Brian Kaskavalciyan - Ep. 14 - Let Your Customers Work For You Using A Little Known Law From 1896

This is the Wealthy Contractor Podcast brought to you by G4 Marketing. Interviews with today's top home improvement entrepreneurs about marketing, sales, money, mindset, and lifestyle. Now here's your host, Brian Kaskavalciyan. Hello and welcome to the Wealthy Contractor Podcast. This is Brian Kaskavalciyan with G4 Marketing Group. In this episode, I'm going to share a recording, uh, that I did actually for our private clients, and now I'm going to share it with you. In this recording, I talk about the Pareto principle, otherwise known as the 80/20 rule. Now, of course, the 80/20 rule states that 80% of your profit will come from 20% of your customers. 80% of your outcomes will come from 20% of your effort. However, Here, I'm gonna talk specifically about referrals and how 80% of your referrals come from 20% of your customers and how you should really focus your energy on developing and cultivating that 20%. But I go one step further, in fact, a couple steps further. While you should certainly pay a greater level of attention to your top 20%, What you'll hear from me on this episode is a challenge to hyperfocus on the top 1% of your customers to create true raving fans who will buy from you over and over again and promote you to your friends, family, and neighbors. You'll get to hear a few specific examples of how some of my clients have executed this idea to benefit their own businesses. And believe it or not, I'll even have a lesson to share with you from pop star Lady Gaga. Yes, I'm even going to talk about Lady Gaga. It's true, but she is a world-class marketer, and there's a few things to learn from that. So let's get to it. 1%, 4%, and 20%. What is the significance of those numbers, and how does it relate to you making a whole bunch more money? That's what we're going to be discussing this month on this very special CD. This is Brian Kaskavalciyan from G4 Marketing, and if you are new here, welcome. And every month or so I send out a package like the one that you received this CD in, and lately I've been doing something a little different. I have been having discussions about certain topics, certain things that come up. And so this month I wanted to talk about the Pareto principle and how it applies to, to business. Now, I talk every day with people about referrals and about repeat sales and how do we get more. It's almost like it's this big mystery and it's the Holy Grail of any business is how do we get more repeat business? How do we get more referrals? People think that there's like some magic formula to it. Some people think that It's, you know, it's not for me, it's for somebody else. And, you know, some people think, oh, it's good, it's not worth the time and the effort and the money. Well, that may be very true in some cases, but in most cases it's not true. Getting repeat business from your customers is actually one of the most profitable things that you can do. You don't need me to tell you that. You know that repeat customers close at a higher percentage. That takes a whole lot less time to demo them and sell them. They really don't usually give you issue with pricing. So they are much, much more profitable, and everything that we can do to get more of them will be helpful. So in the last couple of discussions, I've talked about— in the last one, we talked about the affluent and targeting the affluent, giving them an experience that they can't really get anywhere else. And, and before that, we talked about statistics or people. Which one are you focused on? And that was really all a conversation about, you know, are you just looking at numbers, you know, your customers as numbers, or are you looking at your customers as people and as potential relationships? Because obviously relationships are much more profitable than just numbers on a page. So today we're going to talk about how the Pareto principle, the 80/20 rule as it's well known, can help you make more money. Well, just like everything else, 80% of your results are going to come from 20% of your effort. This applies to repeat sales. This applies to relationship. This applies to referrals. What a lot of people don't do with the Pareto principles, they don't take it beyond 80/20. So if you take it beyond 80/20, there is the 95/5 or the 96/4, right? The, the 20% of the 20% gives you 4%. The 4% are arguably as valuable in most cases as the 96%, and then you could take that one step go further, and you can go 1 versus 99, 1% versus 99. If you remember recently, we had the whole Occupy Wall Street movement, and the 1%, which, you know, a lot of us are probably in, we're made out to be the evil ones, right? Well, the interesting thing is that the 1% control the majority of wealth in the United States and the world. So how do we use that information to make more money? Well, let's talk about referrals. 80% of your referral results and sales are going to come from 20% of the people. If you break that down even further, you get into the 4%, right? So 4% of your customers could provide a significant amount of revenue and sales and referrals for you. But the question is, what are you doing to identify those people and treat them different? So I was on, um, I had 4 or 5 or 6 airplanes last week, and I downed, I don't know, 3 or 4 books. And one of the books that I read last week, and it's a fantastic book, it's called Monster Loyalty, and it's about Lady Gaga and how she created this global empire. And she did it in record time. Now, I'm just gonna focus on one part of the book. It's really a brilliant book. I'm not a big Lady Gaga fan, and I am not a quote-unquote little monster. However, I've always had a lot of respect for her because even when she was just starting out, I read about her and how she studied famous people, successful people, particularly Andy Warhol. One of the things in this book, and it almost gives you a blueprint of how to create raving fans, how to almost create not a cult, but like a really loyal following. And one of the principles in there was the 1 percenters, the 1 percenters. So in Lady Gaga's business, right, and make no mistake, she is a very savvy, very smart, and very successful businesswoman. 