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The 3 Stages of Business Growth – @johnjantsch
The Agents of Change

AOCP-Pinterest-John-JantschMost businesses come up with all of their products and services first, and then go out and try to market them. But what about developing those things with your audience, in a collaborative fashion? Sort of like taking a “find them first and see what they need” approach.

The key to any good marketing strategy is to market to the key audience that wants what you have, but what’s the most effective way? And if you find one platform or channel that works, should you just stick with that or add others to your repertoire? Try concentrating on your strengths and what is already working and then simply building upon that. A strong foundation is a great starting point, then slowly try casting your net deeper versus wider.

John Jantsch is the marketing guy to look to if you’re a small business trying to grow. His simple and effective approach to marketing can turn even the hardest cynics into believers once they start seeing real results from his effective marketing strategies.

Rich: John Jantsch is a marketing consultant, speaker and author of Duct Tape Marketing, Duct Tape Selling, The Referral Engine and The Commitment Engine, and the founder of Duct Tape Marketing Consultant Network.

He has spent the last 25 years working with entrepreneurs, mostly preaching that marketing is simple, and it doesn’t have to be that complicated. He’s passionate about helping business owners make the connections between processes and strategy. And he thought it was important that you knew that his favorite movie was Ferris Bueller’s Day Off, and that life moves pretty fast if you don’t stop and look around once in while, you could miss it. John, welcome to the show.

John: Thanks for having me, Rich. I’ve known of you and your work and you were one of the early bloggers, I think, back in 2005-6.

Rich: Yeah, you know it’s funny, just the other day i was looking through some either on  Moz SEO or one of those tools and there was a link to my website from Business Blogging Consultant, which was one of the first things I ever contributed to. The last post was from 2005, I think. Nothing ever happened to that site, but it was a collection of really awesome people. So yeah, we’ve both been doing it for a while.

John: Rick Bruner was it?

Rich: I think so. Man, it was like a whole other life when I took a look at that website. So my first question to you today is, have you ever met Abe Froman?

John: I have not. Should I?

Rich: He should be on your show. I mean, I understand he’s the sausage king of Chicago.

John: Ok, so he should be on my show.

Rich: Absolutely. Alright, so when you said that you would be willing to be on my show I was obviously tickled pink. I’m a huge fan. I’ve read – if not all of your books – the majority of your books and I’ve paid attention to you. I think the stuff that you’re putting out there is awesome. So I asked you what did you want to talk about today, and you came back to me and said you wanted to talk about growth. And you pointed me to a few articles on your website – which I read about five times each – and we’ll link to those in the show notes.

So you’re a marketing guy. Some might say you are the marketing guy, when it comes to small business. So what’s the deal with growth and how does it differ from marketing?

John: Well I think I’ve started talking about it a lot lately because this whole idea of “growth hacking” has sort of crept it’s way into the vernacular, particular of the startups. And in a lot of ways I’m trying to make this distinction because growth hacking sort of implies a shortcut – you don’t need marketing, you don’t need product – you just need to be able to trick people into subscribing to your list or whatever. And again, not everything that comes under the heading of “growth hacking” is that, but I think a lot of people looks towards that.

So I guess the difference for me comes about as a business really finds themselves. They know who their ideal client is and they know how to talk to that ideal client based on something that they deeply care about and they created enough of a message and enough content to really start to build trust. That to me is really kind of the marketing component, and the marketing component really never ends. But now we have – I’ve been doing this forever – maybe when I first started we had 5 or 6 channels, so to speak, to try to go out and attract clients. Now I routinely talk about 16 channels.

So where I make this distinction between marketing and growth is when you start really gaining some traction and understanding how to attract clients, how do we then start methodically working our way through some of those channels or converging some of those channels.Finding a way that works – like sales – which is actually a way that typically works for a lot of companies, they figure out how to sell something and then they want to grow the business beyond that and they have to then go out and start exploring new channels.

