Maximize Profit with The Four Mores

The idea of The Four Mores is to recognize that if you want to maximize profit but you’re just focusing on bringing in more clients — you are very likely missing out on 75% of the available profits that are going to come from these other three quadrants.

Maximize Profit with The Four Mores

David: Hi, and welcome to the podcast. Today, co-host Jay McFarland and I will be talking about The Four Mores: More clients, more money, more margin, more often. Great to see you again, Jay.

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Jay: Yeah, it’s good to be here. And I feel like there’s one more more, if you can get all of those. More happiness and more peace of mind, right?

David: Yeah. That’s true. There are more than four mores.

Jay: Yes.

Quadrant #1: More Clients

David: I think that what we’re thinking of here is that these four mores are designed to increase the value of our clients and increase the value of our businesses. A lot of times when people are thinking in terms of growing their sales and profits, they think in terms of the first more. They think in terms of more clients.

“I need to get more clients, “I need to get more business.” And so many business owners focus their time and attention exclusively on bringing in more customers. And sometimes what ends up happening is they forget about the ones that they have. And they start to lose track of the fact that they could be drifting off.

Anyone who’s been in business for any length of time has heard the old adage that it costs a whole lot more to bring in a new customer than it does to resell an existing customer or to satisfy an existing customer.

Stop Missing Out

But it’s easy to lose sight of. And so the idea of The Four Mores is to recognize that if you’re just focusing on one thing — bringing in more clients — you are very likely missing out on 75% of the available profits that are going to come from these other three quadrants.

Jay: Wow. That’s very good. And kind of like we talked about last time, moving people into that center zone, that loyalty zone. Right?

David: Yes.

Jay: And then, if they’re reoccurring, I mean it just makes life so much better. If you have a loyal base and then you’re bringing in more clients, to me it’s just the perfect pattern, right?

David: Yeah, it does. So now we’ve got sort of conflicting visual images, however. Because last time we were talking about a target. Now we’re talking about quadrants, but it’s all designed to accomplish the same thing. Which is to get more of our clients buying from us more often. Spending more money with us at higher profit margins so that we can continue to grow the business, service those people. And without the profit part of it, you’re dead in the water. I mean, you cannot continue to operate without that. So each of these four components is absolutely critical to being able to grow the business the way that we want to do it.

What About Quality of Life?

Jay: Yeah. A good, healthy business that is making money, is growing, has loyal customers. And hopefully giving you peace of mind and maybe some quality of life. Right?

David: Exactly. Yeah. Quality of life is a nice bonus for some people <laugh>. It should be a requirement, but it’s not always a requirement. Sometimes we sacrifice quality of life just to reach our financial goals. Sometimes, particularly in the early stages of a business. But eventually, yeah, we learn.

But one of the things about this topic that I think is so important is that when you look at each of these four elements and you focus on them and you focus on improving them, it does improve your quality of life.

Because now you’re not investing a lot of time on aspects of the business that are less important. Because if you think about the idea of bringing more clients through the door, obviously that’s an important consideration. When you think of the idea of when I talk about more clients, more money, more margin, more often. More clients, we bring more clients of the door.

Quadrant #2: More Money

David: More money. Well, what does that mean? It means that we can potentially increase the value of each transaction with someone. If somebody spent $500 with me before, can they spend $750 with me next time? Or can they spend a thousand next time? And again, it’s not just about increasing prices.

It’s about providing more advanced solutions. In some cases they that are worth more money to them so that we can charge more. So we can sort of ascend them up that ladder.

Quadrant #3: More Margin

More margin, the things that I’m selling. Is there sufficient or can there be more profit margin built into that sale? Sometimes our focus is so much on being competitive on price that you can cut your way to lower prices. But at some point it becomes counterproductive. Because if you are losing money on every order, then volume is just going to kill you faster. <laugh>

Jay: mm-hmm.

David: So we have to make sure that we’re balancing the idea of charging something that’s fair. But also maintaining enough of a profit margin so that we can continue to do what it is we do.