1% of her customers and fans are— it's over 5 million people. It's like 5, 6 million people. And what she does— I'm sorry, it's like 500,000. Forgive me, it's like 500,000. What does she do with those 500,000 people? Well, those 500,000 people have a special website that they can go to that's very much like Facebook, where they regularly get to interact with Lady Gaga. I mean, she does so many smart things. It's really amazing, and if you have a chance to read the book, I mean, I probably read it in, you know, 2 sittings. It's not a long book, and it's not a hard read. But here's the one important thing that I wanted to bring to you from that book is that the 1%, what she has done is she says, I am going to treat this group of people different than I treat everybody else because Because if I get this 1% to be ambassadors for me, to become raving fans, they will go and they will infect and affect a whole bunch of other people, right? And they will bring more and more and more people to me, which is what has happened with her. So in your business, you don't got Lady Gaga numbers. None of us do. So if you've got, let's say you have a database of 3,000 people that you've done work for over the years, 1% of that is 30 people. That's a nice group of people. Imagine what you could do with 30 people to really create raving fans. Now I'm going to talk about the 1%, but as we talk about the 1%, I want you to be thinking in terms of the 4% and the 20%. So again, using the same example, 3,000 people, 4% of them is 120 people, 20% is 600 people. So that's how it breaks down: 600, 120, and 30, right? And with each level, those people become more and more valuable to you. Make no mistake, they become more and more valuable. And make no mistake, You have these people that are potential ambassadors for you, but what are you doing to cultivate and grow them? So let's talk about some of those things that you can do. So if you've got a 1% Club and it's 30 people, right? Now the, the 1% Club, let's be clear about who these people are. These are people that love you, that think your company is the greatest. If you don't have 1% of the people that think you're great, that you are amazing, that, you know, like the greatest thing ever, then you got some serious other issues. But I think everybody's got this group. So 1%, the people that just love you and think you are the greatest person or greatest company ever. These are also your top referral sources, whether that be an individual person, whether it It could be like a partner, you know, like a real estate agent or another contractor. Whatever it happens to be, there is a referral source. This could also be a center of influence, somebody that knows a lot of other people. So that's what you want to start looking for when identifying who is your 1%. Now, last time we talked about the affluent, targeting the affluent, people over 50, people with money, people that have equity in their homes, right? These are the people that you want more of, and trust is a big thing. Going back to the first discussion that we had, trust is a big, big thing with that group of people. They remember a time where, whether real or imagined, they remember a romantic time in America where I call Mayberry, you know, The Andy Griffith Show. That is their point of reference, right? That's their idyllic romantic version of the United States. And more and more, we're getting away from that. And that group of people in particular yearns for that again. And so the more you can deliver that to them, the better your chances are of turning them into a referral source, turning them into somebody that would that could join your 1% club? Now, when somebody joins the 1% club, I mean, obviously you are the one that's going to determine who these people are. What are some things that you can do for this group to keep them promoting you, to keep them talking about you? What are some of the things that you can do? I have a client who does this beautiful thing. He doesn't do it for the 1%ers. He actually does it for all, everybody that makes a referral, but it's a really nice idea. He goes to a website called Simple Truths and Simple Truths sells, like motivational books and CDs and stuff, but beautifully packaged. They're really nice. Um, we've sent stuff like this out. If you've been with us long enough, we've sent you stuff as gifts from Simple Truths. But if you just go to their website, simpletruths.com, you'll see what I'm talking about. But you could send them a nice book in a nice package and with a nice little note that says, hey, I was just thinking about you, hope everything's going well with you, I thought you might enjoy this book. That's one thing. You could gift them every once in a while. Obviously, you want to be in constant communication with these people, letting them know what's going on with your company. I mean, it would almost be worth it for you, knowing how busy you are, but for you to set aside an hour or two a month and just write a personal letter just to this group of people, the 30 people, and really like everything is personalized to them and you talk about you know, what's going on in your life and about your business, not pitching them, just talking to them, just saying, "Hey, this is what's going on, blah, blah, blah." Okay? Those are a few simpler things that you can do. Here are some other things you can do. What if you invited this group out to a really special dinner? So what if you went to the, you know, best steakhouse in town or whatever food you like, Italian, whatever you