I had the pleasure to speak for my friend Matt Kohn’s private membership community a few weeks ago and share some of my philosophy when it comes to growth strategies. I wanted to share that talk + notes with you as I think it could be very valuable for you as you look to grow your service business.
Below you will have access to the video (1hr 27min) + my notes for reference. Any questions don’t hesitate to ask by emailing me here or by leaving a comment below.
I have been building and operating service businesses since I was 15. I love the model and have been actively involved in the “Productized” movement once I decided to start building service businesses the right way.
I would consider myself a Productized Service Builder, and investor.
I currently co-run the largest productized service Facebook group called: “Productized Community” (over 4,300+ members).
I’m also actively looking to invest, and or acquire service businesses.
What I do
I help service businesses transition to a “productized business model” and help them better understand their true problems, build systems that scale, remove themselves, and create an asset investors ultimately are fighting to buy.
We all got business problems.
Growth is one of them.
How you are probably thinking of it however, most likely is not your true problem.
Growth is sexy.
Growth is desirable, and a topic people want to obsess over. Growth Hacks…What’s your growth bro? Growth Hacker positions, etc.
But is growth really your true problem?
Quick Exercise: Answer the following questions-
What are your biggest problems right now? And write out the biggest issues you are facing at this moment.
Part of the work I do in most cases is helping service businesses define their actual core problems from the more obvious symptoms. This is where the hard work is.
Symptoms are easy to diagnose. True problems are much less obvious.
So what do these look like?
Let’s review what you wrote down?
We most likely wrote down something that resembles these hidden Symptoms:
- The market is too competitive
- Not enough customers
- Not enough leads
- Not enough traffic
- No clarity on the target market
- Not converting enough people
- Weak/poor salespeople
- Customers aren’t buying enough
- We aren’t growing fast enough
When in reality your actual problems are:
- Lack of referrals
- Lack of repeat business
- Lack of being different in the market
- Lack of competitive advantage
- Poor messaging
- Not priced competitively
- Weak Brand and No true Promise
- Weak or NO – USP
- Wrong messaging channel
- No core niche-targeted market
- Poor customer experience
**Samples taken from The Road Less Stupid – Chapter 3, pg 14.
What is incredible is when you can actually solve the real problems your growth will naturally start to skyrocket to new levels.
Q: Ask tactical questions and you will get tactical answers.
- To spark new creative ideas around growth
- To help you look at growth from some new angles
- To help you maximize what you already got
- To help you ask better questions which will in return help you get better answers
- Separate the symptoms from the real problems in your business
1. Keep More Customers
Q: How big would your business be if you never had lost a customer?
I’m guessing pretty damn big.
Q: How much more money would you be making now if you still had everyone who ever tried your service?
This hit me hard with my last service business with a churn rate at one point of 20% per month. In the service business world this isn’t uncommon.
Most agencies and service businesses only keep customers 3-6 months, and that is it.
So this is going to be particularly important and is why it is #1.
We ended up taking this down to 3% per month which was amazing and completely changed the trajectory and value of our business.
You might be asking, “So how might I keep more customers?”
How did we go from 20%—>3%
This is a question to start asking yourself.
In fact I’m always asking this. Whenever I get a new customer I’m thinking, “What do I need to do to ensure this customer never leaves?”
Action Items to keep more customers:
- Know your numbers. Like our SaaS business model brothers start tracking these KPI numbers more closely.
- Set a target churn rate to hit as a goal and work towards it. Sub 5% per month is a great starting goal or lower.
- Create a post mortem review process with your team to find out exactly why people are leaving. You would be surprised how many people don’t do this and just shift focus onto selling more rather than truly understanding where the holes in the ship are. This should give you a checklist of things to focus on. **I recommend an exit call
- Focus on Customer experience
Dive deep into what your customers actually want
What do they want?
Get it and Serve it.
Customer + Mechanism = Result
2. Increase Referrals & Repeats
One question I like to challenge myself with is, “What would I do if I could only grow my business from referrals and nothing else?”
This is often a strategy that is left to chance, nice to have, etc.
The power of creating referral systems in your business is game-changing.
