You’ve all heard before that there are three ways to grow a business. One is to get more customers, two is to get them to spend more per transaction and three is to get them to come back more frequently.
My predictable growth formula breaks it down into something that is a little bit more concrete and usable.
Get more traffic
The first thing that we look for is, “Do we need to get more traffic to our business?”
Let us say we can have an incredible product or service but if we’re operating in obscurity. Nobody’s seeing it or not enough people are seeing it, then we’re not going to grow. So we need to get more eyes to what we’re doing.
Everything could be functioning properly in terms of delivering and selling a great product, but we may just need more people to it. So getting traffic is the first thing to do.
Increase conversion rate
The second thing is increasing the conversion rate of that traffic so that more of it actually becomes a customer.
So what are the things that we can do there?
If you’re running an online business you do things like lead capture, building a list, offering some sort of ethical bribe and trip wires, and some sort of lead magnet to get people to do that initial transaction with you.
You can create a relationship and get them to buy more over time. Increasing that conversion rate is oftentimes the place to go to get growth. If we’re getting a lot of traffic but it’s just not converting well, then we know we need to increase that conversion rate.
Increase immediate order value
The next thing is increasing the immediate order value and this is an absolutely critical one.
If you’re a small business, you are usually relying on the funds that you get from your sales each day to continue to fund the growth of your business. Anything that we can do to increase that immediate transaction value is really important because it gives us more funds to continue to fuel the growth of the business.
If we can take our immediate transaction value from 97 to 997 it can have a massive impact on our ability to fuel growth at the company.
The lifetime value of the customer
And then the final area is the longterm or the lifetime value of our customer. If we’re doing all of those first three really well, but our customers are going out the door just as quickly as they’re coming in then it might as well be all for nothing.
They’re not staying, they’re not buying from us over and over again. If they’re not continuing to invest with us long term then we’re not really building an asset.
We may build that short term revenue, we may grow that revenue very quickly, but if all those customers are leaving then we’re not really growing that longterm asset.
Application of the components of a growth operating system
We need a process in place to be able to evaluate which of those four areas do I need to focus my attention on. Then I can specifically identify what is it at my business that deserves the most attention right now.
If you remember that the third component of this predictable growth formula is that we need a process for gathering and evaluating ideas then implementing those ideas to improve our business. Then if in the second step we identify that we need a better conversion rate for our opt-in pages because they have way too low conversion rate we then think of what we are going to do to improve that and to fix that.
We can come up with all kinds of different ideas. We can come up with ideas in terms of new images, new headlines, new copy, completely different landing page format, and even different offers.
Which of those are going to have the greatest impact, which of them can be implemented quickly, which of them can be implemented affordably, etc.
Those are the types of things that we need to have a system for evaluating at our business, for gathering ideas from smart people that we know that could be in masterminds, that could be employees of ours. It could be business partners gathering those ideas and then evaluating those ideas and an objective way. That’s a very critical thing.
Additional things to consider
Again, instead of being emotional and making decisions on the fly you better have a process where you can evaluate those decisions based on criteria that you know are important to you and your business.
Then there’s a process for doing what we call experimentation. Or you’ve probably heard of the phrase growth hacking where you’re in a cycle of running experiments, gathering data from those experiments, learning from them, and then using that to create more experiences or experiments.
This is wherein you get more data and continue that cycle of learning until you’ve improved what it is that you set out to improve upon. That process is absolutely and critically important.
So this growth hacking is a major philosophy and practice in Silicon Valley and fast growth companies.
What I’ve done is I have taken that and dumbed it down for those of us who have small teams and limited resource. Those of us who don’t have a bunch of PhD data analysts, but we want to still be able to take those practices and put them to use at our business.
So that’s the three components. If you have a way of measuring what’s important to you, a way of determining what and where in your business deserves your focus, resources, time and attention right now then you will get the biggest impact.
Then finally a process for evaluating and what are the ideas that we have to actually improve that thing that needs to be improved. Supported by the process of knowing how to run experiments and tests then get data to make sure that what you’re doing is actually working and moving you in the right direction.
If you have those three things, you can put this growth operating system in place at your business successfully, and you’ll continue to drive your business forward. Drive it with growth and profitability.