Lifetime Value of a Customer, Ideal Clients, and Getting more Clients with Harvard Professor Sam Mallikarjunan PoP 295

Lifetime Value of a Customer, Ideal Clients, and Getting more Clients with Harvard Professor Sam Mallikarjunan

Have you worked on optimising your customer conversion process of late? Are your blog posts directed at convincing your ideal client that they need to make an appointment with you? Do you understand the lifetime value of a customer?

In this podcast episode, Joe Sanok speaks with Harvard Professor Sam Mallikarjunan about the lifetime value of a customer, ideal clients, and getting more clients.

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Meet Sam Mallikarjunan

Executive Strategist at HubSpot, PDP Instructor at Harvard University. I help build organizations that drive growth. Enduring companies build engines of growth and teams with the right muscles to test, experiment, and challenge assumptions.

Sam Mallikarjunan’s Story

After spending time at a desk job, and realising he was overweight and in a lot of pain from a previous back injury, Sam decided to get his act together and went out to find a chiropractor, personal trainer, and a massage therapist. During this process, he realised how bad a lot of these therapists’ conversion processes were.

In This Podcast

Summary

In this podcast, Sam Mallikarjunan discusses his journey of trying to find a chiropractor, personal trainer, and massage therapist. In the process, he realised how bad some of their conversion processes are. As such, he gives invaluable advice on how to improve this through blogging and by understanding the lifetime value of a customer.

How to Get More Clients

“We don’t make money when we sell things, we make money when we help people make purchase decisions.” – Jeff Bezos (founder of Amazon)

Create a web experience that makes people feel comfortable with their processing decision and then create an efficient follow-up process for that decision. Mental health clients generally don’t want to make an appointment with you, so the process for them to do so needs to be as streamlined as possible not to make them decide not to go through with it.

When writing a blog post, don’t overthink it. Don’t try to write an article that will impress your colleagues by using high-end terminology within your niche. Instead, focus on the conversion process on your website and how that post will assist in that. Create content around what people would be searching for in Google when considering seeing a mental health professional. Focus on helping people realize that they need to make a counseling appointment.

Understanding Customer Lifetime Value

Useful Links:

Meet Joe Sanok

private practice consultantJoe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.

 

 

 

 

 

Thanks For Listening!

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Podcast Transcription

LIFETIME VALUE OF A CUSTOMER, IDEAL CLIENTS, AND GETTING MORE CLIENTS WITH HARVARD PROFESSOR SAM MALLIKARJUNAN
POP 295

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This is the Practice of the Practice Podcast with Joe Sanok: Session Number 295

Two Milestones

Well, welcome to the Practice of the Practice Podcast. I’m Joe Sanok, your host. I am on Cloud 9. Last month, April, 2018, we hit 2 major milestones. We got more than 100,000 downloads. We got actually 111,000 downloads last month and we broke 1,000,000 downloads overall. It’s insane, thank you so much for all of you that have rated, reviewed, listened, subscribed over the years. I can’t thank you enough because you have been a huge part of this.

There were times when I wanted to give up. There were times when I thought, “Is this worth my time to be putting into this?” There were times that I said, “How am I actually going to make money so that I can survive and make it worth it to do this?” And whether it’s you signing up for individual counseling with me or Alison or Kasey or joining one of the Master Mind groups with me or Alison or Kasey. No matter what it is that you specifically have done, oh my gosh, I am so thrilled that we reached this milestone and you have supported us by listening, you have supported us by sending me encouraging emails, telling your friends about it.

I know that it’s going to take way less time to hit 2,000,000 downloads because we’re growing by 20-30,000 downloads per month. I want you to know that, as we grow, I’m still Joe. As we grow, I’m still Joe. I’m not going to let this go to my head. I’m not going to be too “up there” to reply to your emails. I’m still approachable, I’m still here with you and we are just going to keep continuing to build up things that really help you to continue and scale your practice.

What’s Next?

