4 – Communications and Marketing Leverage

The shortest and best way to make your fortune is to let people see clearly that it is in their best interest to promote yours.

– Jean de la Bruyere

The 1954 Masters purse was $5,000. Fast forward to 2003 and it was 200 times larger at $1.08 million.

The average NBA salary was $8,000 in 1954. By 2003 it had climbed to $4.5 million.

In 1954, the average NFL player earned $16,000, but by 2003 the average player made $1.1 million.

What drove the dramatic increases in sports celebrity income?

If you answered “inflation” you’d be wrong. Surprisingly, it played a relatively small role compared to the real cause.

The main reason for the astonishing growth in sports celebrity earnings was communications leverage.

And the big change that caused huge growth in communications leverage between 1954 and 2003 was television entering the mass consumer market. Television made professional sports accessible to millions around the globe; whereas before television, viewership was limited to just a few thousand local fans.

Communications leverage expanded the audience size, making the product of sports entertainment more valuable. The result was increased advertising revenue, which translated into higher salaries for those sports celebrities who could attract the most eyeballs.

Without media, how would those athletes make those huge sums of money? Who would pay them? Communications leverage is what converted sports icons into millionaires.

Now let’s contrast sports stars with teachers…

A teacher creates more value for society than a sports star; and yet, who commands the higher salary? Teachers’ salaries remain low because they lack communications leverage. Today they teach to a roomful of pupils just as they did in 1954, so the salary they command has grown little net of inflation.

If teachers want to increase their income, they need to increase their leverage. They could get on the lecture circuit, attract media attention to their ideas, write books, produce educational videos for the mass market, develop a content marketing website around their ideas, and promote related educational products.

The point of these two examples is to illustrate how communications leverage is the bridge that creates marketing value out of networks. Stated another way, marketers use communications leverage with networks to grow their business and multiply income. In this chapter, I’ll show you how each part of this formula works together in your wealth plan so you can get paid like a sports celebrity.

Why Communications Leverage Matters

Communications leverage affects every business and impacts your daily life as a consumer.

Anytime you feel harried with information overload, look no further than the increased reach and reduced costs of communication technology. What started as stamps, a telegraph, and a telegram, was replaced by telephones, telex, fax, and conference calls, which then morphed into smart phones, the internet, videoconferencing, YouTube, podcasting, email, and instant messaging.

Each stage of this process increased access and lowered costs to communicate information. The result is tremendous communications leverage for your business, but information overload for consumers.

We’re already seeing limits to how much information humans can effectively process without devolving into distraction. The instantaneous response expectations of today’s zero latency, always-turned-on communications tools have introduced a new level of worker stress.

In fact, some research shows we’ve already exceeded the point of diminishing marginal returns on communications leverage – at least in terms of quality of life, if not business efficiency as well. Today’s always-connected, over-communicated worker is maxed out, constantly distracted, and (often) burned out.

That doesn’t mean you shouldn’t use communications leverage in your business. It just means you’ll want to carefully choose only those tools that deliver the highest leverage for your time while producing the least damaging side effects.

Increase Your Profits with Marketing Leverage

It’s hard to get your message noticed. People have shorter attention spans, there’s more information in front of your customer all the time, and your message is just one of millions that is trying to get through. You have to figure out how to cut through the noise with something meaningful or it will be too costly to connect with your target market.

There are several proven ways to increase the leverage in your marketing:

In other words, there are many individual tactics to increase marketing leverage, but the good news is they can all be simplified into two strategic principles for application: find new customers and increase the lifetime value of your existing customers.

In fact, all marketing and communications leverage strategies for business boil down to just those two goals.

Goal #1: Increase the Lifetime Value of Your Existing Customers

This is the starting point for marketing leverage because the easiest sale is a satisfied client who has already bought from you.

Research shows it takes seven calls to close a new client versus three calls to close an existing customer for the same product. Other research shows it’s 10 times more expensive to land a new account than to serve an existing account.

That’s because when a customer already knows, likes, and trusts you, and they’re paying attention to your messaging, they’re way more likely to buy from you. In fact, the only barrier between you and the next sale is having a great product that genuinely solves an important problem. Affinity, trust, and attention are already there for existing customers, which is why the sale is so much easier.

Cross-sell, Upsell, and Back-end Sell

Do you like your cell phone carrier?

