Podcast Summary
Implementing strict SOPs and focusing on valuable customers: Companies can increase value by implementing SOPs, identifying and maximizing valuable customers, and focusing on growing their investment in those customers.
Successful companies like Vista, the world's largest private equity firm for software, create value by implementing strict standard operating procedures (SOPs) and focusing on identifying and maximizing the potential of their most valuable customers. Vista's SOPs are closely guarded and only accessible to certain levels of employees, and their goal is to triple their investment in a company within three years. Most companies do not effectively score their leads or customers based on their value, but Vista takes advantage of the diligence process to learn more about a company than its founders and employees know. By identifying and focusing on the most valuable customers, Vista is able to increase the value of the acquired company. At GymLodge, we can apply this concept by implementing a more effective lead and customer scoring system to identify and prioritize our most valuable customers, leading to increased revenue and growth.
Focus on high-value individuals: Analyze and attract customers/prospects with potential for long-term commitment and value to the business
Successful businesses focus on and expand their customer base of high-value individuals, whether they are customers or prospects. This concept was discussed in relation to Marco's story of turning around a large software company, where they applied this strategy to all segments of their pipeline. For a gym business, this means analyzing the characteristics of those who have achieved the best results and committing fully to the business, such as being a gym owner, working full-time, having a signed lease or building, and having employees. By implementing these qualifications in the front end, a gym business can save time and resources by attracting and serving those who are most likely to succeed and contribute the most value. This strategy, while simple, can lead to significant improvements in business performance.
Implementing stricter customer qualification criteria: Stricter qualification criteria led to fewer but more valuable customers, decreasing operational workload and increasing profitability.
Implementing stricter qualification criteria for customers can lead to a decrease in the number of new customers but an increase in customer value and operational efficiency. The speaker shared that when they qualified prospects to have at least 25 clients, a signed lease, and be a full-time gym owner with one or more employees, their sales decreased from over 100 gyms a month to 40 to 50. However, this cut in half the inflow of customers who required significant time and resources from the team, resulting in zero escalations since the qualification change. Furthermore, these higher-qualified customers were paying more and required less work, leading to a more profitable business and potentially happier customers. The speaker also mentioned that having a defined end program for customers, rather than a year-long commitment, seemed to lead to better results in terms of customer skill acquisition and profitability. Overall, the speaker's experience highlights the importance of carefully selecting and qualifying customers to maximize business value and operational efficiency.
Analyzing customer data to identify ideal customer base: Examining customer data helps businesses make informed decisions to focus on their ideal customer base and expand reach
Understanding your customers is key to growing a business. The speaker shares his experience of focusing on the wrong customer base for three years and the importance of analyzing data from those who have left the business to identify good and bad customers. He emphasizes that businesses like Vista have thrived by extracting and amplifying value for their customers better than their competitors. By examining customer data, businesses can make informed decisions to focus on their ideal customer base and expand their reach. The speaker encourages listeners to review the show and help spread the word to reach more entrepreneurs, as they are the ones responsible for their own growth.
The importance of a well-executed onboarding process: A successful onboarding process builds trust, sets proper expectations, and overdelivers value to ensure long-term customer commitment
The period between a customer's purchase and the start of your product or service is crucial in determining their long-term commitment. This is particularly important in recurring businesses. During this time, known as the implementation or onboarding period, customers are making decisions about whether they will continue using your services. Therefore, it's essential to make this experience choreographed and focused on overdelivering value. This can involve demonstrating the necessary skills for using your services and ensuring the customer is self-sufficient. Rushing this process can lead to a lower lifetime value for the customer and a higher likelihood of them leaving. Communication after the sale, such as personalized videos or letters, can also set proper expectations and build trust. Overall, being intentional and deliberate during the onboarding process can significantly impact a customer's decision to stay with your business.
Managing Customer Expectations in Sales: Focus on selling towards behavior and sustainability, set reasonable expectations based on industry averages, and overdeliver to create excitement and ensure customer satisfaction.
Managing customer expectations is crucial in sales. Setting unrealistically high expectations can lead to disappointment and hinder long-term success. Instead, focusing on selling towards behavior and sustainability, and setting reasonable expectations based on averages, can help shift a prospect's mindset and lead to overachievement. An example of this is sharing the average results in an industry, rather than focusing on exceptional cases, to set realistic expectations. By doing so, you can overdeliver and create excitement when results exceed expectations. Conversely, setting expectations too low can lead to underachievement and dissatisfaction. Effective expectation management is key to ensuring customer satisfaction and long-term success.
Focusing on qualifying clients upfront for better business outcomes: Identify unsuitable demographics, set clear expectations, and deliver seamless onboarding to retain clients long term
At Gym Launch, they have shifted their focus towards qualifying clients on the front end to ensure longer lifetime value, superior client outcomes, and less operational complexity. By doing so, they have identified that certain demographics, such as watchpreneurs, are not a good fit for their business model. Instead, they are creating info products tailored to these individuals. Additionally, they are being more deliberate in setting expectations and creating a seamless onboarding and implementation process to overdeliver on the set expectations and retain clients for the long term. This approach can be applied to any business to increase customer quality, set proper expectations, and ultimately, retain clients for an extended period.