We’re almost to 100 people in our Next Level Practice. We’re doing so many things and it all comes from our “why.” Our “why” is what drives it. And I haven’t really talked a lot about this and I’m probably going to do a deeper series on the “why,” but when I evaluate my own life, I’ve always kind of had this outsider, punk rock, skate boarder, snow boarder approach, where I question the norm. I went to 13 years of Catholic school and I was the first kid with a ponytail and a chain wallet and I was super into Nirvana. I remember calling the local radio station and requesting Rage Against the Machine and the person said, “Nobody likes that kind of music, I think you’re alone in the world.”

And I really believed that through middle school and part of high school. But then a lot of friends along the way I met that had this alternative way of viewing things. They didn’t just accept the norm, helped me realize that that was actually a strength of mine. Getting pushed around in middle school or not fitting in with the jocks in high school and enjoying music and art and creativity and travel and hiking… these were all things that really showed me that life is more than what we do or what we achieve.

But I also had this side to me that I love achieving and going after big goals and structuring things out. And so to be able to then take that and say, “Well, what’s the modality of how I do that now?” Right now it’s the podcast, it’s consulting, it’s the Master Mind groups, it’s all the things that we create that are free that we give away to challenge the typical way that private practice is done. In a sense I think we’re really trying to completely disrupt the private practice world and help you be wildly successfully in the process. To live the life and have the practice that you want and then go after those huge ideas.

So we’re going to continue to make the stuff for you. We’re going to create, we’re going to innovate. We want to hear your ideas so that wherever we have gaps we haven’t taught you, that we get those guests, we get those blogposts up, we get those products out there for you, so that we all can really disrupt and change the field of private practice.

Upcoming Episodes

So the next four episodes are going to be amazing. We have four incredible guests. We have Sam Mallikarjunan. He is a Harvard professor. Today I’ll tell you more about him, he’s going be on this episode. And then next episode we’re going to have Sherri Fitts. Sherri, I actually just interviewed her a few minutes ago and thought, “I’ve got to bump her up in the podcast.” Usually we’re a couple months out, but I just decided that I’m putting her in this series. She gives some great branding advice.

Then we’re going to have Jeremy Zug from Practice Solutions. He’s going to talk about what we can learn from lean manufacturing. Lean is this great way of goal setting, of deciding what you’re going to work on. It’s been used and developed in first the manufacturing world, and then in the business world. We can definitely apply this to our practices. And then we have Robing Waite. Robin Waite is an expert in the areas of SEO and marketing.

So these next four episodes are going to be so dynamic, it’s going to be incredible. And then we’re going to be diving into a series with Kasey Compton after that. It’s a five part series all on scaling your million dollar practice. Kasey was on the podcast recently and I had so many people say, “We love what’s she saying.” She has actually joined the Practice of the Practice team as a consultant. She and I are launching a Master Mind group starting in July. For people that want to scale their practices. If you want to be one of the first people to apply for that, you can go to practice the practiceofthepractice.com/apply and you can apply to join that Master Mind group. But we have a lot of things here, keeping it all organized.

Interview with Sam Mallikarjunan

So without any further ado, let’s dive into this interview with Sam.

Joe: So today on the Practice of the Practice Podcast, we have Sam Mallikarjunan on. He is a Marketing Fellow at HubSpot and former Head of Growth at HubSpot Lab, the somewhat secret experimental arm of the world’s number one sales and marketing platform. He’s also a Harvard Marketing Instructor.

Sam, welcome to the Practice of the Practice Podcast.

Sam: Thanks for having me!

Joe: I’m really excited to have you on today. I feel like there are so many directions we can go, but one thing you were just telling me was that you’re looking for a new massage therapist, chiropractor, and personal instructor and you’re kind of on the other side of people’s private practices. I’d love to hear more about that.

Sam: Yeah, so, it can be a really frustrating experience. So after ten years of sitting in a desk and having a desk job, finally came to the decision that I’ve got to do something about this. I was 220 pounds and I’m only 5’7” and I have a lot of back pain because I have a back injury from high school.

Joe: We have that in common, I have a back injury from snow boarding in high school, too.

Sam: Mine was football, but so not quite as cool as snow boarding. I finally decided that I had to do something about this. I should have done something about this years ago, but it got to a point that it was so painful and it was impacting my life to such an extent that I finally overcame my dread of having to find a personal trainer, a chiropractor, and a massage therapist, and I went out and did it.

