Trying to get your head around the idea of freemium? Just think cloud storage service Dropbox and note-taking and archiving application Evernote, both of which have been phenomenally successful. The word ‘freemium’ combines the two aspects of the business model: ‘free’ and ’premium‘. It’s a business model that works by offering a basic product or service free of charge (typically software, content, games, web services), and a fancier version that costs money. Fancy can mean more features, more functionality, more space, more usage, more seats, more time, or no advertisements.
The business model was first defined by prominent New York-based venture capitalist and blogger Fred Wilson in 2006: “Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.”
Wilson offers these examples:
- Skype – basic in network voice is free. Voice mail and calling plans that allow users to dial landline phones require a monthly fee.
- Flickr – a handful of pictures a month is free, heavy users convert to Pro
- LinkedIn – reeled in users with free content, but has boosted sales by adding features that customers have to pay for, such as recruitment services.
Wilson points out that this business model has been around for a long time. Shareware always used a similar model, and many successful software companies have been built on it. The customer is only a click away and if you can convert them without forcing them into a price/value decision you can build a customer base fairly rapidly and efficiently.
Wilson points out that it’s important to ask as little as possible in the initial customer acquisition process. Asking for a credit card even though you won’t charge anything to it is not a good idea. Nor is forced registration. You may want to do some of this once you’ve acquired the customer, but not in the initial interaction.
He offers this advice: “Don’t require any downloads to start. Don’t require plugins. Support every browser with any material market share. Make sure your service works on various flavours of Windows, OSX, and Linux. In short, eliminate all barriers to the initial customer acquisition. And make sure that whatever the customer gets day one for free, they are always going to get for free. Nothing is more irritating to a potential customer than a ‘bait and switch’ or a retrade of the value proposition.”
The big idea is to make sure your free service is loved by customers. Only then do you communicate the value that comes with the paid service and that will have you converting to paying users. The best examples of this business model are when the customer understands why the paid service has to cost money. More storage costs for photos, virtual storage, or termination costs on other carrier networks in the Skype model, are good examples.
What you gain on the swings
Much has been written about the psychology of free. Among the most instructive texts are Free: The Future of a Radical Price by Chris Anderson and Predictably Irrational by Dan Ariely. Both authors note that free immediately reduces the mental barriers for the customer. Free makes people think that they have “nothing to lose.” That makes free a huge accelerator of adoption. The flip side of this is that after using the product for free, it is very hard to get the customer to start paying for it. This is why it is so critical to choose your premium features wisely.
But is it for you?
Freemium expert Uzi Shmilovici, CEO and founder of Future Simple, which creates online software for small businesses, cautions that before you think free (or rather freemium) is the best model for your business, you need to answer a few difficult questions:
- How big do I want my company to be? If you are looking to build a lifestyle business that’ll make you R80 000 a month and you have a good product, you can probably do without freemium. If you want to build a dominant company that has a substantial market share, Freemium can help you accelerate adoption.
- What is the value of the free users? Across all successful freemium companies, there is a way of making money or saving money from the free users. Either by saving on marketing costs (Dropbox) or by making money from ads or data (Pandora, Evernote, Mint) or both. Figure out how to turn your free users into savings in marketing costs or revenues from third parties.
- What is the cost to serve free users? This is a critical aspect of the model. If you spend a lot of money or time servicing free users, you are going to lose money. The cost of servicing free users must be lower than the rand value they provide.
- How big is my market? “The easiest way to get one million people paying is to get one billion people using,” says Phil Libin, the CEO of Evernote. Free adds another conversion step on your way to revenues. You need a big market to have enough people who will pay you at the end of the day.
- Is there value to one customer from other customers using the product? This will determine how many new users the free users will refer. There are three levels of value:
- Inherent value – You can use Skype only if the person you talk to uses it. The same is true of Dropbox. In this case, freemium can be a powerful strategy.
- Added value – You derive the value of Linkedin from other people using it. In this case, freemium can help you gain traction if you use an effective invitation mechanism.
- No value – You don’t care if someone is using Evernote or not. The only reason to tell another about the product or service is if they think it’s awesome.
