How to Be a Marketing
Genius, Part 1
by Michael Masterson
Of all the skills you can have -- the ability
to speak like Winston Churchill, to paint like Rembrandt,
to calculate like Albert Einstein -- none will help you
achieve wealth as well as knowing how to sell things.
Every private enterprise -- every school,
every art gallery, every restaurant, law office, hospital,
building supplier, hardware store, and entertainment complex
-- survives and prospers by virtue of its commercial activity.
In my own life, this lesson was hard to learn.
Coming from a non-business background, I looked at the commercial
world from the outside in. A bookstore, to me, was a place
where bookish people gathered to page through old volumes,
talk about literature, and make bookish friends. When I
fantasized about owning my own (as I often did), I saw myself
sitting in a comfortable leather chair, catching up on the
classics and having conversations with beautiful women wearing
reading glasses.
I had a similar delusion about art galleries.
Until I actually bought one. A successful local art dealer
I knew told me in passing one day that he was planning on
retiring in a few years. I immediately suggested that he
allow me to buy into his business.
In my mind, I was going to be sitting in that
same leather chair, reading those same classic books, and
chatting with those same bespectacled women in my bookstore
dreams. The only difference was the conversation. Instead
of chatting about Proust, we'd be musing about Pollack.
A month after I started, I bought myself out
of the art business. I realized almost immediately that
the dream I'd bought into was, in fact, a business based
on hard-core selling. Something that I found offensive at
the time.
It was a very expensive lesson. But it taught
me a great deal about business and life that has been enormously
helpful to me since then.
The reason this art dealer had been so successful
(he was making a very high income even during periods when
other dealers were going out of business) was because he
was an expert at selling art. His knowledge of art history
was limited. He wasn't ignorant, by any means. He knew the
important, inside stuff. What type of paintings a particular
artist was admired for, what periods of production were
considered the most valuable, etc. But his main skill was
in (a) getting people to come into his shop and then (b)
getting those who bought to keep buying, year after year.
I began to see that virtually every private
enterprise functions that way. To keep doing what you want
to do (and to make a profit from it), you have to (a) attract
customers at a reasonable cost and then (b) convert them
into repeat buyers.
Let's call the first task making the "front-end"
sale and the second task making the "back-end"
sale. In the years that have passed, I've learned to look
at virtually every private enterprise -- from regional theatres
to restaurants to pet hotels -- in terms of these two selling
skills.
And this perspective has given me an inside
view as to how these businesses operate. It's no longer
a mystery to me why, for example, so many restaurants and
small hotels go out of business. Why people in the travel
and leisure business make so little money. Why you shouldn't
even try (as I explained to a Bootcamp attendee just the
other week) to make a business out of a llama farm. And
why most good small businesses fail when they attempt to
get bigger.
This fundamental perspective has also allowed
me to provide advice to all sorts of different businesses
in almost every conceivable industry. I can see now how
every successful business is based on understanding the
correct answers to two very simple questions:
1. What is the most cost-effective way of
attracting customers?
2. What is the best way to keep those customers buying?
If you can learn to see your business that
way and can one day discover the correct answer to these
two questions, you will quickly become known by everyone
in your company as a bit of a marketing genius. That will
happen because you will understand your business from the
inside out. You will know it better than 90% of your fellow
workers.
Even the stickiest problems in business --
which are always "people problems" -- can be analyzed
effectively by considering possible outcomes against these
two objectives:
* Lowering the cost of acquiring new customers.
* Increasing the lifetime value of each existing customer.
The primary purpose of a good business is
not to produce profits. It is to provide good value. But
the most effective, least political, and ultimately most
enduring way of measuring the value you provide is twofold.
First, by the profit you generate each year. (That pays
the bills.) And second, by the long-term profit value of
each customer. (Which is a measurement of how much they
value your products and services.)
If you want to radically increase your income,
my advice is to turn yourself into a marketing genius. And
the best way to do that is to:
* Understand how your business works in terms
of front-end and back-end selling.
* Become an expert in one or both of these forms of selling.
(Ed. Note: Michael's essay today was taken
from "Automatic Wealth: 6 Steps to Financial Independence,"
the book he is writing for John Wiley & Sons. It was
also part of his presentation at this year's Wealth-Building
Bootcamp. If you couldn't attend the Bootcamp, you'll be
happy to know that all of the sessions were professionally
recorded and are now available on CD or VCR. If you're interested
in learning how you can get the complete ETR Home Study
Package delivered to your door -- including the handbook,
the handouts, and the PowerPoint presentations that in-person
attendees received -- click here http://www.agora-inc.com/reports/700SBCTP/W700EA41.)
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