Tony Guarnaccia, founder of Results Trained and author of Small Steps to Big Profits shares his insights into running profitable businesses using his framework of growth factors. This construct helps businesses audit themselves and identify gaps so that they can grow and generate revenue predictably.
Tony’s story in business begins with his parent’s failed bakery and their resulting homelessness. Thanks to his flair for digital advertising, he flipped the script and found real business success online marketing for big auto companies. Since his realisation that small businesses need planning and strategy like a fish needs water, he’s been dedicated to helping grow businesses navigate the uncertainties and emerge stronger on the other side. Tony has helped grow over 10,000 small businesses and a dozen Fortune 500 companies.
The Results Loop
The idea behind Tony’s results loop comes from Jim Collins seminal book called, Good to Great. The theory of pushing with effort to get the flywheel to inch forward until it completes a full turn is great in theory but in reality a lot of businesses either don’t have a flywheel or it’s broken. Tony believes that the flywheel actually has three components:
>> Know what you need to do
>> Know how to do it
>> Take action and do it
He calls this the results loop because when these three components work in combination the flywheel effect works and drives growth. By design the results loop is a recursive process with the aim is to keep moving back around over and over.
In an effort to help struggling businesses gain traction Tony took all his learnings from working in the corporate world and created a simple results loop and then distilled it down into six easily digestible and executable growth factors.
#1 Markets
Markets are critical because they are used to segment our audiences. They can be divided in many different ways - by region, by people's needs, by people's behaviours.
Look at where you are going to get the greatest return by identifying markets that have unmet needs. Once you begin to get some traction look for patterns that can help determine how you diversify markets. If you're a startup, you can model your competitors or do the research and be strategic to find the lowest hanging fruit.
#2 Offerings
Offerings is about looking at how you can leverage your existing buyers to get more of the same kind of buyers. So, once you have a submarket you need to consider whether you offer new products to a new market, or whether you offer new products to existing markets or existing products to a new market.
Prioritise higher-margin, higher converting, quicker-selling products and services, or offerings. The product and the pricing is going to matter because if you have a high end market you can segment it by price point because you need higher quality products and services to justify the higher price.
How you prioritise is based off of the profitability and even the cash flow in some instances. For example, if you have a product that may be delayed by weeks or months then it’s best not to prioritise that. Also take into account the average order value and offer products and services that keep your customers coming back.
#3 Value
Once you have defined your products and services you have to ask: why would someone actually buy it? How do I make it unique? How do I make it more valuable? If you're just selling the same things that everyone else is doing, why should they buy from you? Do you offer better customer support? Are you able to bundle products together?
There's so many ways to look at value but at the end of the day value is all about exchange. At the top of the value chain, you exchange your time for people's attention and at subsequent stages you exchange even more value for something even more valuable.
At the final stage you exchange money for some kind of result (which is the value) like looking better, feeling refreshed, etc.
There are two kinds of value - real value and perceived value. Real value (tangible) is what a product or service is actually worth. Perceived value (intangible) is what customers think the product or service is worth.
People tend to buy products and services with a higher perceived value. For example, people will be drawn to your mission or the purpose behind your product. They may also be buying from you because you have authority in a particular area. Essentially, people will buy because of the who, the why, the what, the where and the how behind the product.
So, instead of just thinking about the product itself, consider all the intangibles that you can use to increase your profit.
#4 Number
Acquiring new customers is expensive but not impossible. Having a very clear value proposition that people in your target market can use to self identify themselves on your website and in your marketing strategy will make them feel understood and so motivated to buy. Providing valuable content early in the process will draw prospects in because they will know you understand them and can solve their problem.
Your message must match your target market so that your readers and prospects can get a sense of belonging when they visit your website. If they don’t feel like they belong then they will not convert. Your message needs to also match your blog posts, lead magnets, downloadables and all other content you create. Generally, the more specific you are, the higher the conversion rate will be.
The bigger the problem you solve for as many people as possible, the more value you’ll provide and the greater your profit will be.
#5 Size
Not all buyers are equal and so it is really important to know your markets. Some markets are worth more and those are they ones you want to pursue.
This is also where upsells and cross sells play a critical role because they directly increase the value of bundles.
#6 Loyalty
Loyalty looks at how you get your buyers to buy more and then secondly, how do you get them to drive referrals.
Customers that advocate and evangelise our brand are very valuable. Consider ways that you can increase loyalty such as more frequent communication with your customers, build a community, ask for referrals, increase the value that you offer them, provide free content and target past customers with high value offers. When our customers refer on their own accord the message is far more powerful and viral.
There's so many things you can do with loyalty. But the foundational thing is to have a good product.
Takeaway #1 Continuous growth is essential to the long term survival of any business.
Takeaway #2 Utilise this recursive process every quarter to help your business review strategy and to discover opportunities to grow.
Takeaway #3 Whether you're a startup business or a big corporate organisation, the principles remain the same.
Connect with Tony Guarnaccia
Websites
https://www.linkedin.com/in/tonyguarnaccia/
Links
Small Steps Manifesto Download