Freemium and your business
Still wondering whether you can use freemium to your business’s advantage? Writing on Freemium Blog, freemium business model expert Peter Froberg has isolated a few characteristics of freemium success:
Quality free products
The most important condition for creating a successful freemium model is that you have a great product that people want. It will be the engine that drives your freemium-based business. Without inherent value your freemium will not get off the ground.
So instead of giving away a sample track of the music, let people download the whole album. Instead of letting people take a look at your worksheets, let them have all your tools for free.
Only a small percentage of free users will usually buy something. In order for this to make financial sense, the expense of distributing the free product should be very minimal. Digital duplication ensures virtually no cost for copying and distribution. If you want to distribute one million pieces of something, R1 as a unit price is quite a substantial amount.
Freemium depends on generating attention with the free product; then to sell premium products or services to some of the free users. In most cases only a small percentage of the free users will buy something. This is fine if it is a small percentage of a large number.
Creating a successful business
Froberg says his research has shown that there are two methods that should be incorporated to ensure freemium success:
Adapting the business model
If your free product is a quality product that people want, it will generate attention. You need complementary products to generate revenue from this attention.
Ensuring a wide distribution
The economic logic behind freemium is that, “When the supply of a product increases, the demand for its complementary products also increases.” The free product drives off the revenue-creating products and more free users means more paying users. Since additional distribution of a free product costs close to nothing, the success of a freemium business will increase with the number of people using it.
Helping This Along
- Actively promote the product
Making sure that more people get to know about it will lead to more users.
The generous nature of freemium fits very well with the emerging field of social media, and social media marketing has proved to be a good way of promoting a freemium product.
- Remove barriers for people to access the product
If it is hard to access your free product, some people will stop before they get to it. Not only will these people not be exposed to your thoughts, they will also have wasted time.
The cost of customer acquisition
Some people argue that freemium significantly increases the customer acquisition cost. The argument is that it costs money to acquire every new user, while only a few end up paying. Shmilovici says it’s important to consider what happens to the total amount of premium users in the case of freemium.
The total amount of premium users depends on three factors:
- Traffic – the amount of people visiting your site. People like to recommend them to their friends. With a freemium model, you will most certainly see an increase in traffic for the same marketing spend, since people will spread the word. You can further enhance the social media benefit by giving people easy ways to share their excitement and implementing a smart referral programme.
- Sign-up conversion – how many of them sign up. It’s likely that you’ll increase your conversion to users with a free offering, since users don’t need to enter their credit card details up-front. Unlike limited trial periods, your users don’t have to worry that their trial will end before they have a chance to try the product. Also, “Zero is a hot emotional button,” as Dan Ariely mentions in his book Predictably Irrational.
- Premium conversion – how many of those who signed up become paying members. Conversion to premium may drop since you might get a higher proportion of low-quality sign-ups. However, this is not the only factor at work. With freemium, people have a chance to use the product long enough to see the value in upgrading. At the same time, while they are using the free product, they build up switching costs. Eventually, they might be more likely to pay. Here’s Evernote CEO Phil Libin’s approach to this subject: “We’ve got the rest of your life to make money off you.”
To succeed in freemium, you need the increases in traffic and sign-up conversion to compensate for the drop in premium conversion rate, if any. In successful freemium companies, the boost to traffic and adoption significantly reduced the customer acquisition cost, which in turn led to great results.
SA’s first freemium HR and payroll software for business
Control your HR and payroll costs with free software that lets you choose additional premium functionality,
on a pay-as-you-use basis.
In September last year, employee management software developer PeoplePlus released the first HR and payroll software built on the freemium model in South Africa. Since then, almost 2 000 users have registered, with an additional 300 signing up every month.
“The cost of developing the software was high, but the cost of distributing it to users is relatively low,” says Rodney de Villiers, CEO of PeoplePlus. “We offer modules, such as disciplinary procedures and the ability to print payslips free. Users pay only for premium modules, and for what they use. There are no contracts, no big upfront payments, and no expensive consultants.”
De Villiers says the freemium model has been used widely for consumers, but less so in business applications. “The offering enables the business customer to select any high-value or efficiency functionality, in a modular manner. That means they can directly control their costs.”
The PeoplePlus offering is targeted at businesses with between one and 200 employees, but companies of all sizes can use the application.