There is so much focus on the “new” that we often forget about what we “have”.
keeping customers you have got + getting new ones = Sustainable growth
So the goal is to be intentional about referrals and repeat customers.
- Does your business model support a recurring and ongoing experience? subscription revenue vs. one-time
- What can you do to delight and amaze your customers throughout the entire customer journey? Killer Resource:
Assess→ Admit→ Affirm→ Activate→ Acclimate→ Accomplish→ Adopt→ Advocate
- I would suggest mapping out your customer journey in a program like Lucid Chart to really understand it from a visual perspective. This is a vital step in knowing where you can bring the most value to your customers.
- Create a new rule and process to ask for 1 referral each day for your business from your customer base + network. –Incredibly powerful when done consistently.
- What if all your current customers could introduce you to 3 people in the next week? How many more WARM sales conversations would you be having? The problem is most people are afraid to ask. If your service provides value, ASK!!! You don’t need to offer anything in most cases.
- Prime your customers during the sales process, onboarding process and customer journey. We do this at Applause Lab on our sales calls + onboarding and welcome pages like here.
3. Define & Enhance the certainty of success
Building on what we have talked about so far this point is incredibly powerful.
Remember your customers get to decide what success is. NOT YOU. They don’t care what you want.
They just want to say afterward, “Yes!! That’s exactly what I wanted and I love it. I’ll be back!”
So write down these questions and think about what these mean for your business:
Q: What is success for your ideal customer?
Again: customer + mechanism = Result
Q: What has to happen to give your customers certainty of success?
Q: What has to happen so your customer will say “I’d have to be crazy to do business with someone else!”
Oftentimes you will find you don’t have to get everything right. Neil Gaiman said it best in his 2012 commencement speech at the university of arts:
He outlines 3 key areas to be successful [min 14:36] In most cases you only really need to achieve 2 of 3 of these key areas to create success with your service business.
- Deliver work on-time
- Be pleasurable to work with
- Deliver good quality work
- Really have a pulse on your customers. Start with yourself connecting and documenting this, and then keep in close contact with your support and customer success team. I like to integrate this into my weekly team reports and huddle calls to stay updated and connected.
- Actually ask your customers what this is for them? I like to include this within our onboarding forms and or intake forms. They will tell you exactly what to optimize. This will also bring clarity instead of “guessing”.
- Ask what is success during the sales process
- Ask what is success during onboarding calls
- Example: “For this to be a 10/10 experience for you what do you need to happen?”
- “What would be a complete win for you at the end of “X”?
4. Enhance & Train the Sales Process
You most likely are “winging” it when it comes to sales and your overall sales process.
This gives you zero optics on what is actually working and not working in your sales process other than your “gut” feeling.
Goal is to avoid inconsistent results.
The best salespeople in the world don’t chance this.
- They have a script, a process and a “Recipe” they use.
- They then rehearse and practice the process over and over again.
- They are Designing their pitch to strategically breakdown objections before they happen.
This is easy not to do, to be honest. Especially if you have never built a sales team and are a sales led founder still doing all the sales yourself.
- Start recording all your calls. If you use Zoom this makes it really easy. Save all the calls and then have someone review them for feedback. Someone else who does sales outside your organization will be key here.
- Create a sales script to follow which will create consistency in every pitch you make
- Create a graphic of your process to show how your service works. Often times this can be incredibly helpful and actually be your script and guide on your sales calls. We saw sales increase by 15% when we started using this visual prompt on our sales calls at Applause Lab.
5. Increase Conversions
Now that you know your numbers, and have a consistent sales process the goal is to “Optimize” what you already have before pushing more people down the funnel.
It is an Art and balance.
I’m not saying stop trying to get new customers but rather “Shift” your focus where 80% of your time is solving these inward issues and 20% of your time is focused on driving new business at the top of the funnel.
This will dramatically increase your overall growth and help you build a more valuable and profitable business.
It is a hell of a lot cheaper to grow from what you already have vs. trying to get new customers.
The greatest marketers in the world understand this and maximize this first. Take their lead.
For example if you are closing 25% of your leads right now, a simple 5% increase in your close ratio is the equivalent of increasing your leads by more than 20%.
