GENERATE, CONVERT, ELEVATE, MAINTAIN
If I told you that you every business only has four things that need to be focused on for it to be successful, I’m assuming every reasonable person would want to know what those four things are. We’ve talked many times on this show about all four of these things in great detail and in a variety of ways, but in today’s show I’m breaking down each of these four things so that you have something to refer back to as a guide whenever you feel you’ve gotten off track with your business.
I’m not going to string you along in this episode and make you wait until the end to hear what the four things every business must focus on to be successful are. Get your pens and paper ready because I’m going to tell you what they are and then I’ll go deeper on each one so that you have a greater understanding of each and how you’re likely not doing any of them at the moment.
The four things are:
- Lead or client creation (often called ‘lead generation’)
- Lead or client conversion
- Customer or client elevation (customer ascension)
- Customer or client retention
The bold statement I made at the beginning of this show is that every business only has four things it needs to focus on to be successful. I’ll take that statement one step further and say that the lack of focus on these four things is the reason you’re not more successful today.
Let me also restate something else I said so that I can double down on that as well; these four things apply to EVERY business, without fail. As many of you know, I’ve built and run a variety of businesses in several different industries over the last 30+ years and can tell you with 100% certainty that every single one of those businesses, and each of the industries they belong to, required a focus on each one of these four for the business to be successful. That is not to say, by the way, that all of my businesses were successful. I have had some spectacular failures in those 30+ years and, after reviewing what led to their failures, this pattern always reveals itself and it becomes obvious that the failures were always due to either the complete absence of focus on one or more of these four, or just really poor execution on them.
So, before we go into detail on each of these four things, I want to make sure every one of you understands that these four things exist in every business in existence, without fail. If you find yourself attempting to disregard any of these as not applicable to your particular business, you will be doing so at your own peril. I talk with and coach business owners every single day, and have been for many years now, and there isn’t a one of them that isn’t or wasn’t suffering because a lack of focus on one of these four things. Let’s get into the first, and maybe most important ones:
- Lead or client creation
Friends, this is one of the most important of the four things and for good reason: without a continuous flow of new leads, prospects, potential clients, possible customers, new people who want what you have and have what you want, your business will be in a perpetual state of failure, even if it continues to feed you in some way.
I’ll share with you the experience I had that woke me up to this one in a very real way. It was in late 1999 or early 2000 and I was in the mortgage business. I was doing pretty well, or at least I thought I was. I had come from the real estate sales side of things so I had some Realtor connections that were sending me some good business and I was bending over backwards for my clients so that they had an awesome experience, making it more likely they’d refer me to their friends, family, and colleagues (#3 on the list of four), but I made a fatal mistake, and it’s the mistake I see appraisers make daily. The mistake was in not having an ever-present and consistent prospecting habit.
I would have 6 or 8 loans going at a time and would get hyper focused on all the minutiae of processing those loans and I would stop prospecting for new leads. All of the sudden, all those loans would close within a week or two of each other and I’d find myself sitting at my desk looking at my lead system on my wall and it was blank. I’d be at zero the next month and starting from scratch. I’d scramble like a maniac to get 3 to 5 or 6 more loans going only to have the same cycle happen the following month.
I see appraisers following a similar cycle, although the time frames are slightly different, and for them it happens in two ways. For appraisers, the main cycle might stretch over several years. They get on a panel, they get some orders, and then they sit back and relax into the order flow. They get comfortable with the number of clients and the number of orders that come in from those clients and they stop paying attention to this all-important never-ending process in every business. That’s the first mistake most appraisers make.
The second mistake appraisers make is in getting too complacent with the number of orders they need each week to be comfortable. They have a number in their head that corresponds with a specific definition of ‘busy’. For some it’s five appraisals per week, for others maybe it’s twenty or fifty. It’s not uncommon to be in a coaching call and to have the coaching student say, ‘these past few weeks have been busy’, to which I always respond with, ‘what’s busy?’, as in, ‘what does it mean to be busy and why?’
Although the number of appraisals you can comfortably complete in a day, a week, or a month is a topic for a different episode, this all has to do with lead generation and client creation. The first and primary goal of any business must be in generating new leads and creating new clients. When you’re stuck in the minutiae of producing and you take your eyes of off generating new and better clients and customers, your business is dying. Once you’ve completed all the work on the docket for that day, week, or month, you’re effectively back to square one and waiting on someone else to make your business generate income. In fact, it’s the dire position many appraisers are in today.