Benefits for users include the sizeable reduction of the total cost of funding and operating your HR and Payroll IT, such as power, security, updates, back-ups, anti-virus, lost data, stolen equipment, staffing and consultants, not to mention your time and stress. When it comes to support for free users, De Villiers says telephone support is offered as a premium service. “The application is easy to use, and comes with a number of practical ‘how to’ guides. If users need support, they’ll only pay for it when they want it.”
PeoplePlus was developed by Talenger Holdings, a company that De Villiers launched in 1998, and which specialises in human resource technology for large businesses. “PeoplePlus is basically a scaled-down version of the proven solutions that Talenger has been developing for years. We analysed the local market and saw that more than 90% of businesses employ up to 200 people. That was how we identified a gap in the market for PeoplePlus. The freemium model has been proven and we are confident that the application will become increasingly popular because of its pricing and functionality.”
For more information, visit www.peopleplus.co.za
How freemium is changing industries.
In recent years, several industries have applied the freemium model with great success. This is particularly true in music and publishing. A great example is the rock band Nine Inch Nails. Fans could download their latest album Ghost l-lV for free and buy a range of other products from the extended $5 download, to a $300 limited deluxe boxed CD.
Flat World Knowledge is a company that publishes university textbooks. Where it differs from competitors is in its business model. Instead of only selling expensive paper versions that change every two years, Flat World Knowledge releases the books online for free download. Students and professors have access to quality textbooks at no cost. The publisher makes money from selling a range of other products, such as a printed textbook, audio books, e-book for a device, individual chapters to print, or study aids.
Free-to-play online games, often overlooked in the hype around social and casual games, are growing just as fast as their counterparts. Much of this has to do with the industry’s transition from paid to freemium models – not only in online gaming, but for web and mobile apps on the whole.
Free: The Future of a Radical
Price, by Chris Anderson
Predictably Irrational: The Hidden Forces that Shape our Decisions, by Dan Ariely
Dr Greg Fisher’s 5 Key Principles For Executing Your Growth-Driven Strategy
Exceptional strategy is based on five key principles: A good plan, the choices and trade-offs you’re willing to make, differentiation, your profit equation and activity integration. Here’s how you can strengthen your business to drive higher growth and profits.
Your key implementation plan framework to get you started
Dr Greg Fisher is a professor in the Management and Entrepreneurship Department at the Kelley School of Business at Indiana University and a visiting lecturer at the Gordon Institute of Business Science (GIBS) in South Africa.
Over the past three years, GDP growth in South Africa has been small. Economists expect 2018 to see GDP growth at 1% or less. And yet the growth strategies of businesses are aiming much, much higher. How do you target 15% to 20% growth under such tight economic conditions?
According to Dr Greg Fisher, a professor in the Management and Entrepreneurship Department at the Kelley School of Business at Indiana University and a visiting lecturer at the Gordon Institute of Business Science (GIBS) in South Africa, you can’t just ride the momentum of the economy. You need to do something more to fill that gap. And therein lies the challenge, because there’s no silver bullet that can drive double digit growth.
“Ultimately, you need to be able to critically think through and formulate multiple ways to fill that gap,” explained Greg during his keynote strategy workshop at the 2017 ThinkSales Sales Leadership Convention. “Success in anything — sports, raising children, learning and business — is driven by fundamental principles that need to be applied with balance and moderation.
“A conceptual understanding of what to do isn’t enough. You need to take action — your ability to drive double digit growth lies in developing a strategy based on five key principles, and then executing it.”
Here are the five key principles you must unpack in order to formulate and execute a growth-driven strategy.
1. You need a good plan
Every successful business shift begins with a good theory. It doesn’t need to be sexy. It does need to be insightful, and give you a map of what to do next, what not to do next, and what value needs to be created through which channels going forward.
Leverage foresight, insight and hindsight to formulate a mental model and hypothesise (or develop a theory) that relates to your market.
Take Steve Jobs as an example. He hypothesised that people would pay a premium price for ease of use and an elegant design in computing. This would form the foundation that other digital products could be added to.
2. Strategy is about making choices and trade-offs
Strategists are constantly faced with choices and trade-offs that need to be made if you’re going to stick to the plan. Remember, true value is created when you make a choice, and don’t try to dabble in multiple things at once. You need a clear and manageable goal. Choices require decisions, often relating to where you will be channelling your resources. A trade-off is not doing something. What will you do and not do? This must align with what you’ve already theorised. It doesn’t serve you or the business to follow too many paths and options.
