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The Theory Of Constraints, and its Application to Sales & Marketing
This just in from Wikipedia:
Theory of Constraints is based on the premise that the rate of revenue generation is limited by at least one constraining process (i.e. a bottleneck). Only by increasing throughput (production rate) at the bottleneck process can overall throughput be increased.
The key steps in implementing an effective TOC approach are:
- Identify the constraint (bottlenecks are identified by inventory pooling before the process)
- Exploit the constraint (increase its utilisation and efficiency)
- Subordinate all other processes to the constraint process (other processes serve the bottleneck)
- Elevate the constraint (if required, permanently increase bottleneck capacity)
- Rinse and repeat (after taking action, the bottleneck may have shifted or require further attention)
The Theory Of Constraints can also be applied to sales and marketing. Your typical lead generation and conversion scenario is a series of interdependent processes that goes something like this:
Generate a lead…
Convert the lead into a firm enquiry…
Produce a proposal or Action Plan…
Follow up…
Close the sale…
Fulfil the work or order…
Rinse and repeat…
And it’s very common – almost to be expected – that one area will get out of sync with the others. It seems that you either have too many leads and not enough “closing” or fulfillment resources, or else a sales team who are desperate for qualified sales leads to turn into sales. (They spend the majority of their time on relatively UN-productive prospecting work and only a small proportion of time doing what they should be doing – closing sales).
If the “fulfillment” part of your business is time-consuming (as it can be in the case of service providers), this can upset the apple cart further, as you switch priorities from lead generation, to sales, to fulfillment – either as an individual or as an organisation.
There’s no easy answer, but the TOC certainly supplies some valuable ideas. On the TOCCA website, there’s a fantastic flash video that demonstrates the key principles of the TOC. It’s a little hard to find: click the link on the bottom left that says Click Here to View 3 Minute Flash Demonstration.
Eliyahu Goldratt’s work in another great source of information on this subject.
Will
P.S. What’s the secret to evening out your lead flow and bringing a measure of control back into your sales process? Automated lead generation systems of course! Ones that utilise “pull” marketing and the web to build a herd of interested prospects that you nurture over weeks, months and years to generate an even, steady stream of sales leads that YOU can turn on and off like a tap. Is it easy? Nope. But it is possible.
Marketing Results Blog Hits PR5
Google has recently done another crawl, and with much to-ing and fro-ing of PageRank, this blog has finally hit a PR5. I know, I know…PageRank doesn’t mean anything – SERPs are much more important – but it is a fun milestone to hit…and here are some implications:
Blogs are a much more convenient way to serve “article” content than hard-coded articles, and a higher PR indicates that somewhere, somewhere, values this blog enough to link to it. 
That in turn will tend to increase the SERPs of the individual posts within this blog, which will expand our reach within the only search engine that matters.
Non-internet marketing businesses can do the same thing – all you have to do is commit to consistently posting high-quality content about your area of expertise. It’s free to get started…just install a WordPress (or similar) blog and you’re good to go.
There’s been a lot of talk about “business blogging”…but very businesses seem to be actually DOING it.
We recently installed a Drupal blog for Anders Sorman-Nilsson at Thinque, Australia’s leading NLP Training consultancy. Anders intends to use his blog as a vehicle to post high-quality content and add value to his readers and his business.
The problem with blogging, as a business growth strategy, is that it’s too “long term” for many website owners, who want to see quick gains. Don’t get me wrong – quick gains are good. I love quick gains. That’s what we produce for clients through targeted lead generation and website conversion consulting. But you also have to layer traffic generation strategies, and blogging is one way to do that.
L8r – Will
Where’s Your Website Traffic Coming From?
Have you ever wondered where your website users are located? Here’s a useful little tool that tells you. It’s a screenshot of the “Geo Map Overlay” tool within Google Analytics.
I understand that the Google Analytics platform tracks the IP address of website visitors’ computers to plot this geo map.  This is likely not to be totally accurate, but it’s a useful guide.
Getting Started With Google Analytics
Google Analytics, by the way, is a very powerful tool (especially considering that it’s free!). It offers a tonne of functionality – the challenge is converting all the pretty graphs and tables into actionable strategies and results.
As a first step, set up some conversion goals (see how to set up conversion goals) which will show you what percentage of website visitors are buying, enquiring or opting in.
Measuring your conversion results is the first step toward improving your results.
In future posts I’ll talk about some of the other functions within Google Analytics, and how to use them to boost your marketing results.
Will
How to Sell Your Zero-Cost Hidden Assets for Cash
I’ve recently come across some excellent examples of companies that have successfully converted zero-cost (or at least zero marginal cost) ‘hidden’ assets into cash. In no particular order:
1) Anthony Robbins converts room placement into cash
At the recent Anthony Robbins Unleash The Power Within event in Sydney, ticket prices varied from around $1,500 “Standard” tickets to $3,000 “Diamond” tickets, the principal difference being seating position. Diamond people got to sit up the front.