So the idea behind growth, or the difference between marketing and growth, is really your ability to kind of go out and systematically and analytically address all those various channels to find new ways to grow profitably.

Rich: Alright, that makes sense. You also talk about the stages of business growth. Can you kind of go through those with us?

John: Well, I wrote these a long time ago so forgive me if I don’t tell them in the exact words. The premise behind it is that when you start a business, a lot of times you’re just trying to figure out if somebody will buy from you. If you’re just trying to get some traction – the catchy word today – to acquire enough clients to validate that what you have out there whether it’s a startup software or your professional services that you’re trying to offer, a lot of times you’re just trying figure out what attracts people and how to get and keep a client.

You start getting that figured out and and the next stage really is, ok, how do I grow this business and start finding ways to scale and add people and get resources or get people to do the work for me so that I can actually focus on just building maybe client relationships. And there’s a lot of experimentation typically in that phase.

And then the last phase really is optimization. There’s a lot of businesses out there that have grown healthy, they’re doing things right, their customers love them, they have found a way to consistently and predictably acquire clients and grow the business. And now what we’re going to start looking at is how can we  optimize some of these channels that we’re in to be as profitable as possible. How can we start taking things like the fact that we have the trust of thousands of customers and start offering them more things and additional services.

So to me there is somewhat of a linear hierarchical growth to that. but it’s obviously messy. I think recognizing those three stages exist and then you as a marketer have to operate differently inside of those stages is probably a healthy way to look at growth.

Rich: Ok, so let me just recap and make sure I understand what you’re saying. So we’re talking about the three stages of business growth that all small businesses hopefully go through. the first one is just traction. If you’re just getting started, we’re just trying to get anything out there to see what sticks. Is what we’re bringing to market something that people actually want and are willing to pay for.

Expansion is the second phase. And here it’s like how do I actually grow or scale my business up. I’m starting to get some sales and some business, I might be looking to bring on  employees or contractors to grow this business as well as I take on some more business development ideas or maybe just kind of remove myself from some of the parts of the business.

And then finally when things are really firing, I’m in the optimization zone. And that’s when I’m fine tuning some of these channels, things are working but there’s always a way to improve it,things are always changing so I need to adapt to those.

Is that a pretty good recap of what you’re talking about when you talk about the stages of business growth?

John: I couldn’t have said it better myself.

Rich: I think you did say it better and I just kind of put it in my own words, but I certainly appreciate that. You also mentioned at the end that marketing needs to be different for each one of these stages. Can you go a little bit deeper into that – or – if it’s easier, talk about how will I know when I’m shifting from one phase to the next and how should my marketing change?

John: Well, the reason I say it needs to be different is because again – let’s go back to that first stage – that’s where you get a lot of leeway to say I’m just kind of hypothesizing here. This might work, this message might be it, this might be my ideal client. Most of the businesses I’ve worked with over the years that were in that kind of start up phase were really just trying to figure out how to get some clients and sell and do something that started looking like an opportunity, almost 100% of the time who they ended up working with or attracting was different than what they hypothesized in the beginning.

So I think you really have to have that almost experiential marketing lens in the beginning. And that’s not to say that you just try anything and change on a whim, but you do want to actually have a hypothesis that is based in something. But you also want to stay very open to the idea that you’ll probably evolve in what you offer and how you offer it. Service businesses are a great example. A lot of times they don’t have any reputation, they don’t have any case studies to fall back on, so consequently they’re probably going to be in a situation where they might be charging much less than they will say in a year or two years from now when they develop some sort of reputation. So as you might imagine, you’re just kind of scrappy in the beginning.

But then I think where one of the big shifts is when you actually find – and this is when I think businesses really realize, “Ok, I’m going to make it” – when you find one or two channels that you’re actually able to go out there and consistently generate leads and convert leads. So it might be sales, it might be SEO is starting to kick in for you, heck it might be Facebook advertising, but you’re actually able to say, “If we put in a $1, $3 comes out of this.” And the point where you can kind of go back and say we found a channel that works. To me that’s when many businesses kind of get to that point where they’re saying it’s time to grow this thing because now we just need to scale what works.