Which markets will you pursue vigorously and which will you leave alone? Which customers will you target, and which won’t you? Which products will you produce to enact your theory? Which activities will you engage in inside your organisation, what will you outsource and what won’t you do at all? Who will you hire? Who won’t you hire? And which assets will you choose to own?
Everything is a choice and a trade-off. Take Ikea, a retail brand that’s enjoyed 70 years of successful growth. Why? Because of fundamental and particular choices relating to product designs and style. Ikea isn’t everything to everyone — it has a very specific value proposition and delivers on it relentlessly.
This is fundamental. Even if you’re the low-cost provider in your space, you still need to be doing something different to drive those costs down; you still need to be differentiating yourself and the way you operate. The world is more competitive than it’s ever been, and buyers have more access to information and options than they’ve ever had. To be competitive, you need to really interrogate your differentiators.
The strategy conversation tends to happen early, the profit conversation happens late. You need to bring them together. When you’re having a strategy conversation, you need to understand how it will drive bottom line growth. The role of strategy is to bridge what customers are willing to pay for a product or service, and what it will cost you to deliver it. The strategies you adopt are determined by theories, choices, differentiation and costs.
The formula is the following:
Profit = the number of products you sell x price of product — expenses.
How does your strategy impact this equation? Which lever will your strategy pull? You ultimately want to drive profit, and to achieve that, your strategy must point to one or more of these three elements.
In other words, either you need to sell more products, or you need to increase the price you can charge, or you need to decrease the expenses you will incur to get that product to market (or a combination of all three).
The key question is therefore: What can you influence to drive the outcome you want? What strategy will drive profit?
The variants on the profit equation that you need to consider include:
- Industry average competitors
- Uniquely differentiated competitors
- Low-cost competitors
- Competitors with a digital advantage.
On the other side:
- Customer willingness to pay
- The cost to produce and deliver your goods.
Profit lies in the middle. Focusing on two or even all three of the levers is challenging, but it will result in the greatest results if executed properly.
But remember: The management of the profit equation is ongoing. You need to manipulate it in action and create a strategy that can be adjusted when and where necessary, always tying it back to the bottom line.
Ideally, you want to spend less while delivering more, resulting in higher profits. Before you can do that though, you must identify your profit levers. Finally, does your profit equation tie back to your points of differentiation, trade-offs and choices and ultimately business theory?
5. Activity integration
Your fifth, final and most important point is activity integration. You need to make your strategy happen. The previous four steps are meaningless unless you can do something with them.
Activity implementation is the result of the business performing a certain set of discreet activities. These include the sales force, managing customers and managing returns. This is your core and critical to business. Think of each business unit as a part to a mechanical watch.
The challenge becomes: How do they all work together in the service of the four points above? Your goal is to ultimately create something that is beautiful and precise. Independently, these departments are meaningless. Success lies in multiple activities, all working together to drive your strategy.
Start by driving your strategy and ensuring integration
To get started, consider which activities are necessary to drive your strategy and ensure integration. How these activities work together reinforces everything you’re doing. Activities amplify each other, until 1 + 1 = 3.
The problem is that multiple activities working together is difficult to replicate. There is no single activity (or silver bullet) that will drive success. You need to optimise all of your activities — you need ten primary activities, and you need to do them all very well. That’s activity integration.
The problem is that it’s not easy, which is why so many organisations fail at this stage.
If you can get this right though, the results will speak for themselves. 1x1x1… to 10 = 100%. 0.9×0.9×0.9… to 10 = 35%. That’s the power of activity integration. It also means that doing each activity at 90% will bring the entire organisation down to 35%.
Walt Disney conceptualised the entire Disney business according to activity integration. Each element worked into the next, starting with movies at the centre. Get that right, and all the other activities — Disneyland, merchandising and so on — work. Negate the movie piece and the rest disintegrates.
Bringing it all together
- What’s your theory?
- Do you have a clear, consistent and concise theory on how to succeed?
- How does that theory translate into your choices and trade-offs?
- What definitive things are you choosing to do and not to do?
