I was talking to the business owner of a mid-sized company this past week and he said something that really struck me as not only true for him, but is probably true for most of you as well.
He said…
We all know the proverbial 80/20 rule where we get 80% of our revenues from 20% of our customers. We are no exception. But upon further prodding from you (that was me) we took a hard look at the people that weren’t just spending money with us but which ones were saying the most to others about us. While it was more of a guestimate than hard data, the results were astonishing. Of the 20% that generated the majority of our revenues, there were only about 20% of those that were aggressively telling others about us. But this 20% accounted for almost 100% of our referrals and new business from this source! I was shocked and it really showed me how valuable an “Advocate” is to our business. Our mission is to do whatever we can to increase this number from the 20% of the 20% it is today. We do that, we will see more growth than we have in the past 5 years. This “Advocate stuff” is very real and something we haven’t paid as much attention to as we should have – but we will from now on…
I didn’t know what to say – he really “got it” and understood the power of his new customer, The New Advocate! The only difference is that he was able to put some quantification around it and come up with his own numbers to see how powerful it really was. He is a changed leader and as such, this is now the focus of his organization over the next year and beyond. He finally saw the power an “Advocate” has in his business.
From all the business owners and CEOs and other leaders I talk to, I would bet my consulting fees he is not the exception, but the norm amongst businesses. The issue is that when I talk to leaders, they either don’t know the numbers or they are too embarrassed to figure them out. But for those that do take the time and embrace the notion of focusing on Advocates, the rewards are plentiful. As a leader, ask yourself this question…”How many of my competitors get more word-of-mouth business than I do and do they have more Advocates than us?” This might just be the motivation you need to think differently about the 80/20 rule going forward!