When calculating multiples on profit and revenue, buyers of a business have two basic questions:

1. Will the customers stick around after the sale?
2. Will the employees stick around after the sale?

Doubt in one or both of these areas erodes the perceived value of your business. Despite decades of hard work by yourself and your team, when buyers get nervous about these two areas, they begin discounting their offer.

Fortunately, there are three things you can do proactively to alleviate the buyer's doubt. When you get these three things right you can actually increase the value of your business.

Hypothetically, let’s say that the buyer discounts their offer by 25% based on their fear that customers and employees will leave. Similarly, what if the value of the business actually increased by 25% based on confidence that not only will employees and customers stick around but that the business is in a position to continue to grow? This 50% swing can literally mean millions of dollars.

What does it take to reduce the doubt that customers and employees will leave? Here are three ideas to consider.

1. Focus On Ideal Clients

Ideal Clients need everything you sell and they are a good fit with your company culture. Since they need everything you sell, they have a higher value. When they are a good fit with your culture, they have a much higher chance of sticking around. This combination not only maximizes your value by creating a trajectory of exponential growth with cross-sell revenue, but it also reduces client turnover.

2. Create Programs That Build Value and Loyalty

Clients don’t buy your products and services, they buy the outcomes your products and services deliver. The initial sale should be the ground floor of value creation. From there, the experience you deliver to your clients should provide increasing levels of value as you help them achieve more outcomes. 

Progressive realization of value can be delivered inside an overall client experience. Yes, client experience needs to include great customer service. However, it needs to go beyond that to provide a journey of increasing value.

The programs that you develop wrap around your products and services to create increasing revenue while building client loyalty. These programs increase client retention. When it comes to maximizing the value of your business, these programs themselves often have appeal and saleable value to you your buyer as they realize that they might be able to adopt some of your best practices in their other businesses.

3. Develop and Document Processes That Ensure Scalability

Programs need to be backed with marketing, sales, and operations processes. In a Revenue Growth Engine®, these processes become like the cylinders of the engine. The more cylinders you have, the more horsepower you get.

Processes are a series of steps for a repeated outcome. You can train employees to follow these processes. This gives the buyer of a business peace of mind that even when some of the current employees leave after the purchase, the company will be able to onboard new employees to continue to deliver these processes. Plus, with processes in place, it becomes easier to scale your marketing and sales teams as new employees have clear job descriptions.

Whether you want to sell your business as you approach retirement or are looking to spin up revenue to exit in 3-5 years, the work you do in these three areas has the potential to flip your multiple from a discount to a premium. While revenue and profit are key drivers of the value of a business, make sure to put programs and processes in place that alleviate the buyer's doubt about the sustainability of that revenue and profit.

A word of warning as we conclude. In the process of creating a Revenue Growth Engine® that attracts ideal clients and delivers increasing value while providing processes that help onboard and retain employees, you may fall in love with your business again and want to keep it in your portfolio for someone else to run for you. Whether you want to exit or decide to hold, building programs and processes that attract and cross-sell Ideal Clients are the keys to maximizing the value of your business.

To discover a model to maximize the value of your business, schedule your confidential 20-minute revenue breakthrough conversation with me by clicking here.

Could it be possible to 10X your business over a decade? Not only is it possible, it is doable for virtually every business.

How do you get 10X growth? Let’s break it down:  When you double business every three years you will 10X in 10 years.

Consider the following example of a business that is doing $1 million a year:

Now: $1M

3 Years: $2M

6 Years: $4M

9 Years: $8M

12 Years: $16M

Right around 10 years this business will hit $10M. That’s 10X. 

The problem is that most businesses don’t experience this. Many businesses are stuck in flatline growth.

The financial world gives us the rule of 72. Divide 72 by the growth rate and you can see how long it takes to double your money. 

Using this model, you can quickly see that a company growing at 10% year over year will double every 7.2 years. That business will get 1.5 doubling periods in a 10 year time frame, a far cry from 10X growth.

How can you accomplish 10X growth? You drive marginal improvement in two key areas simultaneously:

1. Net-New Business—This is the number of customers you have
2. Cross-Sell Revenue—This is your revenue per customer.

If you grow 1% a month (12% a year) in each of these areas, look what happens:

 | Growth | Now | Year 1 | Year 2 | Year 3
Clients | 12% | 1,000 | 1,120 | 1,254 | 1,404
Revenue per Client | 12% | $1,000 | $1,120 | $1,254 | $1,404
Total Revenue | 
| $1M | $1.26M | $1.57M | $1.97M

There it is in simple math. Business doubles in 3 years. 

How could you pull off 10X growth?

In Atomic Habits, James Clear tells the story of how the British cycling team went from being the laughing stock of the sports world to Olympic Champions. 

