With so many buzz words and marketing ideas flying around, it’s easy to forget the basics. That’s why I wanted to share something with you today, which really helps us focus on what’s important.
4 ways to grow a business
As Jay Abraham said so concisely, many years ago; there are only 4 ways to grow a business. They are:
1. Attract more clients or customers (herein called clients.)
2. Sell more often to your existing clients.
3. Increase your prices or fees.
4. Reduce the number of clients, who stop using your services or buying your products (your attrition rate). Though this was not included in Jay’s original 3 ways to grow a business model.
The most effective businesses, focus on all 4 ways to grow a business.
The least effective businesses focus on just 1 or 2 of them.
Many businesses, for example, actively seek to win new clients; but to little to retain their existing clients. Others look after their existing clients supremely well and their clients love them – but they don’t focus correctly on winning new clients.
Whatever business you are in, try and work on as many of these 4 ways to grow a business as is possible, for someone in your industry.
Those 4 listed above are VERY powerful. I agree that in that many companies often do little to retain their existing clients.
I think I’d also add one more – Know Your Customers (where do they get info, where are they (online, too), what are they interested in, how do THEY want to interact with your brand/business).
Chris,
Thanks for the comment, but ‘knowing your customers’ is not enough to grow your business, without one of the 4 things mentioned above.
Good reminder post Jim. I like Jay’s work.
Many businesses think they know their customers, what I call a tribal group of your overall tribe. You need to routinely ask, record and analyse the feedback from you tribe so you – know your tribe.
By knowing the views of your existing tribe you are able to:
- find out what other products/services they would like to buy from you (point 2)
- find out if they feel you are value for money (point 3)
- keep in touch with them and find out how you can improve (solving problems for customers and communicating that is a great way to do your point 4)
- find out what they love about you so you can communicate that better to others (covers your point 1)
These are good tips for businesses everywhere, though I’m not sure hiking prices is always a guaranteed way to grow the business – especially in an economic downturn. I’m not necessarily advocating a price drop possibly a price freeze to encourage customers old and new. In times like these I think marketing is a good idea.
I say this because a business needs clients/customers to make money, to increase money it needs to increase sales to existing clients and get new sales to new clients. The only way a client is going to know there is something you need is if you tell them.
Marketing can be pricey but with the use of the web a clever use of social media it doesn’t have to be and it can very quickly see a return on investment. That said the marketing needs to be aware of who the client is, what they like, where they hang out just as Chris Lugo pointed out.
Is this post meant for service type businesses as opposed to those that sell commodity widgets? I was reading your list and I’m not confident it applies to all businesses. For example, raising prices for a commodity business surely means death.
Sun,
Thanks for your comment – seems I may not have made the point clear enough.
It’s not ‘my’ list, it’s Jay Abraham’s and extremely well known within marketing. The list is NOT a recipe – it simply represents the 4 ways you can grow a business.
You ‘CAN’ grow a business by increasing your prices, so long as your market is prepared to pay the increase. However, you need to focus on the elements of the 4 ways to grow a business and then identify the best one’s for you.
It’s why I explain within the post:
Which you focus on depends on your industry AND marketing skills.
Hope that clarifies it for you.
Hi Jim, i’m following from Argentina, and every day i’m learning a lot of something about marketing due to your excelent notes!,
thanks a lot to share your knowledge
Cristian.-
Great point about the need to concentrate on both keeping existing clients and attracting new ones. I agree with you that a lot people seem to concentrate on one or the other rather than both.
One of my favorite posts of yours.
Jim,
Great post. Many companies forget about the importance of retention. But, it is far easier to keep a client than to earn a new one.
Hi Jim,
I have a question for you,
know as the monitoring of post-sales is very important to know if the customer is satisfied with our product or service, in order to the client to keep us in the mind at this time to buy again and recommend us to their contacts.
this would not be as elementary like the 4 items?
(ps: i’m sorry for my elementary english :=) )
best regards,
Cristian.-
I think this sentence is stronger without the comma:
The most effective businesses, focus on all 4 ways to grow a business.
Excellent post Jim.
Used to follow Jay Abraham a lot a few years back and I remember his THREE ways to grow a business. When was the 4th added? I’m not disagreeing with it just noticing that it it’s quite different from the other three.
You can put the first three into a formula on a spreadsheet and see how each has an effect on the other when you make changes. It’s not as easy to account for number four.
Managing your attrition rate is very important but I always bundled it with #1 as part of the whole process of getting new customers and managing them properly.
Peter
Peter,
Jay has always spoke about his ’3 ways to grow a business’ model – yet it actually consisted of 4 ways; including attrition.
Attrition was added, because for any provider of a repeat product or service, none of the other 3 ways to grow a business will be effective, if people use you once and leave!
Jay was the first person I knew on in the 80′s, who even used the phrase ‘attrition’ to refer to one’s client retention rate.
I guess I could have called it Jay’s 3+1 ways to grow a business
The 3 (or 4) ways to grow a business can be summed up in 3 words…
1. traffic
2. conversion
3. back-end
and the cheapest way to grow your business is to start from #3.