Almost nobody likes the company that provides their cell phone services. And that’s largely because they are like so many businesses – dedicating their scarce resources to chasing new clients instead of first doing everything they can to better serve their existing clients.

In fact, it’s far more effective to leverage your marketing by going deeper into your niche and developing a complete product line so you can cross-sell, upsell, and back-end sell to better serve your target clients.

Using Financial Mentor as an example, all of my courses backend each other. (https://financialmentor.com/educational-products/courses) Each is a targeted solution to a specific problem when one is pursuing financial independence, and all of the courses together provide a complete solution. The way it works in practice is that the customer enters the course series based on the problem immediately in front of them, and as soon as they solve that one problem, they are then confronted by the next naturally occurring problem in the wealth building process. The courses are arranged in the order that the problems naturally occur when one is in pursuit of financial freedom, so that one solution leads to the next, then the next, and so on until the goal is achieved.

Similarly, all of my books serve the same target market – people interested in financial independence. The entire product line serves a single market so that one sale on either platform can get leveraged into many sales across platforms.

For example, let’s assume my Expectancy Wealth Planning course attracts 1000 customers and 100 affiliates. When I publish the next course in the series, that means I already have 1000 likely buyers, plus 100 affiliates to offer the course to for instant sales.

Not only that; the effect is multiplicative since every person who becomes interested in my teachings through the Expectancy Investing course is also a likely candidate for the Expectancy Wealth Planning course, as well as every other course and book in my product line. Each product backends every other product, thus increasing the lifetime value of every satisfied client.

The same thing happens at Amazon as a distributor of my books. A cursory look at the “also bought” list for any of my books shows that people who buy one of my books tend to buy the rest of them. Each book holds a different marketing position by topic within Amazon (investing, retirement planning, financial coaching, variable annuities, leverage, risk management, etc.), which creates multiple ways for my target market to find my business when shopping on Amazon, and if they have a great reading experience, they then buy the other books. That’s why the best way to expand my book business is to cross-sell by writing more books on different (but related) topics teaching how to achieve financial freedom.

Another way to increase the value of each customer is to repackage and repurpose existing products. For example, if you give a live seminar and record the presentation, you can sell it later as a DVD set. Or you can develop a live training, and then flesh it out later into a book or self-paced course. Or possibly you can take sections of a complete course and repackage them as books. In fact, the book you’re reading right now is a stand-alone sampling of the three-lesson series fully explaining leverage, and it is excerpted from the entire Expectancy Wealth Planning course. If you’re getting great value from this book, you’ll get even more value from the comprehensive course it’s excerpted from.

People prefer different modes of learning. Some like live events; others prefer books; and others want audio or video. Some people will consume everything in all formats! When you repurpose your products into multiple learning formats, it leverages your existing marketing efforts so you can sell more stuff to the same customers.

Also, when you train employees to always be on the lookout for an appropriate upsell or cross-sell for your related products, it increases the lifetime value of your customers. That’s why the best servers ask if you’d like to have a drink or appetizer before your meal and also offer dessert before bringing the check. They’ll also suggest great side dishes or add-ons to your meal. It improves your overall experience because you’re well served, and it increases the profit margin of the business. These are high margin upsells for existing restaurant customers that significantly raise the average value of each client to the business.

Create Continuity Sales Programs

The final strategy for increasing the lifetime value of your customers is continuity sales. The idea is simple: sell the customer on a repeat purchase program so they buy from you every month (rather than just one time), thus increasing the value of that sale. For example, don’t just sell a single bottle of water. Instead, sell a weekly bottled water delivery service so that multiple bottles are sold every week.

In summary, when you fully satisfy your customers’ needs through a complete product line, it gives them the opportunity to buy more from you, resulting in a higher lifetime value for each customer. It’s one of the smartest ways to grow your business because it leverages the value of every dollar you spend on marketing to increase total sales.

Goal #2: Find New Customers

There’s a limit to how much of your stuff each customer needs. That’s why finding new customers is the second goal of marketing leverage. And one of the most effective tools for reaching new customers is technology.

Technology is so deeply intertwined in all communications today – whether it’s the phone, internet, email, or social media – that it’s nearly impossible to talk about communications leverage in marketing without including technology leverage.

