July 14, 2025
How the 80/20 rule applies to business
When most people think of the 80/20 rule and how it applies to business say 80% of their Revenue is from 20% of their customers and they are not wrong, but the way we look at it is 80% of your revenue comes from 20% of what you do every day and we show you what that 20% is.
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Hi, you love done too, that's true.
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For why great Young.
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This is the Pipe Man here on the Adventures pipe
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Man W four C Y Radio. And this is another
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edition of our segment Positively pipe Man, and we have
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our returning expert guests, because man, he's such an important guest.
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He helps your business and like no other person on
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the planet, and in these segments every week, he's gonna
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come on as part of this Monday show for Positively
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Pipe Man and give us strategies that can make our
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dreams in business come true. So let's welcome back Michael Barbarita.
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How are you fantastic?
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Dan, how are you doing? Thanks for the kind words.
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Oh my pleasure, you know, because it's true, like I
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don't even need a script because I listened to you
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on your own show on our network, and I've talked
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to you at length, and you know, I just know
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you're the right answer to most of our businesses out there,
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especially in the trying times that we're experiencing right now.
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That's for sure. I appreciate it. Thank you.
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So what I'd like to know is, you know, we
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always talk about the eighty twenty rule, So how does
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that really apply to business? According to Michael Barberita and
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next Step CFO.
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Yeah, great question. By the way, you know, as we
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were doing research for our book and as I interview
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business owners for the book, it was very common that
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from a business standpoint, people felt that the eighty twenty rule.
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And by the way, no one's ever wrong about the
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eighty twenty rules, so I don't want to make it
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tell them that way. But most people think eighty twenty
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and they're right that eighty percent of their revenue comes
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from twenty percent of their customers, and that's absolutely correct.
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But what we discovered when we were doing research for
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our book is that eighty percent of the revenue comes
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from twenty percent of what you do every day, and
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that business owners aren't focused on the key components of
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that twenty percent that drives eighty percent of the revenue.
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And what we did when we were doing research for
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our book is we identified seven areas that we call
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the seven step Pathway to Profit formula, and we identified
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seven areas that which represents the twenty percent that drive
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eighty percent of the revenue. And you know, most business
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owners want to know what that twenty percent is, and
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that's what we're going to do today, we're going to
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go through that and a lot of business owners that
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identity really never understood what that twenty percent was. And
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so we're going to go through today the first step
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in the seventh step pot thread of profit formula. And
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by the way, I want to mention one other thing.
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When we were doing research for our book, we found
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that there were eight areas of impact where that business
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owners had to had to know about, and then when
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we dug deeper and deeper, there were more lands and
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more lands, more lands, and we ended up at thirty
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two with this and this. Under those thirty two categories,
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there was another twenty or thirty categories. And so business
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owners are overwhelmed. And that's what that's what kind of
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led us to understanding what that twenty percent was that
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drives eighty percent of the revenue. Because business owners are
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just completely overwhelmed. And what they do, Dean, is they
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hire marketing companies. And the first thing that marketing companies
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do is they omit all the stuff that's needed for
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a business owner to get grounded. All those areas that
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I talked about, they skipped over those completely and went
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right to Facebook ads or social media ads and that's
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starting in the weeds. And so what we did is
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we identified those seven steps that drive eighty percent of
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the revenue. And the first one is leads, but not
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just any lead, good quality leads for your ideal customer.
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That that's really critical. And you know, all of all
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of this first part that I'm gonna be talking about
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is really just about messaging all it's really about. The
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second is conversions. And let me define conversions. Conversions is
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taking a prospect, whether it's cold or warm, into your
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sales process, whatever that is, you know, for a retail
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of the sales process of them showing up in the
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retail store. For somebody like my sales process is a meeting,
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So it could be a meeting, it could be proposal,
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it could be an estimate, whatever your sales process is.
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So the first step is quality leads. The second step
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is conversions.
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I want to talk about those leads for a second too,
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because as somebody that's been a salesperson since I'm like
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eleven years old, okay, I've gone through every kind of
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lead there is, and here's what I found that just
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proves the point of what you're saying is Okay, So
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when I was in the investment business. When I started
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in the investment business, the people, the leads they were
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giving us were basically as cold as cold could get.
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They you know, it's just basically buy a book of
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names and phone numbers and that was your leads. Right
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then later in the business, I would do exactly what
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we're doing now, and I would have a radio show
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to get leads for my investment business. And you know,
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there was such a huge difference because when I was
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first in the business, you had to make like five
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hundred calls a day.
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This was the numbers.
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Five hundred calls a day to get twenty people to
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actually talk to you and have that twenty five to
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seven maybe want some information, and you would mail them
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out information, you know, back in.
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The snail days, and.
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Then out of that one of ten would actually become
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your client. So you'd have to make five hundred dials
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to get a client, which is a lot, okay, and
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it's a lot of work, and it's time consuming, it's
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not fun, you know. But then I could get on
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like a radio show like this as one example. I
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don't mean somebody else's by me. I had my own
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radio show. And then and then you know that was
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a different time too, when like infomercial type of stuff worked,
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you know, really well. And then I would get these
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leads that ninety percent of them would send me money,
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you know. And so yeah, you would think because I
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only had a handful of leads, it's like, oh, I'm
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not going to get any business. But that handful of
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leads got me way more business than the five hundred
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dials that you know to get one lead, you know.