Their coach, Dave Brailsford, implemented the aggregation of marginal gains. The theory was that a 1% improvement each day would yield massive transformation over time. This proved out in going from last place to first.

The parallel to business is the aggregation of marginal gains in each of the two core revenue drivers: net-new and cross-sell revenue.

12% growth in each of these areas requires 1% growth per month or 3% per quarter. With this in mind, every leadership team has two questions to ask each quarter:

• What can we improve the grow net-new (our number of clients) by 3%?
• What can we do to grow cross-sell (revenue per client) by 3%?

Get these two numbers right and you will break through to 10X growth in 10 years.

What does it take to make this happen? That’s why I explain in the Revenue Growth Engine® book. To get your copy visit www.revenuegrowthengine.com/book.

When you hear the words Ideal Client, what do you think? Many entrepreneurs, sales professionals, and marketing leaders immediately think of their largest client. However, in many cases, the Ideal Client is not your largest client.

Ideal Clients need everything you sell, value what you do, and fit with your culture. This creates a flywheel of growth with net-new and cross-sell revenue. Because they fit with your culture there is a good chance they will stay around for the long term.

This isn’t always the case with your largest clients. They may not need everything that you sell. While the people on your buying team may appreciate your company and feel some loyalty, frequent changes in the org chart as people climb the corporate ladder may complicate the matter.

Here are six reasons why your largest clients may not be your ideal clients.

Your Largest Clients May Not Need Everything You Sell

Your largest clients often don’t need everything you sell. They may look to you for one of your core products or services but not be open to additional things you offer. Often, this is because they build these products or perform the service internally.

For example, an office technology company that provides hardware, managed services, and software may have a major account that buys hardware from them. But because they are a large company, they have an internal IT department that handles technology management and software support. While that company may purchase a lot of hardware, it will likely never purchase software or services.

Ideal Clients are able to create a flywheel of net-new and cross-sell revenue for your company. As Mark Hunter says, “You don’t just close the sale, you open a relationship.” The goal is to climb the ladder of value as you deliver multiple levels of value to these clients. (See Why You Need Ideal Clients to Create a Revenue Flywheel.) Large clients simply may not be able to provide this value ladder.

Your Largest Clients May Not Value You or Your Company

Larger clients often have purchasing departments with RFPs that tend to go to the lowest bidder. While sales teams develop skills to get around this, the reality is that they often look to vendors to provide commodities.

25 years ago I remember visiting the purchasing office of Walmart’s corporate headquarters. The company I worked for provided some communication technology to several divisions of the enterprise. While many of my clients looked to me for advice, the only thing this large company wanted was a lower price on our equipment. In fact, they told me what they were willing to pay and basically said, “take it or leave it.”

There was no value placed on the advice or services myself or my company could provide. It was a pure transaction. In this type of situation, you remain vulnerable to the next vendor that is willing to shave a little more off of their price.

Your Largest Clients May Not Be Profitable

Over the years, I’ve heard the joke, “We’re losing money but we’ll make it up in volume.” Larger clients that bring in a low margin may not be very profitable compared to your Ideal Clients. Considering the time and energy it takes to manage these accounts, the profits may seem even less attractive.

Your Largest Clients May Not Be Able To Be Loyal

Larger companies tend to have a lot of turnover. People promote inside the organization. Others leave to pursue career opportunities either voluntarily or because of layoffs. Add in the presence of a purchasing or materials management department which we discussed above, and the reality is that many of your largest clients may not be able to be loyal to you, even if some of their people want to be.

Your Largest Clients Can Make You Vulnerable

When large clients change vendors it leaves a big revenue hole. Over-dependence on large clients can make or break a year. The challenge is that when they leave, there often isn’t much you can do about it.

Your Largest Clients Can Make You Distracted

We get obsessed with our largest clients. We tend to plan our year around them. If we are not careful we can end up focusing too much energy and attention on these clients to the detriment of our actual ideal clients and prospects.

Get Clear On Who Your Ideal Clients (and Prospects) Are

Every business is different. Your largest clients (and some even larger than them) may be your Ideal Client. However, for many companies, Ideal Clients are often found in the middle range of your client base. They are probably not your smallest or your largest clients. They are the ones in the middle that fit just right.

Be careful to not fall into the trap of always chasing the largest clients. Make sure to know who your Ideal Clients and Prospects are. Focus your attention on landing and cross-selling them to maximize your revenue. In this, you’ll create a revenue stream that is much more consistent, predictable, and enjoyable to manage.

One ordinary Saturday morning, commercial artist Rick Norsigian drove by a yard sale. He found two boxes of glass-plate photography negatives which he purchased for $45 because he liked the images of Yosemite, where he once worked. After a bit of research, Norsigian discovered that the negatives might be the work of famed landscape photographer Ansel Adams. Over the next 25 years he is expected to earn $200 million from these prints.

