Recently I interviewed my business mentor Victor Cheng for my group mentorship program, Bestseller Business Blueprint*. Victor Cheng is a CEO coach who advises business owners on exploiting growth opportunities in any economy. He has been featured as an expert on business and the recession by the Fox Business Television Network, MSNBC, Time magazine, The Wall Street Journal, The Harvard Business Review, Fortune Small Business, SmartMoney, Forbes, Inc. magazine, and Entrepreneur magazine. Victor is a former McKinsey & Company consultant and has also been a senior executive in several publicly owned technology companies. He’s a graduate of Stanford University with a degree in quantitative economics and is the author of four books, which include “The Recession-Proof Business: Lessons from the Greatest Recession Success Stories of All Time” and Extreme Revenue Growth: Startup Secrets to Growing your Sales from $1M to $25M in any industry.
Here’s a “fly-on-the-wall” snippet of the interview from the webinar:
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Victor Cheng: Number one, target customer; number two, a lead generation process; and number three, a sales conversion or sales closing process.
Alicia Dunams: Okay. And can you go through each three elements of the Revenue Model, maybe with another case study?
VC: Sure. And the important thing in that is you’ve got to get all three to line up; if you pick the wrong target customer, even if you have the right kind of lead generation process you don’t end up getting a customer to cross the finish line and turn into revenue. So it’s very important that all three of those line up very, very consistently. And this is why, by the way, getting a good revenue model is not easy to do. Usually, and I’ve done several of these in my own business for clients, and it takes months to get the formula right, so to speak.
So for example with that law firm, we have seventeen industries to choose from; do we pick the [removed to protect identity] industry, do we pick one of the other ones? Sometimes you don’t get it right the first time, so you have to go back and make some adjustments. And the sales model, they happened to go to the trade show, go person to person, should they have done it by cold calling, should they have done it by emails, should it be the web, should they have a sales force that go in advance. Those are all different options for generating leads and converting them.
So each piece, it’s hard, you’ve got to do a lot of tweaking and Alicia you know this coz you’ve sat in on some conversations I’ve had with other clients and we worked together as well in the past, I’m always making small adjustments for each part of the process, so it’s a very important part of the approach. So I’ll give you sort of general ideas around picking the target customers, some rules of thumb, if that would be helpful, for people on the call.
AD: Absolutely.
VC: Sure. So target customer. The big mindset shift in picking a target customer is to stop thinking about yourself, your book or what you know and start thinking about what the customer wants. It is a surprisingly difficult thing to do mentally, and is probably one of the things that holds new entrepreneurs back the most. Most entrepreneurs get enamored with the idea, got an idea for a business, and all my longer term students know that I have a philosophy that your idea is irrelevant and what only matters is what problems your customers have and whether they’re willing to pay money to solve those problems or not.
So what you want to look for in a target market is a customer with a headache, with money, who is going to spend money to solve that problem. You’re looking for a customer with a headache that hopefully you know how to solve, and possibly a headache that’s bad enough that they want to pay money to solve it. And you’ve got to decide on that first.
Sometimes picking a target customer, it may not always mesh well with the original assumption around who the target audience was for a book, and so when you have that conflict one of two things must happen; either you sort of repackage the book if you will, retitle it, change the focus, change the subtitle, sometimes change the content to fit a slightly different audience than originally intended; or you write the book for the audience that you originally intended which doesn’t want to spend any money, and you write it mostly for life accomplishments, you know “I wrote a book, I really wanted to write it, it was in me, I got it out, it’s done.” But that and making money from it are two different things. So if you want to make money from the book it’s very important that, the book title and cover especially, and the content as well, is geared towards an audience with a problem that you know how to solve and a problem that’s big enough that they want to pay money to solve it. So that’s very important.
I’m trying to think – a good example I use myself – about three years ago there was the recession that hit and at the time my consulting services were geared towards taking your business and doing better dominating your industry; that was sort of the main message. And what I realized was, after October 08 when the markets crashed and all hell broke loose and they acted like the world was gonna end, no-one, they didn’t, people didn’t care, about being number one in the industry.
I saw all of my sales just get completely annihilated, so I had medium term contracts I knew they were expiring in about six months in terms of the payment, so I had a little bit of time to sort of completely reinvent my own business. And what I realized what was selling, what was hot; you know, the hot problem, in my market at that time, was survival, so its not, I don’t need to be number one in my business, I just need to still be here next year. And that’s where I got the idea for the book The Recession Proof Business.
And I started working on that title, let’s see the market started crashing October, maybe fifth or sixth of 08, and it was done crashing by the end of October, so by Halloween. I started working on the Recession Proof Business on November sixth, coz I saw a major shift in my marketplace and I wanted to capitalize on it. And the way I did it was I said, “Okay I think the market has shifted, I know it’s shifted away from what I was selling, so I’ve got to find something else to sell, and my target market’s still the same in terms of the audience but what they want is now different.”
So I was what I call being misaligned with the market, a very important word, worth writing down and circling a couple of times. You never want to be misaligned with the market. What it is they want should be what you offer. If what you offer does not match what they want, guess who loses? You do. It’s very important that you take the burden on yourself to change if what the customer wants is not you have to offer, you have to adapt, and so I adapt in my own business, and I said, “This recession thing’s clearly a big deal, how about I turn myself into the recession guru.” Which I did.