So that’s the first interesting lesson, having to go out and find these people and then start these relationships and build these habits and work it into my schedule is such a miserable experience in general, that there’s actually some level of back pain that is worth it. A little discomfort, a little tension, everything like that. The first thing I do is message my friends. I have a friend who is a chiropractor in Coco Beach, I live in Tampa. Hey, do you know anybody in Tampa? No, I don’t know anybody in Tampa. Then I go to Google and say, South Tampa chiropractor or massage therapist, etc., and I got a few hundred different results.

So what do I do from there? So then I start looking at their websites, I look at who is near me and everything else. Obviously nobody takes insurance, but such is life. Then I’m reading their websites and the interesting thing is that I eventually ended up with the massage therapist because he had a blog on back pain and I hadn’t thought about massage therapy actually being relevant to back pain, it is. Pain is muscles pulling against each other, something like that. But he had a really nice blog article explaining it really well, so I was working with him.

Then I tried a couple different personal trainer websites, but I would fill out their forms online and nobody would ever call me back. And then the chiropractor, when you Google “chiropractor,” there’s just so many it’s hard to tell one from the other. So this is one of my challenges in choosing is the differentiation. What makes South Tampa Chiropractic any different than Tampa Chiropractics Association, or whatever. It was also the frustrating experience of scheduling. I get it, you’re open from 9-5, but I work from 9-5, as well. So I’m emailing the chiropractor and he says, “Call in and schedule something.” And I never remembered to call in and schedule something until, invariably, it was after dinner, about 7:00 pm. So then I shoot him an email, “Is there any way you can just schedule online.” And he said, “No you really need to just call in and schedule something.” So I was doing the – I don’t know if you’ve ever heard of the drx9000 thing?

Joe: Yeah, I haven’t done it, but I have heard of it.

Sam: I strongly recommend, it is awesome and incredibly expensive, though. So it would be worth them saying, “Hey, no problem, let’s do this over email, clearly this isn’t what’s working for you, the consumer or you, the patient, so let’s adapt to you.” But that’s not how small business, in general – and especially seemingly medical professionals – have it set up.

Joe: Even looking at the client worth. If you go to someone else. I’m not sure how much they charge per session, but let’s say you come 10 or 20 times, they charge $100/session or $200/session, that’s a massive amount of money they’ve missed out on – just from a financial standpoint, let alone their reputation, their ability to grow and scale and all that.

Sam: This is what I’m getting at. So Jeff Bazos has a great quote. When they first added negative reviews to the website, he got an angry letter from an investor saying, “Hey Jeff, we know you think this internet thing is going to be big and all, but you clearly don’t know how to run a business.” Amazon, by the way, makes $300,000 a minute… every minute of every day. And they say, “You make money when you sell things, why would you discourage people?” And Bazos replied, “We don’t make money when we sell things, we make money when we help people make purchase decisions.”

And to this day, that’s how Amazon’s website is structured, that’s how everything is structured where they try to be less about Amazon and more about you and helping you make a decision. Amazon’s Choice is the new algorithm thing that they added. And when I’m working with, especially seemingly medical professionals, it’s sort of small businesses in general… I get it, you’re busy, you’ve got a business to run and you’re not a professional business marketer, you’re not a professional salesperson, you’re a chiropractor. But at the same time, the brutal truth of it is, there are 100 other chiropractors here and the person who is going to get the business, when I don’t have a way to differentiate, there’s not objective features necessarily to tell the difference, is going to be the person who makes it easy and comfortable for me to make a decision. That’s going to be the person who ends up getting me as a client.

Joe: I think that’s the thing, that so often there are these barriers. You already have this person on your email that’s emailing back to you, so there’s back and forth communication and then they say, “You need back and forth communication on the phone with my secretary or front desk person instead of me.” So then why are you the front end communicator? It should be someone who has access to your calendar. And I know that as a marketing person, when I look for those services it drives me crazy. It’s like, oh the potential! It seems like you have a good business here, but you’re just leaving so much money on the table.