Sometimes we vastly underestimate the value of things. You likely have a similar treasure hidden in plain sight inside your business. These are your Ideal Clients—the types of clients that need everything you sell and trust you.

Most business owners vastly underestimate the value of their Ideal Clients. Let’s consider 5 ways they may be more valuable than you think.

https://www.oneidealclientaway.com

1. 10-30X Revenue Potential

After working through Ideal Client Profiles with hundreds of business owners and their leadership teams across multiple industries, I’ve discovered that Ideal Clients are typically worth 10X to 30X the revenue potential of average clients. It’s no wonder that the 80/20 rule coined by the Italian economist, Vilfredo Pareto, is alive and doing well. If 20% of clients drive 80% of the revenue (or potential revenue) it makes sense to focus on these clients.

2. Increased Retention
Ideal Clients typically stay with a business longer for two reasons. First, they appreciate what you do. Just like a good hire for your company will fit with your culture, a good client will fit with your team as well. That means they appreciate you and will stick around.

The second reason retention is higher is that Ideal Clients have typically purchased multiple products and services from you. If you structure this correctly, untangling the relationship is just hard enough that an Ideal Client won’t think its worth the hassle to change.

3. Streamlined Operating Costs
In addition to the higher value of Ideal Clients, they typically have streamlined operating efficiencies. Your finance team sends fewer invoices. With alignment and fit, there may be fewer costly support issues. You may also be able to design systems and processes that cater to the needs of your Ideal Client while reducing your operating expenses.

4. Lower Pain and Suffering

Non-ideal clients tend to cause the most headaches. This misalignment takes a toll on your staff. While hard to measure, you can feel the frustration as team members try to satisfy people who will never be happy. Many of the most challenging customers are ones who only purchase a fraction of what your Ideal Clients buy. The frustration of trying to satisfy these people turns business into a grind for you and your team. 

5. Reduced Marketing Costs
The best type of lead is a referral—especially a referral to another Ideal Client. When you are delivering value inside a relationship where an Ideal Client trusts your company, getting referrals is easy. Let’s say an Ideal Client refers just one new Ideal Client every year. Over a decade that Ideal Client will 10X their value by bringing on more new Ideal Clients.

What’s the Value of Your Ideal Client?
Here’s the sad part about the story at the beginning of this article. The guy who put the box of negatives on the table at his garage sale didn’t understand the value of what he was selling. Likewise, its important that the value of an Ideal Client doesn’t get underestimated by ourselves or our team.

https://www.oneidealclientaway.com

If you would like to get a clear picture of who your Ideal Clients are and what they are worth, join me for the One Ideal Client Away Challenge. Visit www.oneidealclientaway.com for details.

The great business guru, Jim Collins, teaches us that businesses need a flywheel to drive growth. Ideal Clients leverage the consistent application of force to build enough momentum to create a flywheel.

The factories of the 19th and early 20th century were powered by flywheels. According to Wikipedia, “ A flywheel is a mechanical device which uses the conservation of angular momentum to store rotational energy; a form of kinetic energy proportional to the product of its moment of inertia and the square of its rotational speed.”

Once a flywheel is in motion, it only requires a little bit of effort to keep it going. It’s kind of like driving your car on the freeway. Getting up to speed takes a lot of energy. However, once you are cruising, it doesn’t take as much energy to keep rolling. The inertia of the momentum keeps it in motion.

We need flywheels in our business. Specifically, we need flywheels of revenue.

How do you create a revenue flywheel? You do it by bringing in clients that can buy multiple things over a period of time.

An Ideal Client is one who needs everything that you offer and fits with your corporate culture. They have the revenue potential to buy multiple products and services. And they have the “fit” to value what you do, like doing business with your company, and thus stick around.

Ideal Clients are at the core of a Revenue Growth Engine® because they have both net-new and cross-sell revenue potential. They don’t just buy once, they buy more over time. Combining net-new and cross-sell revenue allows you to shift from straight-line growth to exponential revenue growth. 

This generates momentum for your revenue flywheel in three ways:

1. Consistent Injections of Revenue

If you drive a gas-powered vehicle your engine likely has fuel injectors. These spray bursts of gasoline into the cylinders as each piston fires. These tiny spurts of energy are what create the motion. If you just dumped a gallon of gas into the engine you wouldn’t get the same effect. You might get an explosion, but you wouldn’t get forward momentum.

Similarly, to create a revenue flywheel businesses need Ideal Clients that inject bursts of revenue over a sustained period of time. This could be a recurring revenue stream that increases over time. Or, this could be a path of additional products and services they can buy over time. These bursts of revenue add force to the flywheel.

