When I read the Duct Tape Marketing book by John Jantsch, the concept that really excited me was the idea of the Marketing Hourglass.
I love visual metaphors and analogies. The Marketing Hourglass combines the ideas behind the sales funnel with the concepts to building the profitable back end of a business.
It puts the entire business concept in such dramatic focus and emphasises where you will really make your money.
I use the same idea in my Six Steps Profit Formula report.
The First Part Of The Marketing Hourglass – The Sales Pipeline or Sales Funnel
The First Sale
The sales funnel works down from your universe of potential customers all the way down to the people who actually buy from you.
In the diagram above, the shaded green section recognises the money being generated from the customers in a one time sale.
Nice and simple but the V of the sales funnel represents a lot of cost and energy to attract and convert these customers and the green cash block is not very big.
Upsells & Cross-Sells
If the business introduces options as Stage 2 to upsell or cross-sell on the first purchase, the we can add another green box to represent the extra profits.
Since the all the overheads and selling costs are covered by the first purchase, the extra profit that can from as simple a cross-sell as “Do you want fries with that?” could double the profit on the transaction.
The Second Part Of The Marketing Hourglass – The Back End
More Regular Purchases
Stage 3 is to start conditioning your customers to buy more often because it is in their best interests to buy more regularly or because you add other products and services to your range that they want.
You can start adding many more boxes of money if you can turn a one time customer into someone who buys twice a year, every quarter or even once a month and when buying becomes a habit, it rolls into the following year as well.
Customer Referrals
Finally you bring in the Stage 4 and the power of referrals from your happy customers to their family, friends and colleagues which can add an even big box of money provided you a) offer great value and service and b) you have a systematised referral process.
You now have a true “marketing hourglass” where you have filled your business with cash and as a result, it is a much more stable business.
You can continue to add new customers from traditional lead generation sources but the Marketing Hourglass is the best mental picture I have seen of the process of adding profit through backend marketing.
Is Your Marketing Hourglass As Full As It Could Be?
So how far does your “Marketing Hourglass” go down?
Have you explored all the possibilities for upselling and cross-selling to make sure that you sell what the customer really wants to buy in rather than what the customer thinks they should buy? There is an important difference and you are the expert.
A doctor wouldn’t trust a patient’s self-diagnosis and nor should you.
Have you concentrated on provided a great service (and yes that all starts from making sure the customer buys the item that will provide the benefits required) so that the customer is happy to buy from you again? Have you conditioned the customer to expect your future offers or educated them on exactly why it is so important, for their benefit, that they do buy again?
Have you then made those offers to encourage your customers to buy more and more often?
Have you then explained why its in the customers interest and that of the people he or she knows to make referrals to your business? Do you have a process to remind your customers to give you referrals?
Your customers are the source of potentially big hidden profits in your business. Jay Abraham has built his “megastar” reputation and career on finding and exploiting these opportunities and has spawned a wide group of marketing coaches and consultants who recognise that while the glamour may be in attracting the new customers, the real money is in the backend.
With the estimate that it costs on average between 500% to 1,000% more to sell to a new customer than an existing, happy customer, you have to turn your attention to deepening these customer relationships and filling your Marketing Hourglass.
What You Can Do To Fill Your Marketing Hourglass
It’s only right that I tip my hat to John Jantsch and his Duct Tape Marketing book. It has a very good chapter on referrals but other than that, it focuses more on attracting people into the sales funnel than filling the bottom of the Marketing Hourglass.
I think that’s a shame.
If you want to read another book I suggest…
>>> Getting Everything You Can Out Of All You’ve Got by Jay Abraham
The Latest Thinking On The Marketing Hourglass
Since I first wrote the above article for my other Business Coaching Blog, John Jantsch has returned to the concept of the marketing hourglass and finally gives the concept the attention that it deserves.
He has said “I truly believe it’s become the most significant thing I’ve contributed to the concept of marketing.”
While he has built on the direct response masters, I think the hourglass concept helps to sell the idea of marketing to the back end in a compelling way that suggests your job is only half done when you win the customer.
John has developed a free report – How to Build a Remarkable Business by Focusing On the Total Customer Experience – which builds on the idea.
In it, he explains the seven touch-points
- Know – Your ads, articles and referred leads introduce you to your audience
- Like – Your web site, reception, and email newsletter develop the relationship
- Trust – Your marketing kit, white papers and sales presentations demonstrate your expertise and professionalism
- Try – Webinars, evaluations and nurturing activities are a low risk way for customers to test if you’re as good as they think
- Buy – Your order fulfillment, new customer kit, delivery, and financial arrangements confirm the buying experience
- Repeat – Post customer survey, cross sell presentations and quarterly events encourage the customers to buy again
- Refer – Results reviews partner introductions, peer 2 peer webinars and community building help start the hourglass cycle again as your loyal customers introduce you to new prospects.
If you’ve read my free report, The Six Step Profit Formula, you’ll see some similarity, especially at the end. If I was critiquing this new seven touch-points, I’d say that it’s more tactical than strategic. It doesn’t stress the importance of choosing your market niche and defining how you will be different in ways that matter to the customers. Instead it places emphasis on how you will contact your prospects rather than the message that you’re giving.
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