Here’s a solution to the Feast or Famine paradox that often plagues service-driven industries: Feedback Loops.
First, the problem can be somewhat macroscopic or microscopic, meaning, certain times of the year might be much more busy than others, other times you have certain days of the week which are particularly busy.
We present 4 solutions for you:
- Pipeline monitoring tied to your marketing budget. This means when you can see a slow time coming, you increase your marketing time/money expenditure. The paradox here to watch out for is not budgeting to get yourself busy, and then being caught with no available budget, and not enough business to even re-invest. That said, as you gain clarity into your business financials, and also see a pattern of marketing-spend-to-new-incoming business, you’ll be more clear about what cash reserves you need to maintain. Assuming you have even a few weeks of burn available (i.e. cash required for operations) then variable-method-advertising such as Google PPC can be indispensable at helping you get busy again.
- Self-Scheduling tools. To avoid overly busy vs. overly slow, we are working on a new color-coded calendar system that prompts clients visually to schedule on slower days when possible. By presenting clients with feedback data tied to your calendar / schedule, they’ll help you out (and get better service themselves) by choosing less busy days.
- Outgoing “Push Marketing” (active marketing vs. passive wait-for-clients-to-come-to-you marketing) tied to your pipeline and expected work load.
- Buy Live Transfer Leads (not data leads). Some professionals or business owners are categorically against buying leads because they want to control their branding, but doing so misses the point: leads are lower risk because you’re only paying for results. By the way, I mean actual “asked to be contacted” warm leads like live transfer exclusive, not raw data here. Ideally you’ve tested this provider before and know they’ll perform and just aren’t too keen on the price – so shut the spend off or down when you’re busy, and crank it back up when it’s quiet. Every business has at least some fixed expenses, so the goal is keep the deals flowing but in good times (read: lots of incoming deals/leads) cut the spend to widen your margins.
The pattern here: In good times, push to widen your profit margins more than growth for its own sake, and in lean times, push to increase your market share. The market share will for the most part hold as the market picks up again.
Frankly, most small businesses are always pushing for growth, as are many commissioned sales professionals. This creates a roller coaster income effect, caused by getting very busy on fulfillment and thus spending less time on marketing, which then causes a dip in new incoming business or quotes issued, followed by a burst of marketing and sales activity which creates new incoming leads and business – but since it takes some time for leads to turn into cash (depending on your industry this varies. Auto mechanics might only be a few days, but Real Estate Agents typically take months from lead to cash) this leads to income that’s all over the map.
Required to Implement This Idea:
- Knowledge of your average lead-to-paycheck incubation time / sales schedule
- A CRM of some type so you are handling your leads in a repeatable, predictable way
- A graph of your incoming leads, so you can clearly see patterns. Ideally, this would even have some projected closing i.e. if you know referrals close with 80% reliability but cold-generated internet leads close at 33%, then you’d have a graph of projected income weighted by method.
- Marketing systems that allow scaling. Generally, you’ll want to use your most profitable lead-gen methods all the time, so really this means you’ll resort to variable-cost, less profitable lead-gen during lean times in order to keep the money flowing. That said, when you’re potentially running out of gas you don’t want to try something too new, so the time to experiment is when you have some cash on hand, and when in a higher risk situation, use tried-and-true marketing methods. For most offline-sale businesses (i.e. auto mechanic, plastic surgeon, real estate) I’d recommend using PPC and postcards all the time but pause certain campaigns when you’re busy and rely only on referrals, while in slow times you can then increase the spend short term in proportion to average sale time.
What could we do to improve this?