2. Consistent Touchpoints

To create momentum we need to keep our clients engaged. When we engage in one-and-done transactions we easily become out of sight and out of mind. To create a flywheel we need Ideal Clients who value an intentional cadence of consistent touchpoints with our business. 

In Revenue Growth Engine® I share several ways that sales and marketing can work together to create this momentum. Since Ideal Clients need everything you sell, it makes sense to lead them on a journey of increasing value. Sales can have touchpoints with value-added periodic business reviews. Marketing can engage with clients to educate them and provide additional value over time.

3. Consistent Networking

Birds of a feather flock together. Ideal Clients hang out with Ideal Prospects. As we engage consistently with our Ideal Clients we have the opportunity to get introduced to new prospects. 

Ask any salesperson about their favorite type of prospect and 99 out of 100 will say “referrals.” How do you get referrals? You ask. But in order to ask, you have to be engaged. You have to earn the right. When you are engaged with consistent touchpoints and a progressive ladder of value, asking for referrals is easy. In many cases, these types of clients will offer referrals before you ask.

Who Are Your Ideal Clients?

Ideal Clients create a revenue flywheel for your business. To build this flywheel  you need to know who they are and what they are worth. It begins with a clear Ideal Client Profile. As you get clear on your ideal Client Profile you can fuel your engine with a message focused on the outcomes they want to achieve. You can build sales and marketing processes to drive the flywheel.  

All of this works together to create the exponential growth that will propel your business forward faster.

Hubert Joly became CEO of the electronics retailer Best Buy when the company was a mess. He tells the story of the turnaround in his book, The Heart of Business. Before he went to the corporate office he went to the stores. His goal was to get his finger on the pulse of what was happening with employees, managers, and customers. The knowledge he gained combined with his leadership skills led to one of the most notable turnarounds in American business history.

Similarly, marketing can support sales by getting out of the office and listening to what’s happening in the field. Tom Peters, author of the classic, In Search of Excellence, called this MBWA: Management by Wandering Around. 

I think what we need is more MARKETING by Wandering Around.

One of the best things marketing can do is to get out of the office and in front of current customers. As marketing gets out of the office and into the field (or Zoom room) with prospects and clients, three things happen. 

1. Escape the Trap of Generic Messaging

By wandering around, marketing discovers the specific issues going on in the field. They hear the specific outcomes. They feel the pain and frustration. They sense the nuance of the emotions involved. (After all, buyers buy on emotion.)

This is critical in a dynamic economy. Right now, generic marketing messages (“We can help you improve productivity while reducing overhead expenses!” are just static noise. 

We must be current, relevant, and specific. When we talk directly with clients and prospects we discover the specific words and phrases they use. These become the x-factor in creating relevant and compelling content.

2. Align With Sales

The second thing that happens from MBWA is marketing begins to understand the challenges salespeople face in moving deals forward. This gives clues as to how marketing can move beyond lead generation to support the entire net-new sales process.

As marketing sees the obstacles and hears objections, content can be created to proactively address these issues earlier on the sales cycle. 

3. Understand How to Position Cross-Sell Offers

The marketing doesn’t stop once a prospect becomes a customer. I believe that at least 50% of marketing should be directed to cross-selling additional products and services to current clients. 

As marketing wanders around talking with current customers it becomes clearer as to how to position additional products and services in a way that compels action.

In many cases, cross-selling isn’t primarily a sales function. By understanding the outcomes and obstacles current clients face, marketing may be able position offers in a way that provides a frictionless path for the current customer to buy additional products. The knowledge on how to do this happens as marketing talks with current clients. What’s gained from MBWA can be turned into effective e-commerce strategies to drive additional revenue from current customers.

What does Marketing By Wandering Around look like? On a practical level, here are a few ideas:

1. Set a goal to go on a minimum number of sales calls each month
2. Set a goal to interview a minimum number of current clients each quarter. (As a side benefit, you’ll get to create incredibly valuable success stories.)
3. Listen or read transcripts of sales calls. 
4. Attend the sessions at conferences that you attend. Don’t just sit in the tradeshow booth. Go to the education sessions and learn from the attendees.

As marketing wanders around the message will become more focused. Marketing will become more aligned with sales. All of this will drive more revenue.

Traditionally the sales team has looked to marketing to send over leads. However, there are many more ways that marketing can support sales to drive revenue. Here are three you may not have considered: Retargeting, Events, and Talking Points.

Read the entire article online at: https://www.revenuegrowthengine.com/blog/b/three-powerful-ways-marketing-can-help-sales-drive-revenue

You can find the original article on the Revenue Growth Engine website: https://www.revenuegrowthengine.com/blog/b/three-keys-to-a-powerful-revenue-flywheel