Quadrant #4: More Often

And then more often is about increasing the frequency of purchase, getting people to buy from me again and again. If somebody is currently buying from me once a year and I can get them buying from me twice a year, I have now doubled my business with that customer. If I can get them to buy three times a year, I’ve tripled the business, assuming it’s all even. And if I’m able to increase the value of each transaction, that goes up as well. And then those things tend to build on each other.

Jay: Yeah, we’ve kind of done, and I know we will do a deep dive on each of the mores. I feel like what you’re saying is, it’s important to know each one is there. And if you’re too heavily loaded in one quadrant, then you’re going to create possible problems for yourself. Or, you’re not getting the advantages that can come from focusing on those other quadrants. Maybe finding balance in the force, if you will.

David: <laugh>. Yeah, exactly. And one of the things that we touched on earlier when we were just talking about the idea of more clients, is that when you do focus too much on one particular quadrant, the other ones tend to go away. And so when I’m focused too much on bringing new clients through the door, my existing clients are not hearing from me as often. And I can potentially lose business from that. So I lose aspects of the other mores. I lose the idea of more frequency of purchase from my existing customers because I’m off chasing the next shiny object or the next new client.

Diluting Your Efforts

Jay: Yeah. And I see this in businesses a lot. Where a business has a good product, but they decide, you know, if we just come out with 10 other products…  and they dilute their products and that can hurt them. Entrepreneurs typically aren’t entrepreneurs because they know how to balance and run a business. They’re entrepreneurs because they have a skill set and they can create a product that people like and want. But that doesn’t mean they know how to run a business and find balance with these quadrants.

David: Yeah. It goes back to The E Myth, Michael Gerber’s book that we had talked about in an earlier podcast. I thought he expressed it so well. He talked about the fact that businesses are generally not started by entrepreneurs. Businesses are started by technicians suffering from an entrepreneurial seizure <laugh>. And so…

Jay: Yeah.

David: …if I’m an electrician, I start an electrical business. If I’m a disc jockey, I start a recording business or something like that.

Jay: Mm-hmm

Technical Skills vs. Operating a Business

David: Failing to realize that just because I’m good at the technical skills of a business, doesn’t mean that I know anything about operating a business that performs those technical skills. If I’m a plumber, and I know how to plunge toilets, it doesn’t mean that I know how to set up a plumbing business, hire people, buy trucks, invest in real estate, train people, manage people, get customers, manage customers. I don’t know any of that stuff.

Jay: Yeah.

David: And so many business owners fall into that trap.

Jay: Yeah. I feel it’s more common than not. And so when you’re talking about The Four Mores, I feel like you probably should even just get out a whiteboard or something and draw the quadrants and start kind of mapping out your systems for each of these.

Map Out The Four Mores to Maximize Profit

David: Yeah. It’s a good way to start. Just keeping it visual, right? Getting it to be visual. And I think, again, what we should probably do is just post something on the website next to this podcast where someone can download it and they can tack it up on their wall. We’re going to fill up your walls with stuff. <laugh>

Jay: There you go.

David: Things that you can do to keep track of what it is we’re talking about here. But yeah, recognizing that. Because if you looked at something… if you looked at something like that every day and you say, “okay, more clients, what am I doing today to bring more clients through the door? Am I doing anything? What have I done this week to bring more clients through the door? What have I done to raise the amount of the purchase, to generate more money,” right?

Getting Beyond Just Getting Clients

David: Other than more clients, what have I done? Is there a product line that I could introduce that is a little more expensive that would serve their needs even better? That could increase the average value of the transaction. Is there a product line or is there something that would also increase the profit margin on that?

So if I can increase the number of customers and if I can increase the average value of the transaction and I can increase the profit margin on those transactions, and I can get people to buy for me more often, then all of those things end up working together. And small incremental increases in each of those can result in really substantial increases in business, in sales and in profit.

