A phrase I often heard from one of my mentors; “Nial, remember, the money’s in the list!”. What he meant was that the list of contacts, prospects (or even ‘suspects’), customers and clients we have is where the real value is in our business and the same is true of just about every business.
Smart business people understand the value of data and place a great deal of importance in it. Some businesses are designed simply to harvest data and little more else. I remember someone saying to me a few years ago “so what’s facebook all about then; how are they going to make any money out of it if it’s free?!”. We could all laugh now at that statement but it was a valid point back then. I often find business owners who have great ideas but have actually put very little thought into how they can monetise their business proposition. One element that every business should focus on is the value and integrity of their prospect/client data. This is essential.
In March of this year (2010) facebook was estimated to be worth something in the region of $11Billion. With over 400 million subscribers (and growing fast) it’s interesting to see that this value is based purely on advertising revenues; remember facebook doesn’t actually sell anything, other than advertising to its list (nor does it have any sales people!). You might also be surprised to know that this year facebook’s advertising revenue is estimated to peak at $1.1Billion. Not a bad business model eh?
What’s more, a value of $3.60 was placed on each facebook fan to the various commercial fan-pages that exist. So even before we’ve ever bought anything through facebook we’re already a statistic and a valuable asset to the advertisers and facebook alike.
So, it’s fine to throw around these large numbers and unless you’ve got the next facebook planned out the point could be lost in all the excitement. No matter how big or small your enterprise is I would strongly encourage you to ensure your business model has a focus on your client/subscriber data. If you’re not doing much or anything about it right now, stop and take note. There are some key reasons why you list will be vital to you as your business grows:
Re-sales and repeat orders are a significant profit driver in every good business. Unless you have a product that can only be sold once and once only, you need to ensure that your business has an element that creates repeat sales. As you’ll no doubt have heard; it’s six times easier to resell to an existing customer as it is to find a new one. Whether this statistic is accurate is not the point here but the theme is critical. Too many business owners focus on sales and marketing that is ONLY directed at finding new customers, while they leave existing potantial profits on the table. Worse than this, if you don’t service your customers, keep them happy and help them buy more from you, you’ll see your competitors take them away from you.
Create a customer for someone else. I’ll be writing more about the power of communities soon but here’s something for you to think about now. Every time you attract and retain a new customer they are joining your community. At the same time there will be other businesses out there who could sell to your community. These would be parallel but non-competing. For example; we sell marketing services but our clients may also need accounting help, or staff training. Just think of the value you could already have in your list. Of course you must follow the rules regarding the sale/transfer of data but think about how many other businesses could gain value from working with your community and importantly, vice versa!
A friend and professional colleague just said to me the other day “selling data is a bit like prostitution, you get to sell the same thing over and over again!”. As an entrepreneur who has created a business worth over £2million (within four years) I’d say he’s got a point!
So my point is simple; if you’re not currently focusing on the data in your business, remedy this immediately. If you need some help to understand how to do this effectively and appropriately; then get some help (contact me for a start).
And remember, the money’s in your list..!