What is easier? Increasing your conversion rate by 5% of increasing your leads by 20%? Makes common sense when you break it down like this. Focusing on your true problems and the lowest hanging fruit.
- Knowing your numbers here is key. Focus on chipping away at increasing your conversion rate first before increasing traffic. I have seen most don’t have a traffic problem. They have a conversion rate problem. Look at:
**Rule: Optimize before Increasing
- Q: What needs to be done to close the “GAP” of your current conversion rate and where you want to be?
- Circle to point #Enhancing Sales Process to really dial in your training which will drastically move the “conversion” needle in the right direction. As well, apply this to all areas of your business where you have traffic
6. Increase Transaction Size
This is a nice hidden gem in most cases.
Here I like to outline all my current customers and what they are paying us.
**Customers who have already bought are going to be the easiest customers to sell again
In the SaaS world this is known as “Expansion Revenue”. This is typically not focused on within service businesses.
You might be more familiar with Mcdonalds “Would you like fries with that” campaign. This is a great example of driving expansion revenue and increasing transaction size.
- Think of things that pair well with your core offerings? Where can you add congruent value-based add-ons?
- I love to think about maximizing your “Value Ladder”. Where are their holes in your current value ladder?
- Free→ Trip Wire→ 1:1 Core Offer→ Ongoing Higher ticket
- What types of bonuses could you include that are low cost and high value?
- Another Angle: You can also increase transaction size by just increasing your prices
- Additionally, you can increase your profits by optimizing your COGS expenses as well. (what you pay your team)
7. Increase the Frequency
This can be a tremendous growth strategy by simply increasing the frequency your customers purchase from you.
If you don’t already have recurring subscription revenue in your service business then you will want to first focus on that first.
Think about these different levers you can pull to add leverage to your service business:
1:1 (done-for-you Services)
1:M (Webinar, groups, events, etc)
O:M (Courses, guides, ebooks, etc)
Going from one-time purchases or “invoicing” your customers to subscription and recurring revenue will immediately increase the “happiness”, “predictability” and “Value”, in your business.
Become more of their “trusted advisor” for what you do
Be consistent with your communication
Other value-based content like lead magnets, webinars, etc
Create more offers to fill out your value ladder
(By launching new offers the Hoth has grown to over $2MM/month in revenue)
Learn from Loyalty programs- points, credits, etc work really well to integrate into your offers and value proposition to get people coming back.
8: Increase Leads + Drive Traffic
Steps 1-7 have now set you up for incredible growth. Not to mention a healthier and much more valuable business.
Recap Goal: Optimize before you Maximize
**These were the exact steps I implemented the year leading up to selling my last business which ultimately leads to investors fighting over buying it. Use all these steps as a growth loop to continue optimizing.
Most people skip right to 8 or solely focus on #8. So their business looks like this:
Can you relate?
Now driving traffic to increase leads is a very important step in the process there is a few ways to look at this.
Yes there are “tactics” you can use which are typically short term and sporadic.
Yes Paid media channels like FB and Google can work wonders and I recommend them at the right lifecycle of your business and have true product-market fit.
Q: **(Can you afford to spend up to $10k over 3 months to go through the “testing” period? If not, then it may make sense to hold off until your business can afford to do this and you have strong PMF.)
**Installing retargeting pixels + leveraging retargeting Ads right away make more sense to do and I highly recommend it.
Insert the Dream 100:
**My top two resources here for insane traffic & growth strategies
Step 1: The first biggest hurdle that is hard during this process is really having a clear “niche” market and an extremely clear “buyers persona”. I would highly recommend spending a lot of time here as this sets everything else up for success moving forward. Don’t rush or skip this. This is really the “Lead Domino” of your marketing campaigns. It’s not fun work but it is vital.
Step 2: The Dream 100 then is built around creating targeted lists of not only “WHO” your top dream 100 customers are but also “Where” they are at.
I put together a spreadsheet here of what this could look like for your business.
- My recommendation here is it start small and focus on one channel to start. Go deep then add-on additional channels
Follow the 5 ones framework:
- One Target Avatar
- One core offer
- One funnel
- One Traffic source
- One year (or 90 days)