Jay: Oh yeah. Just compounding. If you have more customers purchasing more things at a higher margin. I mean, talk about the perfect storm, right? I have a lot of experience in the restaurant industry. And with restaurants, you talk about more margin. Well food cost, cost of goods sold, is the most important factor. And I try to teach people that, “what’s going to make you more money selling more product, or just controlling your cost?” And which one is easier. Right?

David: Mm-hmm

Bottom Line Profit vs. Gross Sales

Jay: So, you know, having that mentality that I can put a dollar on the bottom line. That’s a full dollar. But if it’s a dollar profit, I’ve got to sell maybe $10 to get that dollar in sales-wise, right?

David: Yes.

Jay: So these are important discussions to have with your team, your staff, your spouse, or just yourself if you’re on your own,

David: They really are. And so if you’re looking at a grid like that, and you’re seeing this grid that says “more margin” or more profit, as you talked about,

Jay: mm-hmm.

To Maximize Profit, Keep The Four Mores Visible

David: Just seeing something like that on a daily basis, or on a recurring basis, will cause you to think about it. Okay, “have I done anything at all, even remotely designed to help me to increase in that area?” And if I haven’t, what can I do?

And it’s not that you have to do a hundred things on that every day. You do a little bit here and a little bit there. Just by being focused on these things. And this really relates to a lot of what we talked about in the past podcast. If it’s about moving somebody from comfort to loyalty, just being aware of those things and building that into your day-to-day routine. Recognizing that this is the goal.

The goal is to move people from obscurity to recognition, to comfort and to loyalty. And the goal is to grow in four key areas: More clients, more money, more margin more often. And when you can marry those things together, it’s just a recipe for success.

Tracking Your KPIs

Jay: Yeah. I’m just sitting here thinking about how can I put these all in a spreadsheet so that they are KPIs, right? My key performance indicators. So that, is there a way that I can see this visually within my company, with a snapshot once a week, that I can take to my employees and I can say, “okay, we were doing more with these KPIs, but let’s focus over here.” And you know, anything, any tool that is available to track those KPIs, I think is absolutely critical.

David: Well, for something like this, when we’re talking about The Four Mores, I mean, QuickBooks will do it. <laugh> right?

Jay: Mm-hmm

David: Because you can look at the month and you can say, “all right, how many clients did we service this month? What were the gross sales that we serviced? What was the profit on that? And what was the average number of purchases per client? Purchases per client, you might want to do that over a period of three months or six months or a year. Unless people are buying from you multiple times per month, depending on what kind of business you’re in.

Of course, that can happen as well. But those KPIs are sort of baked into whatever you’re doing when you’re keeping track of your money. But you have to know to look at it <laugh>.

Jay: Yeah.

Focusing Your Team on The Four Mores to Maximize Profit

David: Which brings us back to a poster on the wall to say, “okay, are we looking at these things?” Are we looking at it regularly enough? And are we getting people focused on it? Not just ourselves. If we’re the business owner, we’re going to focus on it. But yeah, you’ve got to get buy-in from everybody. So that everyone knows that these are the things we’re trying to accomplish.

Jay: Yeah. And they know when they’ve been successful and they know when they have work to do. And I’m assuming also that goal setting in this process is absolutely critical.

David: Yeah. I mean, setting goals, as far as the number of clients that we want to bring in, and the average profit margins that we want to maintain, and the average sale that we want to engage in, and the average number of orders per customer. Those are all metrics that can be easily tracked. And then it’s a matter of just being proactive about keeping up with it.

Systems Don’t Have to Be Expensive

Jay: Yeah. So often with everything we talk about, it comes down to good systems. Right?

David: It does.

Jay: Good systems. So important.

David: They are. And good systems does not mean expensive technology either.

Jay: That’s right.

David: It just means knowing what it is that we have to look at… and looking at it… regularly!

