Wouldn’t you rather read something along the lines of “101 Ways to Grow Your Business”?
I would too. But the truth is, while there are hundreds of tactics and strategies you can try, they’re only going help grow your business if they can successfully do one of three things:
- Increase the number of customers.
- Increase the transaction size.
- Increase the purchasing frequency.
That’s it. There’s no 4th or 5th option. If you’re not doing one of these three things, you’re not going to grow very fast.
Most businesses, by default, focus solely on increasing the number of customers. Finding more people to give you money is the most logical place to start when you need to bring in new business (especially when it’s urgent).
And that can work. It’s just not the most efficient use of resources… and it’s kind of risky.
Jay Abraham, America’s leading business growth advisor, in an interview with Tony Robbins explains how optimizing all three outcomes together will reduce your risk AND produce exponentially greater results.
Do any one and you can grow in a linear manner. Do any combination of the three and you grow exponentially. Case in point. Most people doing nothing, with no formal understanding of these dynamics or principles, have gotten to the point where they have a finite number of customers. Those customers, left on their own without any direction or great sales ability on the part of the companies, have evolved to a certain fixed unit of sale that’s the average. And they’ll buy a certain number of times without anybody doing anything. If all you did was become a little bit more effective, a little bit more proficient and adroit at selling, you could probably close a few more customers. In fact, you could probably double it by just being proactive and concentrating on a few simple ways to increase your effectiveness in these three areas.” — Jay Abraham
Don’t quite get it? Let’s look at the math.
Let’s say a company has 100 customers with an average sale price of $1,000 and each customer buys twice per year. So every year, the company generates $200,000 in revenue (100 * 1,000 * 2).
- What would happen if any one of the variables increased by 10%? Sales would increase by 10% to $220,000 (110 * 1,000 *2).
- What would happen if two of the variables increased by 10% each? Sales would increase by 21% to $242,000 (110 * 1,100 * 2).
- What would happen if all three variables increase by 10% each? Sales would increase by 33% to $266,200 (110 * 1,100 * 2.2).
How do we get a 33% increase in the last example? If each of the 3 variables increase by 10% each, where’s that 3% bonus coming from?
This is what Jay Abraham calls leverage.
When you optimize just one of the variables, growth will be linear. But when you optimize 2 or 3 of the variables at the same time, your growth will be exponential because you’re creating leverage.
You can double check my math. But the numbers don’t lie.