The 'One Trick Pony' Sales Model
July 9, 2023
Over the years, I've come across businesses that have what I like to call a "one trick pony" sales model. Let's delve into that below.
But first, let's consider some real-life scenarios:
Company A offers administration services to small businesses, focusing on restructuring their office processes. They train the owners to understand these systems and once the training is completed, they walk away from the client, considering their job done.
Company B sells building products to the residential housing market. They have a quality product range with multiple uses for wider industry buyers, such as commercial and rural sectors. However, they primarily focus on the domestic market, which is currently experiencing a major slump. Despite this, all their management training and marketing efforts remain centered around serving domestic clients better.
Company C sells business training tools for small to medium business owners to improve their business management. They tirelessly approach the market to sell these tools, but once they make a sale, they quickly move on to the next one. However, the skills evident in designing these tools could be of far greater use to the clients than just providing the tools themselves.
Company D provides meals in an iconic southern NZ location. Their meals are incredibly popular, and their following requires little marketing. However, they solely sell meals without any additional offerings. While their customers leave satisfied, the financial success of the company solely depends on the number of meals sold.
So, what exactly is a "one trick pony" sale?
Think of it as a circus where you witness animals performing a multitude of tricks. However, the little pony can only do one trick, and its relevance to the overall circus experience is fleeting.
Similarly, a business that provides a one-time sale that briefly enhances a customer's life or fulfills their immediate needs, but lacks ongoing relevance, can be considered a "one trick pony" sale.
At iKULUTU, we understand the importance of building long-term relationships with clients and offering ongoing relevance. We believe the following list represents the order of the easiest to hardest client product mix:
- Selling an existing product to an existing customer.
- Selling a new product to an existing customer.
- Selling an existing product to a new customer.
- Selling a new product to a new customer.
The businesses mentioned earlier primarily focus on selling to new clients using existing products, which often results in a one-time sale and a lack of future interactions with those clients. In other words, it's a "one trick pony" sale.
So, how can we solve the above issues?
Now that we understand the need for businesses to stay relevant to their clients, let's see what the examples above could do to change their business models:
Company A now offers three services:
- A small consulting package to restructure small business operations and set them up for success.
- Ongoing administration system maintenance for clients at 50% of their regular charge-out rates.
- Managing a database of existing and potential clients for the business. This database is utilized to send marketing messages, generating new leads and repeat business, effectively helping pay for the ongoing services.
Company B expands its marketing efforts to:
- Target the commercial sector and offer special deals to the rural sector. The commercial sector, in particular, has customers with multiple projects, requiring regular product sales.
- Provide free maintenance processes to residential clients for the first three years after construction, extending the product warranty beyond any competitors' offerings.
- Offer detailed warranty record books to all residential clients. These books are sent to the clients' Valuers, helping them maintain an up-to-date record of the property's warranty compliance, which in turn assists the clients in verifying the property value.
Company C, instead of selling tools, now offers:
- Business training and coaching services, supported by a toolkit of documents to help the client become a better business owner.
- This approach fosters a long-term relationship rather than a one-off sale.
Company D, while still providing meals, has expanded its offerings:
- They now sell merchandise for customers to remember their dining experience.
- Additionally, they have created a Facebook page to capture client sentiments and directly engage with them about their latest offerings and events.
Now, let's address some common problems:
- Customers are often unaware of the level of expertise and skill available beyond the initial sales pitch, which is often of greater importance to them than the sale itself.
- These companies previously focused solely on improving their skills, resulting in increased frustration when faced with the treadmill of non-repeat sales.
- They invested more money in short-term outcomes without breaking free from cash flow pressure.
So, what can you do to overcome these challenges?
- Start by valuing your skills, as the client will value you in return.
- Differentiate yourself from the competition by always focusing on what the client wants, rather than solely what you can sell.
- Strive to become recognized by your clients as a valuable supporter of their business, with a focus on helping them achieve their goals and desired outcomes.
- Begin by selling your existing products to your existing customers. Make sure they are aware of your full product and service list and how it benefits their goals.
- Finally, consider seeking business coaching support. A fresh perspective on your approach to your business and your clients can be immensely valuable.
By implementing these strategies, you can transform your business from a "one trick pony" into a dynamic and sustainable venture that builds long-term relationships with clients and delivers ongoing value.
Remember, success lies in understanding the importance of continuous relevance and adapting your business model accordingly. Together, let's break free from the limitations of a single trick and embrace the limitless possibilities of a multifaceted approach.
iKULUTU.com
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In today's business landscape, an often-overlooked factor that can have a profound impact on the value and salability of a business is the demographic shift towards an aging population. As the number of retirees increases and the pool of potential buyers decreases, business owners may find it more challenging to sell their businesses at a desirable price. Understanding this shift and taking proactive steps to prepare your business for sale in light of these changes is critical for securing your financial future. Understanding the Demographic Shift The demographic shift refers to the changing composition of a population over time. In this context, it signifies an increase in the proportion of older individuals within the population. According to data from the United Nations, by 2050, one in six people in the world will be over the age of 65, up from one in 11 in 2019 ( https://www.un.org/en/development/desa/population/publications/pdf/ageing/WorldPopulationAgeing2019-Highlights.pdf ). This increase in the aging population has broad implications, including a shrinking workforce and changing consumer preferences. For business owners looking to sell their businesses, this demographic shift can result in a more competitive market, with fewer potential buyers and a possible decrease in business valuations. Understanding these trends is essential for positioning your business favorably in the market. Challenges for Business Owners As the population ages, business owners face several challenges when preparing their businesses for sale: Reduced Buyer Pool: With more people retiring, there may be fewer entrepreneurs looking to purchase existing businesses. Changing Consumer Preferences: An older population may have different needs and preferences, affecting the demand for certain products and services. 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Build a Strong Team: Focus on recruiting and developing a younger workforce, which can be an attractive feature for potential buyers. Offer Unique Value: Differentiate your business by offering unique value propositions that set it apart from competitors, particularly in a saturated market. Develop a Scalable Model: Creating a business model that is easily scalable can be attractive to potential buyers looking for growth opportunities. By understanding the demographic shift and the challenges it presents, and by adapting your business model accordingly, you can position your business for a successful sale, even in an increasingly competitive market. Exit Strategy Options In a tough business climate, having an exit strategy is critical. Here are some options that can be considered for a planned and smooth exit: Management Buyout: Selling your business to your management team ensures that your business is left in experienced hands. 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Create a Succession Plan: Develop leaders within your organization who can continue to run the business efficiently even in your absence. This adds a layer of security for a potential buyer. Documentation and Compliance: Keep your documentation, licenses, and compliances up to date. Having all the paperwork in place will build confidence among potential buyers. Build a Brand: Work on creating a strong brand identity. This makes your business more attractive and can fetch a higher price. Optimize Financial Performance: Ensure that your financial records are impeccable and that the business is financially healthy. Exiting a business is a complex process that requires planning and strategic thinking, especially in a challenging market. By considering various exit strategies, and preparing your business for an eventual sale, you not only protect your investment but also ensure that the business continues to thrive. This preparation is critical for making the sale process smooth and beneficial for both you and the buyer. Are you interested in learning more about preparing your business for a successful exit? We invite you to attend our seminar, “Beyond Business: Planning Your Exit,” on July 12th at 12pm at the MACTODD offices in Queenstown. This seminar will provide you with insights, strategies, and practical steps to ensure that you are well-prepared for a successful business exit. Don’t leave your business future to chance - be informed and take the right steps towards securing your legacy. Register now to secure your spot - https://form.jotform.com/231728212827860
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