That’s the point at which I think marketing has to start looking at instead of jumping in a whole bunch of other channels because we found one where we’re stable now and can get clients, that’s the place where you want to look for convergence.

One of my favorite examples is because I work with so many companies that have gotten to where they are because the founder of the company – and eventually 2 or 3 other people – were great at selling the product. They could go out there and knock on doors and network and really go toe to toe and sell with the best of them, but then they ended up kind of stalling because there was only so much of that they could do. And so they jumped into other channels to try to generate leads that way.

What I love is that when we work with folks when they’re in that middle expansion phase, what you want to do is start looking at how you can use SEO or advertising or content marketing to actually make sales – our primary channel – more effective. So now it’s instead of how can we jump into things, it’s how can we actually use content marketing to make sales or our channel that’s working to work better. For example, as silly as it sounds – or as simple as it sounds – actually producing content that instead of is out there to just draw more eyeballs from around the world can be used by your sales team to actually better educate and nurture and get involved in the customer journey maybe at an earlier point. So that’s kind of #2.

And then #3 is a really long answer. You’re probably going to have to come back and recap this. But then that third phase in marketing you start wanting to go in and say how can we take this one or two or three things now that are working great and how can we continually test them and make sure that they work better and constantly have kind of a backlog of projects that we want to try.

Rich: Alright, you did a great job of explaining it, but I have a point of clarification that I need to ask you about. You’re talking about these “channels”, and I think I know what you mean. But just in case some people listening are unsure, would you kind of define or give us examples of some of the channels that you’re talking about?

John: Yeah. That’s a great question because it is a little blurry and that’s one of those things that people misuse or use in a different way. So for me, “channels” are the places that you can go out now and directly or indirectly interact with your clients. So that would be SEO, influencer marketing, content marketing, PR, advertising, speaking are all channels. I don’t have my whole list I go to all the time but I typically talk about 16 or so channels that are available to you.

Rich: So these are the channels where we can generate business, generate leads, create sales opportunities. That’s really what it comes down to.

John: Yeah, that’s right, I think what’s really challenging is a lot of people would look at a list like that and say, “OK, look at all the places we need to be!” And I guess the real challenge is that most businesses can only effectively operate in maybe 3 or 4 of those channels with the resources that they have or with the business model. There are a lot of channels that just aren’t ever going to be profitable necessarily unless you’ve got a really big margin and really big team of people to get into them. So the thing that I really preach is that what your goal or main objective is is to try to master one or two of them.

Rich: Yeah, I’m a big fan of that in terms of going deep rather than wide. Very often when people come to me and say, “This whole social media thing seems so overwhelming, how do I be in all these places?” And I say choose one or two and become excellent at that, and then start to expand.

But I do hear you, and this is advice that I’ve never given or thought about. When you are in that “traction stage” when you’re just starting out, you have to be very nimble, that’s what I’m hearing from you. And you have to be willing to kind of throw the spaghetti against the wall to see what sticks. So if you’re entering in a new business or you’re just out of school or you’re entering a new city, you’ve got to go to networking events, you’ve got to create some content, you maybe need to try some Facebook advertising. You need to be willing to try a bunch of stuff and then pay attention to see what’s working.

John: Yeah. I actually call that first phase, “discovery”, because a lot of times people will want to develop a product or develop a service, and sometimes you’ve just got to develop something and go out and sell it and that then gives you enough money to go out and figure out what you can do next. In a perfect world you want to go out there and develop that with somebody – with a prospect or a customer – because as counterintuitive as it ends up being, everybody is taught to make something and then go out and find somebody that wants it. The greatest successes really – over the last decade in particular – have come about from people who built a community, built up some people who wanted to follow them and then figured out that they had a real need for something and they built that.