Sam: And sometimes it’s as basic as, call your leads. So this isn’t super relevant for your audience, but I’m trying to find someone to help me do my next level of scuba certification right now and I keep filling out web forms and no one calls me! Although this has happened with some of the person trainers, where I’ve filled out their web forms and it’s probably sending them an email – and they don’t use email a lot – and it’s sending them a little email notification. And they probably don’t get a lot of leads because they’re not optimizing for it, but then it’s sort of like the chicken and the egg problem.

They don’t focus on generating leads off their website and following up with them because they’re not getting a lot of clients out of it. They’re not getting a lot of clients out of it because they’re not focusing on generating leads on their website and following up with them. So call your leads, create a web experience that helps people make a decision and helps them feel comfortable with their decision and then create a follow-up process that… you know the weird thing with chiropractors, especially in medical professionals, counselors and mental health counselors, etc. is we’re not calling you because we’re looking forward to this. We don’t want to need you. We don’t want to work with you, right? We are having to overcome a pain and a fear and problems and troubles and if becoming your patient or your client or your customer is an additional pain and trouble, we’re not going to do it.

Joe: And I think that’s especially for the mental health listeners that own practices, to think about what it takes for someone to pick up the phone or send an email. They’ve often thought about this for months or years, that childhood thing – someday I’ll work with a therapist on it. And finally they get to a breaking point and they have to call 15 people from Psychology Today to try to find a therapist that picks up their phone or has someone that answers their phone or returns an email.

Sam: And this is the interesting thing, they’ve been thinking about it for years, but they’ve also been doing research online for years. They’ve been Googling coping mechanisms, they’ve been maybe joining a couple support communities, they’ve been following some profiles and it’s something that takes a long time and we think about a lot and we do a lot of searches and stuff for it. Like I said, the massage therapist, I found him because he had a blog article on “Surgery Didn’t Cure Your Back Pain: here are some things may be causing it that surgery can’t fix.” That was literally exactly what I was Googling because I had surgery on my back and it didn’t fix my back pain.

Joe: What sort of things did he have in his article?

Sam: Well, he explained… oh gosh, I can never say this right, but fascial tissue or whatever. If you want to talk about computer science, I’m your guy. If you want to talk about anatomy and physiology, I’m not necessarily your guy.

Joe: But I think is the point also in that he wrote a blog post that someone who knows nothing about all of that, you connected with. So often people will say, “I went to grad school and I can’t write another APA paper.” No one wants to read your APA paper. They want to read about back pain or dealing with anxiety or your kid who is going crazy at home. What are five quick tips? And when you can take that complex knowledge and give it someone who has no idea what any of the fancy words mean, and make it relevant to them, to me, that’s what blogging is and that’s what’s really helpful to your client.

Sam: The number one challenge I see when people are trying to do web marketing – especially blogging, but even just creating a website that answers questions and helps people make a decision – is that they dramatically overthink it. So they want to write an article where they learn something and it impresses them and their friends and their peers and their colleagues.

By definition, the people who are doing business with you are usually doing so because you know way more about the topic than they do. Not just a little bit, way more. And I have this with marketing all the time, too, I want to write articles that all of my friends and the executives at HubSpot are like, “Wow, that’s really interesting how you broke down the unit economics of platform strategy and stuff like that.” But the people who are our customers don’t know – nor do they care – about the unit economics of platform strategy. They’re much more interested in, “How do I get started with blogging? How do I think about the conversion process on my website?”

For me, it’s pretty simple question, simple concept, but because it’s simple to me, does not mean it’s not transformative to somebody else. It doesn’t mean that the customer is stupid, it’s just not their job. It’s not my job to know what fascial tissue is, right? That’s your job.

Joe: Just make my back stop hurting.

Sam: Yeah, make my back stop hurting, right? And you have to acknowledge that and be comfortable with that and answer the simple questions and make it so that I’m comfortable with that and that’s how you’re going to win.

Joe: I want to go super basic for a little bit. So your mom is a mental health therapist, so imagine she had a private practice and said, “Sam, give me your top three or five things for online marketing that can help me get more of my ideal clients.” Where would you start with her?