- How do these choices drive differentiation? You need a core differentiation that customers can appreciate, value and buy into.
- How does your differentiation ultimately drive profits? Can you articulate it, and what levers are you pulling?
- What activities do you need to implement your strategy, and how do they ultimately integrate with each other?
Your Business workplan
Your key business plan to discover and implement the five core elements of a business strategy
Briefly describe the THEORY underpinning your organisation’s strategy.
A theory is a mental model about how your organisation does (or could) create value. It reveals hypotheses about how an organisation can create significant value. It usually entails:
- Foresight about the evolution of the industry in which you operate
- Insight into how your organisation can create value in the industry as it evolves
- Hindsight about how you might build past competencies, relationships and assets.
We theorise that
Key questions about yourself
- What are the assumptions embedded in your theory? Are they valid? Could they be tested?
- Would the other leaders in your organisation describe a similar theory underpinning your strategy? Do you have a consistent view of opportunities and mechanisms for value creation across the organisation’s leaders?
2. Choices & trade-offs
Identify the CHOICES & TRADE-OFFS that you have made, and need to make, to act on your theory.
A choice is a clear decision to do something specific and meaningful. A trade-off is a clear choice not to do something that is somewhat tempting or attractive to pursue.
- We have chosen to Identify 3 to 5 important strategic choices you have made
- We still need to make choices with respect to Identify 3 to 5 important strategic choices you still need to make
- We have chosen NOT to Identify 3 to 5 important trade-offs that you have made
- We still need to decide NOT to Identify 3 to 5 important trade-offs that you still need to make.
Key questions to ask yourself
- Do your choices and trade-offs clearly reflect your theory?
- What’s preventing you from making the choices and trade-offs that you still need to make? What would it take to definitively make these choices?
Identify the points of DIFFERENTIATION that are embedded in what you do (i.e. in your theory, choices and trade-offs).
Differentiation is something that clearly distinguishes an organisation from others in the industry. It is something that other organisations targeting the same customers are not doing and which those customers ultimately find valuable.
- We are different (or strive to be different) with respect to
Key questions to ask yourself
- Do your customers see and experience these points of differentiation? Would they agree you are different in this regard?
- Would the employees in your organisation describe similar elements of differentiation? Do you have a consistent view of your organisation’s differentiators across the organisation?
- How easy is it for your competitors to emulate your points of differentiation? Could they easily copy your points of differentiation? If not, why not?
Identify how your points of differentiation drive PROFITS.
- A useful way to examine the connection between strategy and profits is to examine a simple version of the profit equation as follows: Profit = (Number of products sold x Price of products) – Expenses. Identify how the organisation’s differentiation elements drive profits as follows:
- Identify those elements of the profit equation that apply for your strategy and complete the statement where applicable
- We are able to sell more products than rivals (YES/NO) because
- We are able to charge higher prices for our products than rivals (YES/NO) because
- We are able to reduce our expenses relative to rivals (YES/NO)because
Check those that are appropriate and complete the statement
- We sell more products because
- We charge higher prices for products because
- We reduce expenses because
Key questions to ask yourself
- What more could you be doing to increase volumes, charge higher prices and/or reduce expenses?
- Does your profit equation tie back to your theory, choices and trade-offs, and to your points of differentiation?
- Is the profit equation consistently understood across the organisation?
5. Activity integration
Identify the ACTIVITIES needed to deliver on your points of differentiation, and assess whether these activities are adequately INTEGRATED with one another (i.e. reinforce one another).
- STEP 1. Write up a brief description of each activity required to deliver on your organisation’s elements of differentiation.
An activity is something that a organisation does repeatedly in the process of developing, marketing and delivering products and services to clients.
- STEP 2. Draw links between the activities that currently reinforce each other.
Reinforcement between activities comes about when two activities support each other such that when they operate together, they are more effective than if they operated independently i.e. doing one activity well enhances the other activity.
Key questions to ask yourself
- Do we consistently view our organisation as an integrated system of activities that reinforce one another, or do we tend to deal with each activity independently?
- Are our activities arranged in a way that consistently and effectively delivers on our key points of differentiation? If not, how could they be rearranged to more effectively deliver on key points of differentiation?
3 Strategies For Growing Your Online Business Fast
Wooing customers requires a sincere devotion to giving people value.