So even when we develop courses now around our products and our books and our processes, we typically develop the idea that we think is out there and then we go find some people and say, “What do you think about this?” And they tell us something and we ask what they think if we did it this way and ask how much they’d pay for it. In the end we typically have something that we already know or feel very confident that some segment of our community wants now because we developed it with them.  And I think every business can take a little bit of that approach or mindset as they start to go out and figure out what and who they’re going to work with.

Rich: That makes a lot of sense. With Flyte – my day job – we’ve been doing this for 19 years at this point and I guess we have a decent amount of understanding of our clients. But after talking to you I definitely feel that the next thing we need to be doing is calling up each one of them and really kind of interviewing them and finding out what it is that they are still lacking in terms of having a website that generates more leads for them. Which is really why we’re in business. I think that’s advice that anybody listening can take and apply to their own business.

John: I don’t think you can ever talk to your clients too much. It’s a fundamental part of how we start any engagement is we talk to our clients and it’s amazing what we learn. It pretty much forms everything we do.

Rich: That’s great advice. So we talked about the stages of business growth, I want to shift a little bit. I know that you have a system for growth that has 4 parts. I’m not going to put you on the spot and make you remember those 4 parts, I’ll jog your memory. But I’d like you to walk us through it if you could, and in those 4 are: mapping your marketing foundation, exploring potential marketing channels, create a project catalog and execute focused project bets. Now we already talked about some of these things already, but how do you map your marketing foundation? Was does that look like to you?

John: Well for us are kind of three – that sometimes blows up into five – core elements. The first one is you have to understand fully who makes an ideal client or multiple segments of ideal clients for your business. In my mind, you can’t spend enough time narrowing that, refine that, understanding at the persona level not only who you want to work with but what they care about and what makes them tick. So we spend a lot of time on that.

And the second part is to get – particularly existing businesses – is to really fully understand what it is you do that is remarkable and unique. A lot of times it’s not the stuff you think it is, it’s what your customers think is remarkable and unique.

I’ve been working on this idea of taking that core message and really trying to tell a story with it as part of mapping that foundation and storytelling has become a really cool and “in” topic these days in marketing circles. But a lot of people I think still get it backwards, they tell great stories about themselves, but I think the most effective marketing stories are where you make the customer the hero of the story and you’re simply the guide who is going to help them realize success. So those are the 3 components; the ideal customer, the core message that comes out of what’s important to them, and then the way in which we can tell that hero’s journey.

Rich: I love it. You also have here, “explore potential marketing channels” and we’ve already kind of talked about the different marketing channels. But do you have any sort of formula? I know for me I like being on stage, so presenting my ideas has always been a good channel for me to generate business for my company. Are there other things that need to go into that decision making when we say we should prioritize this channel over another channel as we’re getting started?

John: You bet. A lot of times we don’t work with pure startups, so a lot of times there’s a channel or two that’s already working for them. It is where they’re getting all their customers. Whether by word of mouth or sales or something, so obviously we want to understand everything we can about that channel. And maybe in some cases the first thing we’re going to do is figure out how to make that better, because it’s already working but maybe you don’t have the assets built that can make it work better. So that’s always going to be #1. 

I typically find there are a lot of channels that people dismiss out of hand because nobody else in their industry is doing it or because they tried and failed miserably because they didn’t know what they were doing in social media. That’s one of my favorites. So we will definitely kind of look at what other channels we can explore, but it always for me comes back to how can we look at some of the other channels to make our primary channel better.

So in your example of speaking, we would look at that and say other ways to do webinars as part of that, other ways to take what you are doing and turn it into content that could draw more people to ask you to speak. But that’s how we would kind of look at something that’s working for you and say let’s look at all these channels first and not just look at them as an open door to go somewhere else. Let’s look at them as a channel to make what’s already working, work better.