As interest rates changed, as the market changed, as the client landscape changed, as the requirements have been changing, what hasn’t changed is the fact that appraisers are simply not good at client creation and lead generation. They get on a few panels, they get some order flow, they get complacent and then, when things change, they sit there like deer in headlights waiting for things to go back to the way they were.
When you stop generating new leads and creating new clients, you’re dying. It’s that simple. The first and primary directive of all businesses, regardless of industry, is to always be generating new clients, new customers, and new leads for the future.
- Lead Conversion
If the first, and one of the most important, habits of a business is lead generation and client creation, the second is what is often referred to as ‘lead conversion’. This is the process of taking someone or a company that is a suspect, meaning they aren’t yet a customer or client, and turning them into a prospect, or someone who has some interest in you and what you offer. They’re not a client or customer yet, but they’ve expressed some interest in what you’re doing or have to offer to the world.
The reason this one is almost as important as the first one, generating new leads and creating new customers, is because you can literally change the trajectory of your business simply by continuously working on the percentage of leads you can convert into clients and customers.
As an example, if you talk to 10 new potential clients for your appraisal business next week, depending on what you say, how you say it, what you offer, what problem you propose to solve for them, some percentage will either accept your offer or decline it, for whatever reason. So, let’s say one out of the ten say ‘yes’ to whatever you’re proposing to solve for them. Now you know what your numbers are based on the prior data: you have to make an offer to 10 prospective clients to get 1 of them to agree to work with you. That means talking to 100 of them should net you 10 new clients.
However, what if the reason you’re only getting one of those ten to work with you is because your offer sucks, your pitch isn’t inspiring, you don’t fully understand what their problems are, and you’re simply not good at talking to people? What if you just changed one or two of those things and now 3 of those 10 agree to start working with you? You just increased you lead conversion rate from 10% to 30%, and your revenue and personal income exponentially.
This may not matter to you as an appraiser because you might only need 4 or 5 halfway decent clients to put food on your table, and you might think you already have those 4 or 5…until you don’t. Then you’re scrambling to find a replacement for the one that disappeared, blacklisted you, got bought out by a bigger company, or maybe changed AMCs and didn’t bother telling you.
Like diet and exercise, if you’re not always in the habit of continuously hunting for new leads for your business, and then working on the science of converting suspects to prospects; prospects to clients and customers; clients and customers to raving fans, you’re always in a slow dance with the death of your business. Increase the number of leads and clients you’re creating regularly, and then increase how well you can convert those leads into real customers and now you have a system that is duplicatable. And I’ll tell you how and why this matters when we talk about the next one:
- Client Elevation (also known ascension)
Once you have a client or a customer, your job is not over. In fact, the real work has just begun, and I’m not referring to you having to now complete the work they send to you. No, the real work I’m referring to is moving that client and customer up your ladder of success. Your ladder of success is comprised of several things: a variety of products and services to choose from, and a plan to help that client or customer achieve greater results than even they thought they could achieve by working with you.
Customer ascension in the retail world works like this: somebody walks into your establishment and the first thing they’re greeted with is something free. They take advantage of the free thing and they feel somewhat indebted based on the law of reciprocity. They walk around the shop and find something they want to buy and bring it to the counter. As they’re about to pay for that thing, the well-trained employee compliments them on their choice and then also points out a few things that could really compliment their purchase. Maybe the customer takes the employee up on their recommendations, maybe not, but the numbers work in the favor of the store because some percentage of people will spend the additional money for no additional effort on the part of the store.
In the world of internet shopping, it goes like this: search out something on Google, land on a website, peruse for a minute or two before being presented an offer for a free download or newsletter sign-up. From there the company sends you information via your email address and occasionally makes offers. Some percentage of people buy, some don’t, and some unsubscribe. The one’s who buy are also presented with another offer for something of higher value than what they’re purchasing, and some percentage of those people take the higher value offer. Then those people are offered some exclusive membership, some kind of higher value offer, and so on. This is customer ascension in the retail and internet world.
Customer and client elevation, or ascension, is simply taking your customers on a journey and showing them other things you offer that could make their lives better. If you frequent a particular restaurant and they have an exclusive membership program, you might be tempted to join, either for the savings, the benefits, or the exclusivity of being part of that club. With every choice you make to spend more money and invest further into that product, service, or company, you are climbing their ladder of ascendency. The further up you go, the more you’re likely spending or investing, the more loyal you are, and the more perks the company offers you.