Sam: The first thing that I would start with her is creating that follow-up process. So really thinking – and by the way, this is something that mental health clients are uniquely good at, is empathy – thinking about the decision-making process that people go through when beginning to work with a mental health counselor and what are the blockers? And creating a follow-up process and a web experience, a conversion experience, that mimics that.

I was literally just talking about this with my massage therapist. I’m sorry, with my personal trainer. I said, “The reason it took me so long to work with you was because I was worried about re-injuring myself.” And he said, “Oh, I hadn’t thought that that would be a fear for people” because he’s in great shape. He also said, “I would never let that happen.” Yeah, but I don’t know that. That’s a fear that I have.

So figure out what’s stopping people from working with you and build your conversion experience around that. When I say conversion experience, it’s from when somebody contacts you to when they become a client. The thing about the mental health profession and the medical profession is your retention is really high. Once you get someone to be your patient, you’re generally pretty good at keeping people around, it’s the acquisition piece that they need to solve. So think through that, what’s stopping people from becoming your customer. And then go to the polar opposite end of the spectrum. So for people that don’t yet even know that they should be talking to you, what are the questions that they’re asking. What is on their mind? What’s going through their research process?

So you think about a funnel, right? There’s an entire universe of people who could go talk to mental health counselors, which in my opinion is that everybody should go talk to mental health counselors at some point, but whatever. What things are they searching for on Google. Like, “Why am I tired all the time?” that’s the first step, it might be a really part of the buying cycle – the research phase, or the awareness phase. I haven’t even defined yet that I have maybe depression or something, but I have these problems in my life… I never seem to have enough energy, whatever. Then go there and create content for that.

Most people try and compete in the phase of the buying cycle, the intent phase. I know that I need to go see a mental counselor, right? So I’m searching for “Mental health counselor South Tampa” and it’s easy for mental health counselors to compete for because you can just go into Google and you can just buy ads for that or you can buy pages that are search-optimized for that, but because it’s easy, it’s a blood bath. Everybody is competing there.

So do the hard things, but not as much competition. So that decision-making process and then way, way further back, start creating content to attract me long before I know that I necessarily need to talk to a mental health counselor. And this content might seem far off the beaten track. So it might be time management. Maybe what I actually do have is depression or anxiety or whatever but the obvious symptom or the one that is making me thinking about it the most is that I always seems rushed. I’m not managing my time well. So you can create an article on time management. It might not seem quite applicable to a mental health counselor and yeah, you might have people who would read that article but would never, ever be your client and that’s fine. But you are going to have some people who read that article and they think, “Oh that’s really interesting.”

Then they look at your checklists to see what else might be causing this and then they say, “OK, so it turns out that I have 7 out of the 9 indicators of anxiety or depression” and well let’s just chat really quick by text message or phone or online or whatever is most convenient for the client. So those are my two main things. Don’t focus all of your marketing on the blood bath of competing for people who already know what they need and you’re a commodity at that point. Focus on helping people make the decision and then focus on helping people realize that they need to make a decision, so the earlier phases, the research phase of the buying cycle.

Joe: You know, one thing I did when I first launched Practice of the Practice is that I joined a bunch of LinkedIn groups that had private practices. And the rules in those groups were that you couldn’t just promote blog posts and things like that unless it was relevant to the discussion, which I think is a great rule because then people just put all this stuff in there to just get people onto their website.

And so people would ask a question like, “How do I name a private practice?” and at first I would just answer it within there and then I had some extra time, so what I started doing is go write a blog post right then – a 300 or 500 world article. I was going to write half of that in the comment anyway, so then I would write that whole blog post, “How to Name a Private Practice,” put it up on my website, come back and copy part of it in the comment and then say, “The full article is right here.” And people loved it, it drove traffic there, but then it also helped me get into that beginners mind.

Questions that I never would have thought of. I didn’t realize that no one had ever written and article about how to name a counseling private practice and I started looking at my Google analytics and that was my number two page that people were landing at because it was ranking number one on Google. It’s just getting into that beginner’s mind. And I think whether it’s a counseling private practice or a different kind of private practice, I love that you start there with the things – even just “I’m feeling tired” – that could lead into depression. Working back from there, even just depression symptoms, that’s such a great tip.