like, you rented a private room, and you brought these people in just for a night of entertainment and fun. You bought dinner for everybody. It's going to cost you a couple thousand bucks at least to do it, but man, what great money spent on this group of people because when they leave there, what are they going to go and do? They're going to go and tell people about you, about how great you are, about how wonderful your company is, and about the good work that you're doing. You know, they're not going to go and say, "Hey, this guy bribed me with dinner. Remember, this is your 1% group. What else can you do? I had a client a few years ago, he's a concierge doctor. Now, just about everybody he works with is in the 1%, like in the real 1%. Concierge doctor, very private select group of patients. He himself, I think, had 300. His partner had another 300. Believe it or not, within their group as well, they have their top 20%, top 4%, top 1%, right? One of the things I suggested he does is right down the street from his office— this is in, in Southern California, right off of Pacific Coast Highway— there was this awesome, really cool dealership that sold— sells Porsche, Bentley, Audi, and something else, but like all high-end, beautiful showroom. And I said to him, I said, look, I said, your customer, your patients are a perfect fit for that dealership. In fact, I bet a lot of your customers probably have even purchased something from that dealership. I said, why don't you go approach that dealership, make a special deal with them and say, hey, look, I wanna do an event for my best clients here in your showroom. What I want to do is I want to bring them in, I want to do a cocktail reception just around the cars, just in this cool environment, and let people go and test drive cars just to have fun. If there's a new Bentley or a new Porsche or something that you want to really promote, what a perfect way for me to not— to show my customers how— what a cool experience I could provide for them. But also, this would be be a great, great thing for you because I'm gonna bring you a whole bunch of prospects. I'm at— you might— you'll probably sell 4 or 5 or 6 cars out of this group. And you get them to kind of provide the venue and pay for some of the food, and you just provide them a great experience. Now, that was just— that was one idea. But man, how many of these ideas could you come up with? With different venues around town. The idea is, how do we identify this group and how do we cultivate a tighter, stronger, more profitable relationship with them? And look, it's a lot easier to do it, and it's a lot cheaper to do it with 30 people than it is to do it with 3,000 people, right? And arguably it's going to be more profitable. So as I kind of wrap up here, my, my hope here is that I've opened your eyes to a new way of thinking about a group of customers. Focusing in on this group can really give your business quite a boost. It can really change the way that your business— the way that you do business. And it's not only more profitable. It doesn't only add more equity value to your company, but you could also make this fun. I mean, you could really make this a way of having a lot of fun with your business. Now, I've, you know, I know a lot of you that are listening to this, and the idea of fun for you is getting your lead costs down by 10%, or, you know, making, you know, having a killer month And, you know, quite frankly, I am that way too. But at the same time, I also enjoy very much meeting with my 1% Club. I enjoy hanging out with my, with my best customers. And unlike you, you know, my customers are all over the country. Your customers are more local, you know, they're around you. And so it's easier for you to get involved with them and to do special things with them. I'm not saying because become their best friends. I'm not saying take them out to dinner every Saturday night, but once or twice a year put on an event for them. You know, the 1% group, I would do something really unique and really special for them. What about the 4% group? 4% group, even for a company, let's say you've got 3,000 past customers, put on an event at your office, you know, or put on a picnic or do something. Get other people to sponsor it so that you don't flip the bill. I did a CD interview with, with somebody, a really, really sharp guy named Steve, and he does a customer appreciation event every year, and that is one of the biggest, most profitable things he does all year. He has hundreds of people go through his customer appreciation event, and it's fantastic. And what it does is it just builds builds that bond. And it's no, and it's no coincidence that he gets 75% of, you know, multi-millions in sales, 75% of that from repeat and referral business. So it's just a good, it's just a good practice. Now, um, let me just quickly recap. So what are, you know, what are your action strategies after listening to this? First of all, just start thinking about it in these terms. Start thinking about my 1%, club, my 4% club, my 20% club, you know, 1, 4, 20, 1, 5, 20, whatever, you know, whatever is right for you. But start thinking in those terms. Start thinking about what can I— how can I identify them, first of all, and then how do I further develop relationship with them? How do I deliver an experience to them that helps get them to be bigger raving fans, to be ambassadors, to really to go out there and promote my business to the public, to their neighbors, to their family, to their friends. This is a powerful, powerful strategy. If you've got any questions about it, please don't hesitate to call me and to ask me. I'm here to serve, and I'm very happy to have these discussions with you. So I hope that you have found value with this discussion. This is Brian Kaskavalciyan with G4 Marketing Group, and I hope you've got— you have a wonderfully profitable month. Take care. Goodbye.