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So I wanted to stress that point because your strategies
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for people are so that they can gain more you know,
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revenue with less effort and time.
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That's correct, That's right. And the messaging is the key.
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You know, your messaging and a code call is completely
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different than the messaging that you have in your show.
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Yeah, totally right.
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So, uh, and that's something business owners need to understand more.
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It's not next to the set. It isn't. It isn't Facebook
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versus Instagram, versus LinkedIn versus. It's not that. It's the message. Yeah,
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if you get the message right now. Granted you could
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go to the wrong platform in terms of demographics, I
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get that, But the bottom line is, you know, lots
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of times when business owners talk shop. Have you tried Facebook?
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Has it worked for you? You know that it's totally irrelevant.
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It's about the messaging, whatever, the messaging that that particular
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business had.
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I think that's so true too, by the way, because listen,
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you could still say to anybody an our age group,
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you know, something like PLoP PLoP, fizz fizz, and they
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will automatically think of alka seltzer. Okay, you can say,
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how do you spell relief? And I don't even think
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you can buy roll ads nowadays, but you still remember
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the message.
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That's right, absolutely, no question. And that's the case. That
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is absolutely the key. So in continuing on with the
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seven steps. So the first step is leads, as I said,
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the high quality leads, second is conversions. The third step
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is closing rate. And by the way, a business owner
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needs to track their data. They need to track the
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information because that's how they learn where they need to tweak.
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You know, if if you have a closing rate of
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one percent, if you if you if you could get
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quality leads and you could convert them into your sales process,
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but your sales process yields a closing rate of one percent,
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you know where you have to work. You know, you
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have to what you have to work on, but you
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have to know that data. Otherwise you're going to be
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flying blind and you're really not going to tweak in
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the right areas.
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And ignorance is not bliss in this instance.
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Very true. And so you have high quality leads, you're
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converting more of them into your sales process and and
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then you're increasing your closing rates. Now, the fourth step
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is retaining clients. You know, this is where a lot
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of businesses fall down. They they don't focus at all
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on client retention. And here we are, we're putting it
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in there as one of the you know that part
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of that twenty percent that business owners need to focus
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on that drive eighty percent of your revenue because you
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need to retain clients. Yes, uh, it's it's a critical
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component and and you have and yeah, and it's and
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you and it takes some work. It's not one of
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these you don't a lot of business owners think that
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once they have a customer, they get to keep them
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by default.
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No, no, no, no, no, does it happen? No?
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And nowadays they think it even more like we think
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because we live in this world of AI and everything's
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automated that you know. No, no, no, that's why you know.
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I run this network, you know, on a new technology
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but old school philosophy.
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Customer, you have to.
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Be on the same team with your customer so that
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you can get them the success they need, So you
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can get the success you need.
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Excellent, yeah, oh absolutely, it's so true. And then so
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you have qual high quality leads, you're converting them more
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into your sales process, you're closing them at a higher rate,
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You're retaining those customers. Now you have to focus on
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the average dollar per sale. So there are strategies associated
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with increasing the average dollar per sale for your existing
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customers and now obviously also any new customers as well.
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But once a customer comes into your ecosystem, you're able
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to increase that average value. It's just part of that
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seven step formula that's going to drive eighty percent of
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the revenue. And then the sixth step is frequency of sale.
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So now if you have five hundred customer and you're
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selling them to them two point three times a year,
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you want to look to sell to them three times
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a year. Maybe you have to add more value to
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your products or services. Maybe you have to add more
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products or services but you want to increase the number
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of times that you sell to them.
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I love that concept right there, because that's something I
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live by as well. I think you have to constantly
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innovate and evolve your business so that you can do that.
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You know, there's always there's always something else that could
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add value and benefits that would be something that your
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customer would want to take advantage of.
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I agree one hundred percent. Yeah, I've seen many times where,
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you know, business owners fail to fail to rejuvenate even
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former customers, they fail to rejuvenate them. All of your
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customers are what we call buyer's journey, and yeah, that
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journey could take anywhere from fifteen minutes to fifteen years,
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but they're on that journey. And you have to constantly,
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constantly nurture your customers and your existing base to tell
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to them more frequently.
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And you know, I tell people throughout my whole career
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that have worked for me. You know, basically, you do
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have to continue to nurture those people because if you're
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not and you think, okay, I got them in the bag.
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You know, even in the investment business, everybody says my
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broker until somebody else comes along and does nurture them,
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and then you can't save them after that because you
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should have nurtured them before somebody else did.
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Right. Well, that's right because, as Mark Cuban says, there's
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always somebody out there going after your butt, you know,
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and trying to take you down totally right, and they'll
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grab those customers just as easily. And then the final
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step is UH we we work on costs, both fixed
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costs and variable costs, and there's there's a number of
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ways to cut costs. Business owners normally find it difficult
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to cut costs, but there's a lot of different ways
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that we use UH to to cut costs. And but
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but it's still it's it's one of the most it's
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one of the seven steps. So once just in review,
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it's leads, conversions, closing rates, client retention, average dollar per sale,
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frequency of sale, and finally costs.
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And I think they need to know a lot more.
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So how do people reach out to you to discuss
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this more where you can expand on this more and
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give them specific strategies customized for their business and their goals.
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