Yes, I know February is “Love Month”, but I feel compelled to give you an important “tough love” message about your business. Here goes…
Inside the vast Opryland Hotel in Nashville (600,000 square feet just for meeting space) you can hop on a boat and take a ride around the center atrium. From the boat you can view the sprawling gardens, watch the ducks and float over goldfish as you take it all in under the massive glass domed sky.
I didn’t take the boat ride, but sat on the patio of a pizza shop some two or three stories above the river when I was there for the GKIC Info-Summit this past November.
Some interesting facts, thanks to Dan Kennedy in a recent issue of the GKIC No B.S. Diamond Newsletter*: The boat rides take between 2,000 and 3,000 folks a day on a ten minute ride for ten bucks each. That’s $20,000.00 to $30,000.00 per DAY. Times 365 = $7,300,000.00 to $10,950,000.00 per year.
The boats are automated, run on batteries. No sea captains needed. No fancy equipment. They just run. And collect cash.
But wait! This is a hotel… They get paid to provide nice rooms to stay overnight in and meeting rooms for conferences, conventions and seminars, right? Their customer value is limited by room rates, length of stay, added fees etc... Isn’t it – What’s up with the boat?
Big Question to ponder: Is your business limiting itself? Could you be tripping over diamonds right under your own feet?
Now a bit of harsh reality: The recent rise in income and capital gains taxes have just taken a huge bite out of the value of your business. You will now be handing over twelve to twenty-five bucks more to the federal gov’t for every hundred you EARN. With higher rates on dividends and capital gains, you will get less when you invest what’s left over. Your average customer value just got nipped while their value to the U.S. Treasury gained.
When you figure added payroll, Obamacare surcharges and a general reduction in willingness of customers to part with their money, you are about to take a 50% pay cut.
Unless you do something about it.
You can cut overhead, use cheaper materials, do with less people. Maybe you can find places to cut that won’t inflict serious damage.
What about getting more customers, you say – is that the answer?
Acquiring new customers costs. And remember, each one is now worth less. Not to mention supply and demand in your niche when all your competitors take this same tack.
So what’s the solution?
Per Mr. Kennedy, and I believe this to be true, you MUST now increase customer value. Not just increase, but DOUBLE to make up for what probably amounts to at least a 50% devaluation.
In his article, Dan says there are only three ways to increase the value of each customer you now own:
1. Get more valuable customers in the first place.
2. Squeeze harder and get more juice FROM EACH ONE.
3. Get a lot more from a small or even tiny minority.
So – Where’s the boat ride in your business? What could you do to increase the overall value of your “tribe”?
Getting clear on the challenge may be half way to solving it. Stay tuned here – I am committed to helping you find ways to make all of the above work for you.
– Mike
*I would like to gratefully acknowledge Dan Kennedy for much of the thought behind this message, drawn from his introductory article of the January 2013 No B.S. Diamond Letter.
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