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Strategies for Business Growth and Improvement

7 min read

From: alexhormozi

This article details a case study where an investor doubled the revenue of a portfolio company in 60 days by addressing five key problems related to sales and organizational efficiency [00:00:00]. The core approach involved analyzing data, identifying constraints, and implementing targeted strategies for business growth.

Key Performance Indicators (KPIs) Explained

Before diving into the problems and solutions, it’s essential to understand the key metrics used to track performance:

  • Show Rate [00:00:22]: The percentage of people who show up for a scheduled appointment [00:00:23]. For example, if 70 out of 100 people with appointments show up, the show rate is 70% [00:00:37]. This indicates the effectiveness of lead nurturing and appointment setting [00:07:09].
  • Offer Rate [00:00:43]: The percentage of people who are actually made an offer during an appointment [00:00:47]. Not everyone is offered a solution if they are not qualified [00:00:51]. A 100% offer rate suggests high-quality lead flow [00:01:09].
  • Close Rate [00:01:13]: The percentage of people who purchase after being offered [00:01:19]. Tracking both close rate from show rate and offer rate is crucial to identify potential issues, such as salespeople only offering to sure-fire buyers to inflate their close rate [00:01:25].
  • Percentage of Cash Collected Up Front [00:02:02]: The average percentage of the total sale amount collected at the time of purchase [00:02:04]. A high percentage indicates strong buyer conviction and effective sales process [00:23:37].
  • Units Sold [00:02:33]: The total number of products or services sold, which is the output of the other four metrics [00:02:35].

Baseline Performance (Before)

Prior to intervention, the company’s performance metrics were:

Identified Problems and Opportunities for Improvement

Problem 1: Low Show Rate (49%) [00:03:40]

The target benchmark for this business type was 70% [00:04:10], representing a 40% difference [00:04:20].

  • Incorrect Ad Targeting: The media buyer was optimizing for the lowest cost leads and appointments, rather than cost per sale [00:05:30]. This resulted in targeting 18-24 year olds when the ideal demographic was 25-35 year olds who were gainfully employed [00:05:07]. Salespeople spent significant time canceling unqualified appointments (75% of scheduled appointments were cancelled before the 49% show rate) [00:05:45].
  • Sales Team Multitasking: “Setters” were responsible for both cold calling leads to set appointments and nurturing/following up with existing appointments [00:06:04]. This dual responsibility led to:
    • No “double dialing” (calling twice, common for getting past initial screens) [00:06:28].
    • Slow “time to contact” for new leads [00:06:38].
    • Lack of “morning of nurture” for scheduled appointments [00:07:00].

Problem 2: Low Close Rate (27%) [00:07:20]

The target close rate for this type of mid-priced consumer service (two-call close) was approximately 40% [00:07:42], representing a 50% improvement opportunity [00:07:58].

  • Surface-Level Discovery: Salespeople were asking superficial questions (e.g., “how much money do you want to make?”) instead of deeper, intention-based “why” questions [00:08:30]. Understanding the prospect’s underlying motivations (e.g., replacing income, quitting a job, side hustle) is crucial for effective selling [00:09:01].
  • High Objections/Obstacles: Many objections (“I need to think about it,” “too much,” “talk to spouse”) and obstacles (“just want to find out more info”) arose because the discovery process was inadequate, leading to “smoke screens” from prospects [00:09:42].
  • Poor Sales Delivery and Tonality: Salespeople were “talking at” people rather than listening [00:11:01]. They missed crucial aspects of vocal tone and emphasis that convey genuine curiosity and empathy [00:11:45].

Problem 3: People and Organizational Structure Issues [00:12:38]

  • CEO as Sales Manager: The CEO, despite being the best closer, was not an effective sales manager, leading to high sales team churn [00:12:44]. Promoting the best individual performer to manager is a common, but often detrimental, error if they lack management skills [00:12:55].
  • Under-Education on Prospect: Sales teams often over-educate on product knowledge and under-educate on understanding the prospect [00:13:25]. Knowing the prospect’s deep intentions is more critical than knowing every product detail [00:13:34].
  • Low Setting Team Expectations: The setting team’s minimum standard was two appointments per day [00:14:28]. This low bar allowed for reduced productivity, as people naturally shrink to the set standard [00:14:41].

Implemented Strategies for Business Growth

The solutions were implemented in a specific order, prioritizing personnel issues first [00:15:08].

1. Hired a Sales Director [00:15:11]

  • Why first?: The CEO’s micromanagement and lack of management skills were preventing other changes from sticking [00:15:16]. This was a “who” problem rather than a “what” problem [00:15:40].
  • Qualifications: An experienced sales director with a background in similar consumer sales and sales training was hired [00:15:23]. The hiring process focused on cultural fit and tactical knowledge, specifically assessing their understanding of data collection and nuanced problem-solving [00:16:18].

2. Fixed Ad Targeting [00:17:08]

  • Personnel Change: The negligent media buyer, who was optimizing for the wrong metrics, was replaced [00:17:20].
  • Optimization Shift: Ad campaigns were re-optimized to focus on “cost per sale” instead of just “lowest cost leads” [00:05:37]. This ensured traffic was again directed towards the ideal demographic (25-35 year olds who love their jobs) [00:17:39].

3. Reduced Sales Team Size and Reset Expectations for Setting Team [00:17:42]

  • Sales Team Downsizing: The sales team was reduced based on “sales team utilization” (e.g., if reps can handle 10 calls but only take 4, there are too many) [00:17:49]. This meant cutting the lowest-performing members, which improved the overall close rate and culture of the team [00:18:01].
  • Increased Setting Expectations: The daily appointment setting target for the remaining team was increased from two to three (and later four) per day, a 50% increase in productivity [00:18:51].

4. Promoted One Setter to Lead Nurture Specialist [00:19:01]

  • Specialization: A setter who was good at nurturing was promoted to focus solely on lead nurture, eliminating the multitasking issue [00:19:03].
  • New Processes: This specialist acted as a bridge between the setting and closing teams, coordinating reminders and implementing a checklist for maximum show rates [00:19:15].
    • Three-way Intro: A three-way introduction between the setter, closer, and prospect (ideally via iPhone to build trust) [00:19:29].
    • Personalized Morning-of Reminders: Closers sent personalized voice memos or video texts on the morning of the appointment to enhance connection and show-up rates [00:19:50].

5. Optimized Sales Scripts and Drilled Looping [00:20:07]

  • Deeper Discovery: Sales scripts were re-written to encourage deeper, more meaningful “why” questions during discovery, moving beyond surface-level inquiries [00:20:12].
  • Pre-emptive Objection Handling (“Killing Zombies”): The scripts were designed to bring common objections to the forefront and address them before the offer is made, effectively “diffusing the bomb before it goes off” [00:20:18]. For example, asking about all decision-makers prior to the appointment [00:20:41].
  • Looping: The team was drilled on “looping,” a sales technique for handling objections by resolving the concern and then asking for the sale again [00:20:59]. This requires persistence and effective resolution of the prospect’s underlying concerns [00:21:20].

Results: Doubling Business Performance in 60 Days

Through the implementation of these fast business growth strategies, significant improvements were observed within just two months [00:22:50].

Post-Implementation Performance (After 60 Days)

These targeted changes led to a substantial increase in both sales volume and upfront cash flow, demonstrating effective strategies for maximizing business profits and overall business improvement [00:24:06].

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