Jay Abraham is one of the world’s leading business consultants and mentors to people like Tony Robbins, Daymond John, Joe Polish, Stephen R. Covey and Russell Brunson. Over the years, he’s built and scaled eight- and nine-figure businesses, and is constantly sought after by some of the most successful companies to help grow their businesses fast.
I recently spoke to Abraham about the ways in which he grows an online business, and what he told me was that it boiled down to three primary strategies applicable to growing any business, whether it’s online or offline. Most people who struggle with this know that it’s hard to grow or scale a business.
They think that to grow a business, they need major capital or funding. While that might help, it’s also a shortcut that doesn’t always pan out. Sometimes, having the coffers filled can actually sidetrack you. Instead of looking for ways you can become profitable, you look for ways to grow by spending more.
The answer to growth is not in merely scaling out your spend. It doesn’t equate to having more employees or a bigger office or any of those things for that matter. The best way to actually do this is organically by bootstrapping. If you’re a solopreneur or running a small business, then this information is integral to your own growth.
Rather than trying to spend more, you have to focus on conversions. Conversions are at the heart of any business. If you don’t have an offer that converts, or the capability to track those conversions, then you’re wasting your time. You can’t scale by any measure without a properly converting offer in your business.
Rather than spending money on the superficial, you have to spend it wisely to get that converting offer working. That means that if you spend $1 to acquire a customer, you have to ensure that you’re making that $1 back and earning more. Otherwise, you have a business that’s losing money, not one that’s making money.
That’s the premise and basis for building and growing business. You simply can’t scale to any degree without that. There are many ways to actually do this. Creating a converting offer can be done through a variety of mediums. One of those mediums is the webinar.
Russell Brunson often tells the story about how a single webinar saved him from bankruptcy twice. Liz Benny and Kent Clothier have used a single webinar to generate millions of dollars in sales. It’s a powerful medium you should be using to sell something.
There is a particular process to selling through the webinar. Most entrepreneurs confuse selling through a webinar as teaching. You shouldn’t be teaching at all. You should be breaking down limiting beliefs through the vehicle of stories.
The truth is that most people don’t buy through webinars because they have false or limiting beliefs. These beliefs are attributed to the vehicle, or offer itself, as much as they are to internal and external beliefs. Successful webinars focus on destroying those false beliefs. Once those dominos topple down, selling becomes almost effortless.
Abraham talks about three primary strategies for growing your business fast. Each of these strategies has several tactics tied to it. But, at the heart of it, there are really only three paths forward. If you can heed one of these paths, you can likely achieve your business goals.
However, keep in mind that the path from zero to seven figures is not going to be the same as the path from seven to eight figures or from eight to nine figures and beyond. The skills you need to use to get to seven figures in your business are not going to be the same skills you use to move you further up. And it’s easy to get stuck in one cycle, often repeating your revenue year after year and not moving beyond that.
Anyone who’s serious about making money online understands that there are challenges when going from one phase to the next. It can be frustrating to say the least. And without a proper sales funnel, actually growing the business will be difficult. You need the right systems in place in order to capitalise on the process.
What most people fail to focus on are the email sequences. How can you bridge that divide between leads who enter your world and those who become customers? The answer is through the email sequence. The email sequence is key for building a relationship with the lead by telling your story.
The first strategy for growing your online (or offline) business is through acquisition. How can you get more customers? Often, to do this, you need to setup a front-end sales funnel. You need to have some sort of offer that will bring the customer into your world, whatever that might be.
Abraham says that there are loads of different tactics that work here. Webinars are one strategy. But, there are also free-plus-shipping offers, other tripwires (which are low-ticket front-end offers usually from $1 to $37) and other lead magnets such as free ebooks, checklists, cheat sheets and so on.
When you sit down to think about how you can acquire customers, you have to envision their pain points and how you can go about adding some value to their lives. You might lose some money on the front-end. But, if you have a proper sales funnel, you can maximise the average cart value with up-sells and one-time-offers that will make your ad spend profitable.
The second way that Abraham says that you can grow your business is through ascension. How can you get your customers to ascend a value ladder? What email sequences can you plan that will move the customer up the progression of value in your business.