Rich: And I think that’s a solid point because one of the things that I’ve found is you can often take one piece of content – or in this case a channel – and repurpose that for a different channel. So for example if you do like presenting, chances are at the end of that presentation you have a slide deck, well then that slide deck goes up to Slideshare and suddenly you’re getting hundreds or thousands more people seeing your content and reaching out to you than you ever would have been able to before. So I think something like that is definitely important.

John: That’s right. And the nice thing about that, too, is you can get some easy wins from that kind of thing. A lot of times people just produce things like a presentation for a trade show but they don’t think about what are 6 other ways they could use that asset they’ve already built.

Rich: Exactly. Recycle and reuse. And the other thing that I was thinking is, I know for our own Agents Of Change Conference we’re always looking to reach a new audience for this conference that’s all about digital marketing. The thought is we should go to Facebook ads and of course we’ve done that and it’s worked, but one of the things that’s also worked for us is going through non social media channels.

I know there’s a lot of social media marketers and consultants that listen to this podcast, and I think the mistake they make is they’re spending all their time in social media. Those people are already sold on it and chances are they know what they’re doing. If I was just starting out, I would be looking for places where people don’t know as much about social media. I’d be speaking at Rotary Clubs or I’d be putting content in the local paper because these are the people who don’t think social media worked for them, and then you can kind of change it so you’re getting to that new, fresh audience.

John: Well I think also the other element of that is particularly if you find people that are already doing what you want to do with them, but they’re doing it maybe in ways that aren’t as productive. And what I mean by that is – this goes back about 10 years when I was first building my agency – and I saw that a lot of things were going online and digital, and I wanted to find people to market to that I could take online. And guess where I found all the gold?

Rich: Where is that?

John: No pun intended, but it was in the yellow pages. People that were spending a significant amount of money on an increasingly ineffective tool. They already knew marketing was important, they were investing in some cases $30,000-$50,000 a year on this one medium, and we knew it was going away in terms of its effectiveness. So it was like shooting fish in a barrel to start working with some of those folks and saying let’s go to the next thing. 

Rich: That’s great. Now you also talk about creating a project catalog, and I just wasn’t sure what you meant by that.

John: So as you get some of these channels that are working for you. Let’s say we’re not doing anything with Facebook advertising but we at least have an inkling that that could be a good channel for us to go into. So then what we try to do is quarterly with clients just brainstorm new projects and create a backlog, kinda always just have a catalog of things that we plan to try in some sort of prioritized order based on what we think will work or should work.

And that changes dramatically. In some cases we’re convincing somebody to go a whole new channel, so that becomes a huge project, whereas in other cases it might be, “OK, we have this Facebook ad working, let’s figure out a way to test it now with new targets or with new creative.” So it’s just kind of our terminology for always probing either new channels or new optimization inside of a channel.  

Rich: Alright, that’s very helpful. This has been great. I learned a lot about the differences between growth and marketing, and when to use different types of marketing in growth. I know you’ve got a ton of great resources online and I’m sure a lot of people listening would like to learn more. Where can we send them?

John: Well the easiest place is always ducttapemarketing.com. I’ve got my own podcast there, been blogging forever, we’ve got a bunch of free ebooks. In fact, we just collected a whole library of free content and just said, “Here, sign up one time and you can get everything we produce.” You’ll just become a member of the site that way if you want to.

Rich: Sounds great. And as always we’ll have the full transcript of this podcast including all the links that John shared. John, thanks very much for your time today, it was great talking to you.

John: It was a pleasure.

Show Notes:

  • The posts John refers to in this interview:
    • http://www.ducttapemarketing.com/blog/marketing-and-growth/
    • http://www.ducttapemarketing.com/blog/best-marketing-tactic/
  • Check out John’s website for lots of great, free resources!
  • Follow John on Twitter.
  • John has written some great books. Definitely check them out if you’re looking to delve a bit deeper on the topics discussed today, and then some.
  • Transcription and links provided by Jennifer Scholz Transcription Services.AOCP-FB-John-Jantsch

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