This is before, by the way, we got any of this publicity, any of the magazines, any television appearances. And I started off by saying I couldn’t really want to write a book unless I knew people wanted this topic, so I started off by just trying to give a speech on the topic. So I started making phone calls and emails and it started off very small; local Chamber of Commerce, Rotary Club, and I said, “Hey I have this speech called How to Build a Recession Proof Business. And what it is, it’s just case studies of companies who just kicked butt in the recession. I’m just wondering if your membership of business owners, if they’re concerned about the economy or not and if this would be a topic that would be of interest.”
And the responses, “Are you freaking kidding me, of course they would be. Can you come here next week?” So I booked like fifty engagements that year right after that, and after the second or third one I realized that I got the right topic, people were just thrilled, and then I started to sell the book, and then once I knew it would sell; actually I think I did sell it, actually I did sell it originally coz I wanted to see if people would buy it. And then once I got a bunch of orders then I decided to write it coz I knew I had the right topic.
So that’s sort of an example of picking the market first and then building everything else behind once you know you have the right topic and focus; building the book, building the services round that, that sells profit and so forth. So that’s an example of picking the right target market and the three or four things that are really important there are who the customer is and what problem they have. Those two things need to mesh well with your book topic and possibly with the services you’re offering related to the book.
AD: Okay, good. And then are you gonna run us through that revenue model, the three – the first one is picking a target market?
VC: Sure. So the first one is picking a target customer; second one is a lead generation process. A lead generation is, it’s really simple, the idea is potential customers that are out there, and you’re in here, inside your business, and you need some way to connect with them, because if there’s no connection, no way of interacting or communicating then it’s impossible for them to buy.
The connection, the interaction can be done in a variety of ways, probably a dozen different ways alone on just that, and I’ll give you one that I used, in that particular case I used several in my business but for that one in particular I used public speaking; and so I would do speaking gigs, initially they were free, and then I started charging nominal fees and in some cases charged higher fees, and I would speak for about, I’d do it from an hour to three, actually I think those speeches back then were probably about an hour.
And I would give my talk and I would say if you found my talk today useful, I didn’t get a chance to cover everything I wanted to cover, coz really it’s a ten hour talk, and I only had sixty minutes, if you’re interested in learning more I have a free gift to offer, I have a book called The Recession Proof Business, lessons from various recession success stories of all times. If you’re interested in receiving a copy just drop off your business card, fill out this sign-up sheet with your email address and your mailing address and I’ll send you a copy and also send you, I’ll put you on my newsletter, where I send out more case studies and examples of other companies that are doing well in this economy, coz I find out about them all the time, and it’s a good way to realize that there are people who are doing just find, doing really well.
If you’re interested in either of those two just drop me your business card. That’s an example of a lead generation offer, and a lead generation offer basically is you offer something, either free or very low priced, and the purpose of that initial transaction is to get a way to contact the customer again, in some way, shape or form. And I put those folks onto my mailing list and I would write oracles around the mailing list on a regular basis, and we’ll talk about this in a second, but that was my lead generation mechanism. Go out, speak, collect names, and business cards; they just had a very good experience and then follow up with them after the fact.
So that’s an example of lead generation, you’ve got lots of ways to do it, you can do it online which I’m currently doing for a major project I’m working on now; you can do it through direct mail, I have clients who are doing it through direct mail; you can do it through cold calling, I have clients who are doing that as well. So there’s a variety of ways, but the key is you need some connection that gives you permission to continue the dialogue with a customer and I have found a very easy way is to provide, particularly in an expertise business, provide something with information that’s valuable to them and offer it free.
So I’ve done that with books. If the audience wasn’t really well qualified, if I’m in a room with CEO’s that run businesses of between five to say three hundred million and they’re all basically independently wealthy and run large businesses and the actual revenues in the room are all like three billion, I’d give away the book, coz I don’t want any friction to get in the way of them saying yes. If it’s more than that market, I don’t know, maybe there’s some tire kickers and some freebie seekers, I might do one of two things; I might say the book is free, pay for shipping and handling, just as a way to sort of filter people out; or sometimes, and I’ve done this as well, sometimes I’ll do an e-book.
So you have the electronic version of the book, I give those away for free to people who leave their email address. It’s another way to sort of leverage that out and still get that name and build a relationship with people. So that’s an example of lead generation, it’s just find some way to connect with them so that you have permission to continue the dialogue, and very importantly they welcome the continued dialogue. That’s the important thing, they are expecting it, and they’re welcoming it, so next time you contact them in whatever medium you’ve chosen to contact them, you contact them by phone or conference call or email or newsletter whatever it might be, they’re expecting it, they’re okay with it, and when you do contact them they’re not surprised and they’re actually sort of welcoming you into the dialogue. That’s what you want to accomplish in that lead generation process.
AD: Okay. And now let’s talk about sales conversion.
VD: Sales conversion. So a sales conversion is getting them to buy something. And there’s two parts to that; one is presenting an offer and asking them to buy, to see if they’re interested; and the other is, and this is an important piece, is what I call follow-up marketing. And I would say most authors if you want to use that word, or new entrepreneurs if you would, they don’t focus enough on presenting the right offer and for those that do present an offer very, very few do a good job at follow-up marketing.
I got someone who enquired about my consulting service today, and they’ve been on one of the newsletters that I write for, they’ve been reading my articles for about four and a half years. I’ve been following that fifty two months in a row and they came around, and I do lots of these things where I’m following up for months and years, and very few of my competitors have the discipline to do that.
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Bestseller Business Blueprint (BBB)* is my group mentorship program that helps business owners market, promote and make money by leveraging their published book. BBB is available for graduates of Bestseller in a Weekend or business owners who already have a published book.