Understand, all four of these things work together. All four of these activities are present in the best businesses in the world, and noticeably absent in the ones struggling from week to week or month to month. You don’t pick one of the things and try to do it separately, you focus on activity number one first: leads. Without a continuous effort on creating new leads, new prospects, new future customers, your business will always be at risk and in the process of dying, even if slowly.
All of the appraisers listening who haven’t had an order in 3 or 4 weeks, your business isn’t suffering from an external force working against you. Your business is suffering from the lack of generating enough new customer and client leads when times were good, becoming oversubscribed and in demand in the months leading up to the interest rate change, and constantly helping your clients ascend your ladder of value so that they’re getting better as a result of working with you. The ones who did those kinds of things, the ones who are relationship focused instead of transaction focused, and the ones who were offering more value than the cost of their product are thriving today.
I don’t say all of that to make anyone feel bad or rub it in if your business is suffering, I say it because I’ve been there, and I learned the hard way. It was only after my business was decimated back in 2008 that I got wise to these four successful business activities and how vital they are to growing and profitable and sustainable business.
Quite simply, if you’re not always generating new prospective clients and customers, increasing how well you can convert them into paying clients and customers, and then helping them climb your ladder of value in the products and services you offer, you’ll inevitably fall into the trap of commoditization. The appraisal industry is already heavily commoditized and heading even more rapidly into the final cycle of commoditization as consolidation of companies increases. This final cycle can take years to complete, by the way, and it doesn’t mean the end of the industry, it simply means that there will be continued fee pressure, continued margin compression, and an increase in the gap between the low fee service providers and the higher fee specialists and relationship builders.
- Customer and client retention
The fourth activity in this chain of things all successful businesses focus on consistently is customer and client retention. Client retention is exactly as the words imply: keeping customers and clients coming back to you for as long as humanly possible. If you understand the lifetime value of a customer, nothing more needs to be said. If you don’t, not much more can be said.
Retention doesn’t happen in a vacuum. It doesn’t happen by accident. One of the big problems in the appraisal industry is that appraisers only have to get themselves added to a lender or AMC panel and business might start to roll in. This leads appraisers to believe this is all it takes to succeed in that business. They fill out an application and have a steady stream of business, potentially for years to come…until they don’t. They get on a panel and then they relax and wait for the deal flow to begin. If you don’t have a steady stream of new potential customers and clients available to you at all times, you’ll end up thinking the ones you have are the best ones ever. But what if they aren’t?
Imagine staying in the same place you were born for your whole life. I know there are people out there for whom travel is not on their bucket list, or maybe they’ve simply never wanted to leave where they are. No judgement of these people, however, their perception and experience of the world will be extremely limited having never seen all that the world has to offer. Their paradigm of life and the world will be naturally limited. Contrast that with somebody who has traveled the country or the world. You think Lincoln, Nebraska is the best place ever because you’ve never been anywhere else, but the person who’s travelled says, “um, have you ever seen Lima, Peru? Or Chiang Mai, Thailand?, or the upper peninsula of Michigan?”
Imagine only ever having the friends you grew up with in elementary school as your friend group. If you never made another friend your whole life, how would you ever know if those are the best people for you, or if you were the best for them? You wouldn’t!
My point with these two examples is that, without contrast and context, you can’t possibly have a full view of the world and how things could be when you have options. If you aren’t always bringing in new, and potentially better customers and clients all the time you risk believing that the ones you have are the best and only ones you ever need. It’s only when you have a steady stream of pure potential coming in all the time that you gain a perspective on your existing clients and customers. It’s only after you have a waiting list of clients who want to work with you that can start to see who you want to say goodbye to and who you can see moving from a B client to an A client.
Your business should always be in the process of adding new clients, saying goodbye to the bad ones, and leveling up the best ones. When this becomes your focus, the retention part almost takes care of itself. The best want to work with the best and they want to do that for the duration.
One of the ways you can increase customer and client retention is by finding a way to add value to them in ways that exceed just doing appraisals for them. Education, happy hours, continuity programs, private Facebook groups, online communities that serve them, gifting programs, handwritten thank you notes, VIP programs, blogs, podcasts, newsletters, joint ventures in marketing, and so on. The only limits are the ones that exist in your mind and in your creativity.
Lead generation, lead conversion, customer elevation, and customer retention. Focus on these 4 things all the time and see if your business doesn’t explode. Until next week, I’m out…
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