Check Your Numbers Regularly

In the early stages of my very first business — and I’ve had a number of businesses over the years. And one of the things I generally say if I’m speaking to a large group is, “you know, the reason that I’m here talking to you today is not because I’m particularly smart. It’s because I feel like I’ve made every stupid mistake I could possibly make along the way. And if I can keep you from making one of those mistakes, then my job here is finished.”

But in the early stages of my first business, we would look at the numbers quarterly. My accountant would come in and I would look at the numbers quarterly. And at the end of a quarter, you could find out how much money you’ve lost <laugh>. But it doesn’t tell you what to do to fix it.

Jay: Right.

Use The Four Mores to Improve Your Monthly Numbers

David: And so simply by looking at the numbers more frequently than that, looking at the numbers every month and asking, “okay, where did we go wrong? Is it the number of clients? Do I not have enough clients? Do I not have enough profit? Do I not have enough repetition for the buyers? What is it? What is the more that is missing here?” You can adjust a lot faster.

Because if you are looking at an income statement, if you’re looking at a balance sheet, and if it’s not positive, if you’re seeing things you don’t like, you can really look at that and say, “how is this impacted by The Four Mores? What do I need more of, most quickly?”

Jay: Yeah. It’s a such a better approach than “the squeaky wheel gets the grease,” right? Or the person who just, you know, the managers who are just putting out fires. And that’s all I do all day is put out fires. You never can get to this level of proactivity if that’s what you’re doing.

Prioritize to be Proactive

David: Yes. That’s exactly true. And so I think it’s important for everybody to allocate some time, ideally at the beginning of your day, to say, “okay, what are my top three priorities for today?”

You’re not going to get past that probably, anyway. You might not get past number one. But if you know what number one is, you can allocate some time, proactively, at the beginning of the day, to take action on at least number one. And then hopefully move to number two and number three, before everything gets crazy and you end up responding to everyone else’s priorities.

Jay: Right. And I also want to add in… don’t be afraid to realize that you need help, you know?

David: Yes.

Add the Expertise

Jay: You know how to do your skillset. Don’t assume that you can just do all of these other ones. That’s why I love these podcasts and these discussions that we have. I think one of the first things you can realize for your own benefit, whether in business or your own life, is that there are people who have the expertise that you’re looking for. Go outside yourself and look for those resources. Either hire those resources. And if you can’t hire, ’em, come here and we can help you expand that. So that you can know what to focus on.

David: Yes, absolutely. It’s important to understand this too, Jay. Out of any market, if there are a hundred business owners, there are probably one to five who are really serious about doing everything it takes to grow their business right now.

Jay: mm-hmm

David: And then there are 90 to 95 who are just doing their thing, plodding along, happy with what they get.,Or maybe they’re not happy with what they get. But they’re not really willing to do everything that it takes to figure out what those next steps are.

Jay: Or they don’t know better, right?

Taking Action on The Four Mores

David: Right. Yeah, exactly. We work with the three to five to seven out of the hundred who are serious about taking action now. So if anyone’s listening to this podcast and you fall into that category and you are serious about growing your sales and profits now? What I would ask you to do is go to TopSecrets.com/call. That’s TopSecrets.com/call and schedule a time to talk with me or a member of our team about how we can help you grow your sales and profits.

What we’ll do in that totally free call is to take a look at: What is the market? What is the group of people that you would like to interact with? What’s the market you would like to dominate? Where are you currently struggling? What’s keeping you from doing it now? Where are things broken or missing in your business?

Whether or not we ever work together, you will get a lot of great ideas from the conversation.

Status Quo is Deadly

So if you’re one of those people, I would encourage you to go there. If you are not — if you’re content with the status quo, and if you just sort of want to let things happen as usual — please do not schedule a call. Because it would be a big waste of your time and ours.

Jay: Absolutely. And keep listening to the podcast, because we’re going to continue to deep dive on The Four Mores and other great topics coming up.

David: Yes. Perfect.

Jay: All right, David, it’s been a great pleasure talking to you.

David: Thank you, Jay. Appreciate it. Talk to you next time.