being more precise in Winning the Customer, and more specifically Winning the Revenue.