Technology for Nurturing Your Sales Funnel

Never in the history of business have more powerful marketing tools been available for so little cost, and this is because of technology. For example, a website provides the unique ability to track and segment both traffic and subscribers according to interest, and the cost to identify and reach out to specific target markets has never been cheaper. It’s a marketer’s goldmine of information:

Leveraging technology in marketing has three important benefits:

  1. Low marginal cost for each touch point. Technology is generally priced as a fixed expense, allowing you to cost-effectively increase the frequency and breadth of communication.
  2. Building brand loyalty and trust by giving value through courses, videos, and other educational resources that solve your target customer’s problems. Technology is what allows you to communicate all that value cost effectively.
  3. Immediate data proving effectiveness. In the old days of snail-mail, marketers would pay large upfront costs to design, print, and mail a campaign. Or they’d incur large media advertising costs. Then they’d have to wait weeks to monitor the results and find out if their marketing idea was effective. Today, you can test a headline in Google or test-email an offer to part of your list for just pennies and know within minutes how effective it was.

The value of generating immediate response data can’t be overstated. You no longer have to risk thousands up front and wait weeks to gauge success or failure. Instead, you can test an offer for almost no cost and know the conversion rate within minutes.

You can also tweak the offer based on your test results, and then send it to another sample portion of your list. This shortens the marketing learning curve through rapid iteration, which streamlines the efficiency of all marketing with minimal waste.

How Marketing and Networking Work
Hand-in-Hand

Another group of leveraged marketing tactics you can use to reach new customers interconnects with network leverage.

The four most common forms of network leverage applied to marketing are:

  1. Media and publicity
  2. Bulk sales
  3. Joint ventures
  4. Referral systems

When you land a spot on TV or receive newspaper coverage, you leverage the publication’s subscriber base. You produce content once and your message reaches thousands. Another advantage of media marketing is that the message enters the prospect’s mind through an unlocked back door. It’s perceived as unbiased information reporting vetted by a trusted third party…instead of self-promotion copy. Examples of leveraging media include:

Each media strategy alone is powerful, but combining several of these marketing leverage techniques can dramatically increase the authority and trustworthiness of your business.

Another marketing strategy that includes network leverage is to bulk sell to strategic partners. For example, Microsoft was built from Bill Gates negotiating a single bulk licensing agreement with IBM that sold millions of copies of software, making Microsoft the industry standard for computer operating systems worldwide. Millions of sales all stemmed from just one sale by leveraging IBM’s sales network.

A slight twist on the same theme is joint ventures, where you offer your product to someone else’s customers on a split revenue agreement. The affiliate leverages your product by profiting from something he didn’t create, and you leverage the affiliate’s customer base and opt-in list so you can sell inside a trusted network you otherwise couldn’t access.

You can also leverage other people’s networks when you hire commission-only sales people. It’s essentially risk-free sales to your business because you only pay for the results the salesperson produces from marketing to his network.

In Summary

There are two objectives you’re trying to achieve with marketing leverage. You want to:

The acceleration of communications leverage through improvements in technology has changed how modern marketers achieve these two goals by lowering the cost to share information so you can affordably increase both reach and frequency in your marketing.

However, the same technology that’s leveraged to increase marketing communications has simultaneously brought information overwhelm to your target market. People are distracted, harried, and have less bandwidth than ever to pay attention to your message.

This makes it harder than ever to break through the information clutter so you can connect with your target market and grow your business.

Stated another way, you must use communications leverage tools in your marketing to compete effectively, but you have to be really smart about how you apply these tools so you deliver value and serve people rather than just adding to all the noise already out there.

Exercise: Increase Your Customer Lifetime Value

The goal of this exercise is for you to start thinking about ways you can increase the lifetime value of each customer in your business.

This principle can be applied to nearly every type of business. For example, you might be tempted to think upsells and cross-sells don’t relate to your real estate rental business, but they absolutely do. Two obvious strategies are renting laundry equipment to your tenant or offering coin-operated vending. Your tenants need clean laundry. By providing them with equipment they pay for, you meet their need and increase their lifetime value to your real estate rental business.

CPA’s historically traded time for money providing accounting and tax preparation services…until recent years. It was a natural upsell for that profession to offer investment and insurance products because they were already intimately familiar with the client’s financial numbers and had an established, trusted relationship with the client as a financial expert.

The same principle is being applied when you open an investment brokerage account and then weeks later they start mailing you credit card offers attached to your account as an upsell.

Regardless of your business, these principles can be applied to better serve your clients by profitably solving their problems. Below are several questions to help you find potential ideas: