Tony Robbins is one of the most successful entrepreneurs around and his companies generate revenues of over $6 billion each year. He speaks with Jay Abraham who has the reputation of being the world’s highest paid marketing consultant and has generated billions of increased revenues for his clients in hundreds of different industries.
Abraham cites an example of how he made millions of dollars in profits for a precious metals brokerage with just a few minutes work. The brokerage ran adverts for their services and had access to bank financing for clients to use for their customers. Abraham understood the value that his client missed and he changed the headlines of their advertising to offer a benefit oriented proposition to the customer and the results of the brokerage increased exponentially.
A common fallacy which encompasses the world of business is that the more hours that you spend on a process the more valuable that it is becomes; nothing could be further from the truth. The most effective consultants in the world solve problems in the quickest time and get compensated the most.
The advertising icon David Ogilvy understood the power of a headline, in his works and interviews he frequently stated that point. You can see our feature on David Ogilvy here – http://www.anisometric-inc.com/how-did-david-ogilvy-rise-to-the-top/
“The headline is the most important element in most advertisements. It is the telegram which decides the reader whether to read the copy.” – David Ogilvy
Abraham mentions a fact that many people have still not understood about how to market to customers.
“People do not buy products and services, they buy results. They buy an outcome that is self-serving to the end user.” – Jay Abraham
Another area that Abraham understands is called the marginal net worth or lifetime value of a customer. This means that each customer will use specific products and services for a certain period of time before the relationship ends.
Understanding the lifetime value of a customer helps with being able to decide how much money to put into a marketing budget so that a business owner can spend that money and be sure that the business will be able to grow sustainably as long as they can keep acquiring customers at the same rate.
This is one of the most important parts of understanding business because when a business owner says ‘I can’t afford to spend money on marketing’ without knowing the real data behind what it costs to acquire a customer then that business owner is unaware of how much more could be made for the business or how much money is currently being wasted.
Icy Hot campaign
The example of Icy Hot is one that every entrepreneur should know about. The Icy Hot product is a substance that provides pain relief to people who suffer from painful conditions with arthritis, simple backache, muscle strains, sprains, bruises and cramps.
The methods and techniques used by Abraham could be applied almost universally to products regardless of their industry. I will highlight specific takeaways that can be used regardless of what business you are in.
Lessons from Jay Abraham’s Icy Hot campaign
- Do not overlook products that have a loyal customer base, even if they are not making much money, there may be a way to turn them around.
- When advertising a product do not focus on how much you are spending without understanding the potential for repeat purchase sales.
- If traditional media will not work with your product then think about non-traditional ways to reach your target audience.
- Always engage in deals where the other side benefits as much as you do from the transaction.
- If you understand the lifetime value of a customer you can literally ‘give products away for free’ and still come out on top if you can deliver benefits to the customers on a repeat basis.
- You can include affiliated offers along with the initial product, this will provide additional value to the customer as well as increased margins for you.
With these techniques Abraham and his partners built the company from $20k in revenue to $13 million in 18 months and this led to the acquisition of the company. The brand Icy Hot is now owned by Sanofi the multi-billion dollar French owned company.
Abraham speaks about the importance of testing in business. A number of online marketers understand the importance of testing, but not the importance of hierarchy and value. There are plenty of marketers who are obsessed with whether the ‘light blue’ version converts more than the ‘sky blue’ version of an ad. This type of testing is nonsensical and testing should be applied to the most important revenue generating activities of a business.
“The only risk that you have to have in anything that you do is an inexpensive test.”
– Jay Abraham
I will go into more detail about testing another time, for now I will list a few of the most essential things to test in any marketing campaign
- Markets, lists, audiences
- Risk propositions
If any so called ‘marketing expert’ is not able or willing to test those aforementioned areas and wants to lead you to measure eye movement or breathing patterns to generate income then run away from them as fast as you can and take your wallet / purse with you.
Jay Abraham’s 3 ways to grow a business
Abraham asserts that there are 3 ways to grow a business.
- Increase the amount of customers or prospects
- Increase the unit of sale / pricing
- Increase the frequency of purchases
Abraham also recognises an area where many entrepreneurs fail and that is because they do not have a back-end part to their business. Also a combination of the ways to grow a business will increase the value of the company by an exponential amount. An important part of a back-end business is for the business owner to be able to educate his or her customers why they should want to continue the relationship.
I’ll list a few ways that businesses apply a successful back-end strategy to add value to their businesses
- Frequent flyer air mile points with multiple flights.
- Telecommunication companies offer free phones to use with their monthly contracts for a fixed term.
- Coffee outlets provide stamp cards to give a free coffee after a certain number of stamps.
- Amazon Prime is another example of back-end business that accepts a monthly payment in return will offer free fast shipping, streaming of movies, TV shows and music, and so on.
- Cosmetic surgeons use a series of botox injections, lifts, and so on.
Abraham mentions that it is easier to be a success than it is to be a failure, even though the statistics say that over 90% of first-time businesses will eventually fail Abraham states the reason is because only a few people understand how to optimise their time, money, resources, assets and opportunities.
Abraham mentions that the thing that stops a lot of people from maximising their results is not a lack of knowledge but their expertise that they have gained throughout their career. The distinction that he makes is the difference between tunnel vision and funnel vision. Tunnel vision is looking down a narrowly focused area while funnel vision is having a broader perspective that gets refined and concentrated over time.
A number of entrepreneurs only know how their industry operates without being able to see how opportunities outside of their industry can be adapted and applied their their current situation. A funnel vision perspective will provide an advantage over their competition because many companies in the same industry operate in very similar ways.
The reason why this distinction matters is because if most people are using the same platforms to promote their business with similar messages and identical types of advertising then how can a new company get to the top? The answer is that they cannot. A key thing to remember is ‘Do Not Compete, Create!’
It is impossible to win a race if you have no idea where the finish line is and you are way behind the field and not able to increase your speed. You have to choose a way to get to your audience that your competitors are not willing or able to do as well as you can. If you are not there yet, then that is a worthy goal to work towards.
“It is just a matter of recognizing that one person’s distress is another person’s opportunity.” – Jay Abraham
One of the most important questions that Jay Asks clients is “how much more can you do with the customers that you already have?”
Often entrepreneurs are too willing to chase after the new customer while neglecting the ones that they already have. Gaining new customers is the most costly thing that any business can do. It makes far more sense to work with existing customers and maximise relationships there before moving on to new customers.
This mentality not not understanding value underneath your feet reminds me of the Acres of Diamond story, to read that story you can read it here – http://www.anisometric-inc.com/how-to-lead-the-field-in-your-industry/
I’ll list a few ways to understand how to maximise past relationships
- Provide regular service check-ups where you assess the situation of your customer’s experiences with your products and services.
- Provide additional services to compliment the ones in existence.
- Use successful customers for endorsements and testimonials.
- Use happy customers for referrals to their network.
Abraham mentions his intellectual debt to the management consultant William Edwards Deming who played a pivotal role in the post World War II technological revolution in Japan from an impoverished war torn nation to one of the most technologically impressive nations in the world. A part of Deming’s philosophy included the ability to measure and analyse processes to see how they could be improved, and then the improved processes would then be measured and improved again perpetually until constant breakthroughs were being made. Deming’s contribution was so great that the Japanese arranged an award called ’The Deming Prize’ which they give to both celebrate Deming and recognise outstanding contributions from others.
Power Parthenon principle
Abraham uses two analogies to describe two type of entrepreneurial activities, he cites a diving board and a Parthenon (a Greek temple with numerous pillars). The diving board represents a business with just one method of acquiring customers, while the Parthenon represents a business that has a a vast number of methods to acquire customers.
Abraham’s recommendation is that successful entrepreneurs need to develop as many methods for generating customers as possible and systemise them so that they can function smoothly.
A few methods of acquiring customers can be:
- Search engine optimisation (SEO)
- Pay per click advertising (PPC)
- Social media (lead generation, targeted ads)
- Joint ventures
- Email marketing
- Live events
- Direct selling
There are many other methods to acquire customers and yet most entrepreneurs only have a single way to get customers, if external events happen that affect their singular method of marketing then their entire business is at risk.
