One problem I run into when helping clients adopt Output Thinking is that entrepreneurs often don't go deep enough. Here's what I mean. If you ask where does revenue come from it's tempting to say it comes from customers. But that's only partly right. Dig deeper and you'll see it comes from transactions between a customer and your company. Here's why that's a useful distinction. If you want more revenue, finding more customers is only half the battle. The output you really want is more transactions.
Because you don't control customers (as much as you wish you could) you have to figure out what you can control. Now we know from previous articles that outputs come from systems. And a system has four parts.
A system that gets you more customers is different from one that gives you more transactions. In fact, there are at least three different systems you can use to generate different types of transactions.
Three Types of Transactions
Look up at the last 20 or 30 transactions that generated revenue. Now group them into three groups:
Group one contains all the transactions that involve new customers who have never bought from you before.
Group two has all the transactions where a previous customer bought something they had previously bought.
Group three includes all the transactions where a previous customer bought something they had not bought before.
Looked at in this way, you can identify three different systems to produce those transactions - based on different inputs and different transformations. (Obviously these are a little simplistic - fill in the details based on your customer’s buyer's journey).
Group One (transactions from new customers)
TRIGGER = Generally a new lead from your marketing system
INPUT = Information about the lead
TRANSFORMATION = Use the steps in your sales process which mirror the way customers buy.
OUTPUT = A sales from a new customer
Group Two (repeat transactions)
TRIGGER = Either the customer reaches out to reorder, or your calendar system triggers your team to reach out to them.
INPUT = information you know about the customer and their purchasing history
TRANSFORMATION = Take the order
OUTPUT = A reorder
Group Three (selling different offerings to existing customers)
TRIGGER = Either a calendar entry (time to touch base) or there some change in your inventory offerings, your price etc.Â
INPUT = Knowledge of the customers' needs and desires that goes beyond what motivated them to purchase from you before.
TRANSFORMATION = Reach out to existing customers and explain what other offerings you have that would provide value to them.
OUTPUT = A new sale from an existing customer.
Group two requires a competent order taker (or order initiator) rather than true sales skills. Only groups one and three require true sales skills. Of those two, group three starts with a deeper knowledge of the customer's buying process and their needs.
Does your company have such knowledge? How do you get it? Where do you keep it? Is it accessible to those who need it? Ideally you have systems for the answers to these questions. But those are topics for another time.
Looked at as different subsystems each producing slightly different transactions allows you to segment your sales efforts appropriately. You might assign different types of sales to different people who are trained differently. You might measure results differently and perhaps compensate people differently.
Here's how one of my clients who runs a chain of women's lingerie stores does this. For group one, they use advertising and relationships with other stores that serve a similar clientele to reach out to folks who've not come into their stores before. For group two they use a database of previous purchases to remind customers when it might be time for a replacement. For group three they use that same database which also records styles and sizes the customers purchased, and they text customers when a new style or color arrives that they might be interested in. For all three, they also use in-store events and social media to keep them top of mind with customers and prospects. No one is paid commission, but the staff at each store gets bonuses based on the store hitting their goals.
You'll do it differently depending on what you sell and (more importantly) how your customers buy. The idea I want you to take away is to dig deeper and be more granular in how you subdivide your sales systems to produce the outputs you want.
If you found this useful, here's where you can find more like this.
1-1 Coaching - I only work with a few clients at a time but anyone can sign up for a free session to review your transaction types.
My book Output Thinking which goes into more depth about developing systems to produce outputs.