With the proper sales funnel and email sequences in place, you can take a customer from your low-ticket, front-end offers up through your value ladder to a high-ticket offer. During each step of the ascension, you have to ensure that you’re adding tremendous amounts of value in the exchange.
If you’re not adding value, then the customer simply won’t ascend and you won’t grow your business (fast or slow). That’s what it takes. Be sure that you’re adding loads of value during each step of the process if you want your customers to ascend and make more money.
The third way to grow your business is through frequency. How can you get your customers to buy more frequently? That’s the big question. Can you do this through a continuity plan or through new offers or some other monetization? The challenge is doing this without zapping too many of your resources.
Some people struggle to understand how they can grow their business. Others have growing pains. When you grow, you need to scale out your infrastructure. You need more employees and systems in place. Again, the same strategies that took you to seven figures won’t take you beyond.
Take a look at your product or service offering and figure out how you can get your customers to spend more frequently. How can you monetise your customers while still adding more value in the exchange. Don’t just look for ways to extract more money from current customers. Look for ways you can get them to spend more often and monetise that.
This article was originally posted here on Entrepreneur.com.
Scale Your Values To Scale Your Business
Can you grow without losing touch with your core principles?
I always get asked, “What is the best way to scale my business?” Even by my business coaching clients.
Based on my experience, scaling a business through values will help to achieve sustainable growth, in any industry. Value-based companies should start with understanding their core values and how to scale those values before worrying about how the company itself will grow.
Failure to scale these values causes all sorts of problems when the company begins to scale. Your core message gets lost. Your team’s motivation decreases. Your lack of a strong corporate culture leads to a lack of production.
Don’t lose your values
Losing sight of the values that comprise your company culture makes organisations less successful, efficient and effective. It can even cause companies to fall apart. Don’t undermine or undervalue your company’s values or mission.
Studies have shown the impact that a focus on company values has on operations. According to Deloitte research, mission-driven companies have 30 percent higher levels of innovation and 40 percent higher levels of retention. Companies with happy employees that are aligned with their core values also outperform the competition by 20 percent, Gallup found.
Set the stage
When new interns start at our firm, we tell them that we do not teach about working in sports. We only teach four things, the four core values of our company: gratitude, empathy, accountability and effective communication. In order to get everyone aligned, we reinforce these values in all three stages of scaling our business, and we use different strategies to instill them.
Invest in the learning stage
Understand that your new employee is an investment in your company, not a privilege. You are investing in a person’s professional growth and, for those with a values-based business, you also invest in their personal growth.
The learning stage is where you tell stories and share content which will get your team aligned with your core values. Find people who represent the values you aspire to follow and tell their stories. Provide examples of people who succeed with those values. Also, share times of failure that happen when people do not live aligned with the standards that your team is supposed to follow.
Don’t execute the messenger
The next stage is the execution phase, where our team members mature through those core values and eventually become profitable. The execution stage is where an employee learns to balance the values of a company while also maintaining profitability for the firm.
Having an appropriate compensation package is key at this stage. What matters is that there’s a learning phase that we as employers invest, an execution phase that leads to profitability, and then an equity phase, warrants or even investment from our employees.
Equity stage: Retain and reward
The equity or partnership stage allows your company to scale and thrive while maintaining a connection to core values. Equity or partnership rewards employees who have shown a commitment to your company and its culture over an extended period of time.
Setting an appropriate timeline to transition from employee to partner is important. People need to know that there is a light at the end of the tunnel.
SAS shows how to scale
Some of the biggest companies have been able to grow and scale because of their commitment to their culture.
Billionaire Jim Goodnight’s company, SAS, is one of the many companies that operate based on values or a mission. They are committed to a holistic approach, providing core values, support and appreciation to their employees. They see themselves as “authentic, accountable, curious and passionate” and put those values into everything that they do.
Live your core values
If you remain firmly rooted in your core values and principles, you’ll be able to not only bring monetary success to your company, but personal success to yourself, your employees, your community and the people you interact with every day.
Remember, nobody can succeed without inspiration. Show them how to give back, how to be of service and how to succeed. Empower them with values that will change their personal and professional life.
Inspire other companies to follow your lead by sticking to your core values and working to empower others to be successful.
This article was originally posted here on Entrepreneur.com.
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