Therefore a Parthenon strategy will endure even if a few ‘pillars’ are destroyed over a period of time.
You should think about how many customer acquisition methods can be integrated into your business and if you currently only have a single method of getting customers think about how to strengthen your business by adding.
Another way to add power to your business is to maximise overlooked opportunities that exist right underneath your nose. Many people never think of events and people from their past and how to leverage them to your advantage today, some ways to maximise from the past is to:
- Rebuild relationships with past employers or employees.
- Look at suppliers of goods and services who you have worked with.
- Reengage with people who are on your mailing list.
- Connect with people who have not bought from you may still be open to a joint venture if you can give them what they want from another company, you can act as a broker for a fee.
- Learn about your environment and the opportunities there for local businesses.
- Look at the potential for other markets across the globe who could use products and services that exist where you are.
What is marketing?
“Marketing is the continual education of the prospect / customer for the lifetime of that customer on the advantages, benefits and results that your company will offer them.” – Jay Abraham
Abraham examines the question, what is marketing? then adds why it is important that everyone should understand how to market whether they own a business or not.
“My definition of marketing is simple—it’s all about educating the marketplace that your business can solve problems, fill voids, or achieve opportunities and goals the way no other business can.” – Jay Abraham
4 critical factors of lead generation
Lead generation is an essential part of marketing and this enables a company to be able to have access to a number of people who initially show an interest in finding out more about the product or service in question.
Abraham mentions 4 critical aspects of lead generation that many businesses are ignorant of and as a result waste enormous amount of time and resources in their marketing.
- The cost of a lead
- Conversion rate
- Unit of sale
- Residual factor
The knowledge of these factors will separate successful business owners and entrepreneurs from those who merely pour their money into some type of marketing funnel and hope for the best.
Questions for business owners to ask themselves
- Where is my business coming from?
- Where could more potential businesses come from?
- Who already has my potential customers and how can we work together?
- What other ways can I benefit from my customers?
- What ways can I reduce the risk of the transaction for my prospects?
Acquiring a new customer is the most expensive thing that any business can do so the ability to reduce the barrier to entry for new customers is an essential factor to the success of any business.
When two sides meet there is typically one side that has an advantage over the other side therefore the perceived weaker of the two parties will need to find some way to induce the other party to take a risk. This risk is mitigated by using the principle of risk reversal which makes doing business so easy that it makes more sense to engage in the transaction than to forgo it.
Risk reversal allows an entrepreneur to provide real value for the client by overcoming their own greed and focusing on the needs, desires and wants of the prospect because the prospect’s needs and desires must be met in order for them to willingly part with their money.
An important question that Abraham asks entrepreneurs to think about is: does your product or service perform at the level that you say that it does?
If so then that will prove beneficial to your business going forwards, and if not then your business success will be short-lived if you achieve it at all. Customers will not keep returning to a business that continually lets them down.
It is advisable for all businesses to have a unique selling proposition to help them to differentiate from their competitors and provide value to their customers.
Finding your own one can be tough because you may not be able to see yourself objectively, so ask your friends, customers, peers, clients and so on, then build a picture of what you can offer for your clients in a way that they will be able to understand and utilise for their own needs.
Go through the buying process
Another way that Abraham advises business owners to think is to go back and examine how they bought products and services and use their own thinking to understand why they bought or did not buy certain products and services.
By understanding this it is possible to use that same logic to convince other buyers to buy your products and services, if you can design a process that takes into consideration the doubts and scepticism of a prospect and then turn those doubts into purchases then you will be successful going forwards.
The founder of the Walmart corporation Sam Walton grew his business from a tiny store to become the biggest retailer in the world by applying the distinction of understanding how his competition went about their business operations. Walton became the richest man in the world until his death in 1999.
The ability to understand what your market wants will help to put your business at a distinct advantage and anyone who does not follow this simple rule will fail in business.
“The fact is, everyone is in sales.” – Jay Abraham
Jay Abraham speaks about this and a number of other areas in his PowerTalk session with Tony Robbins.
Tony Robbins speaks to Jay Abraham
Interviewer: Tony Robbins
Entrepreneur: Jay Abraham