This is a great example of adding value and increasing profit, while holding costs steady.
2) Graphic Design and Printing Business turns faster service into cash
Marc Dussault, MD of Jay Abraham Asia Pacific, tells a story about his days as the owner of a printing and graphic design business. He noticed that different printing jobs were produced in different timeframes, but that all clients were being charged the same.
He began by monitoring what proportion of jobs were being produced within a certain timeframe, then added two levels of “Express” service (with additional fees).
This strategy gave clients a guaranteed express service and added additional revenue, without affecting the cost structure of the business.
3) Mazda Charges a Premium for Yellow
My project manager Philipp Hartle is the proud owner of a new Mazda 3 SP23. He tells me that for one of their models, Mazda offered a “limited edition” yellow colour…for $2,000 extra. Apparently, they were snapped up like hotcakes.
Same pattern: more revenue, zero or little change in cost structure.
So how does this relate to you?
The above examples involve taking a “first in best dressed” or optional item and placing a value on it. You can add value by guaranteeing greater immediacy (UPW), speed (Printing) or exclusivity (Mazda).
The same types of hidden assets no doubt exist in your business – if you choose to look.
Will
Do you have a Smartypants 2.0 Website?
I’ve recently read a couple of blog posts about how Web 2.0 technologies are beginning to morph with “normal” brochure or ecommerce websites.
ProBlogger Darren Rowse posted on how to turn a normal WordPress installation into a working online shop and Stephan Spencer (a Kiwi!) also wrote a great post on the rationale behind converting his corporate website into an SEO friendly website-blog hybrid.
It’s compelling stuff and this is no doubt the way the internet is heading. My expertise / focus has always been on executing successful internet lead generation programs and conversion optimisation, and I can see that Web 2.0 will become more important in that area (particularly from an SEO perspective).
HOWEVER, one mustn’t get carried away with all the geekalicious technology out there. The important thing will always be appropriate execution of marketing strategy using appropriate tools.
What do you think? Am I on the money here or way off course? Leave a comment below and lets duke it out!
Will
Priceless Marketing Lessons From Dan Kennedy
I wanted to share a fantastic marketing resource that epitomises the use of followup marketing and relentless building of customer lifetime value.
Almost every marketer (including myself) doesn’t do enough with the leads we generate. I’m not just talking about front end conversion, but also nurturing and growing customer lifetime value.
One of the marketing resources that I unreservedly recommend is www.DanKennedy.com – specifically, Dan’s paid monthly newsletter. There’s a low cost (i.e. risk-reversed) trial.
A few distinctions:
1) Dan’s sales funnel is fantastic. Look at the way he gets you on to the free e-newsletter first, then hits you straight up on the thankyou page with a low cost 3-month trial of the paid monthly newsletter – which is on a forced continuity program (of course!)
2) Dan offers a number of membership programs with different price points / benefits.
- Silver (about 30 USD per month)
- Gold (40 per month)
- Gold+ (260-odd per month)
- VIP (expensive!)
- Platinum (bloody expensive!)
And his whole marketing process is focussed on ascendency up the ladder. Furthermore, these concentric circles drive the lead gen for his consulting / copywriting business (VERY expensive).
3) The newsletters are excellent – so clients naturally continue to get them (and they hardly notice anyway, right? It just comes off the credit card every month). But what is REALLY impressive is the way that Dan layers the value so that clients are CONSTANTLY aware of what’s on offer at the next level up – but he does it in such a way that you’re still satisfied with the value at your current level.
4) Of course, EVERY newsletter contains inserts and sales letters for upcoming events, bootcamps and larger packages. (Clients pay Dan for him to send direct mail to them).
5) Whenever a new client buys a product (e.g. a copywriting kit for $1,000), they automatically get offered the 3-month paid newsletter trial at no cost. Great way to AUTOMATICALLY convert one-off sales into ongoing revenue streams.
6) Because the process generates so much damn CA$H, Dan is also able to follow up regularly with hard mailings about special events and seminars (e.g. Info Marketing Summit). I must have received 30 (yes 30!) separate communications about that alone via email, newsletter, DM postcard, Magalog etc.
Anyway – I recommend that all serious marketers sign up at least to the free e-newsletter to see how it’s done so they can creatively emulate. The paid newsletter also comes HIGHLY recommended.
Yes, Dan’s process involves a lot of items to execute but it’s all doable because the process is monetized along the way – leaving enough left over to pay copywriters / consultants to execute for you if you don’t have enough time to do it yourself.
What are your most highly recommended marketing resources? Leave a comment!
Will
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