Sam: So first of all, that is the beautiful, classic win and success story, so congratulations. The interesting thing though is that those people have very clear and generally well-defined questions, in business. Business is money in, money out. Economics are relatively well understood. Health and particularly mental health, has a ridiculous number of permutations of possible questions. So the fact that you hit on something in business that somebody else hadn’t already come across and created an answer for is pretty surprising, because we’re pretty good at this. In mental health… so – a huge percentage of searches on Google every day are new. The Google algorithm is 85% or something of Google searches are new.

Joe: Meaning that they have brought together words that have never been brought together on Google? So “Traverse City massage therapist that plays country music?”

Sam: Sure! Right, so you would think with billions and billions and billions of queries going through that everything has already been asked and answered and to an extent, that’s true in some industries and less true in others. In health and particularly mental health, there are way more of those wins that you found right there in the mental health and the physical health professions that there are in the business professions.

Joe: I think even when you look at the analytics of how often counseling in any – even large markets – is Googled per day, is often times 10-100 per day, at least for that specific term, and then when you drill in there’s more than that. But I think you’re absolutely right, it’s sort of like the wild west. There’s not a lot of content out there that therapists are providing for people and so that’s going to really differentiate people.

Sam: I will say that I know for some of the people listening, you went into medicine or you went into mental health or whatever and you did not study marketing, nor do you probably have any desire to be a professional marketer and I get that, but the world kind of isn’t fair and the people who are good at that or are finding a way to get that done – whether it’s user generated content or outsourcing or…

I’m trying to get my chiropractor to just hire an intern from the University of South Florida to do some of this stuff… and the people that do that are the ones that are going to win and survive and sort of continue to grow, so I get that’s hard. I know that it’s hard and I want to add that caveat. We make it sound easy, “Oh, just do this, just go blog or answer questions.” I know that it’s hard, but if you don’t do it, it’s going to be very difficult for you to remain competitive in a world in which there are people who are going to do it.

Joe: How would you structure out that, if someone said, is it worth it? Is there a return on investment for my time? Or to pay someone to write, to do some of these blog posts. How would you answer that for people?

Sam: If you ever take one of my classes, you’re going to get really tired of hearing me say, “Start with the customer and work your way back” So start with what your customer’s lifetime value is. So for the chiropractor I go to, let’s say my lifetime value to him is like $5,000. Between the big initial investment and the fact that I had to keep going forever, right? And then figure out, what return do I want in terms of return on investment, money in to money out. So you might say 1:5. That means that I can spend $1,000 to acquire a $5,000 client. Then figure out, ok for a $1,000 what can I do to acquire that client?

And that’s pretty high amount, you can do a lot. You’re not selling iPad covers for $19.99 and I only buy once. You’re selling relatively expensive sort of thing. For $1,000 it’s like, well, I know that if I get somebody to talk to me because I’ve built this decision-making process where I help people make decisions, that 20% of the people that talk to me will really become clients. OK that means I can spend 20% of $1,000 – so $200. I can spend $200 to get somebody to talk to me, a lead. $200 to do that. And if someone comes and downloads my checklist on depression, only 1 out of 10 is going to actually download that and become a lead. Well I can spend $200 to get a lead and 1 out of 10 people actually download it, that means I can spend $20 actually sending someone to my site.

Now the obvious thing here is pay per click, that means I can spend $20 pay per click to drive someone to my site, assuming all that math stays steady. But the other thing is, if I write a blog article, let’s say I pay somebody $50 or $100 to write a blog article, well that article would need to get 5 new views, right? If I paid someone $100 and I can get $20 per visit. By the way, that sounds like a lot of math, it sounds like it might be a little complicated. The most complicated thing I did there was multiplication and division, but it’s just thinking about it as a funnel, starting with your customer. How much can I spend to acquire a customer, what am I comfortable with? And then looking at all of those percentages of the journey that somebody goes through from, “I have no idea who you are.” to “I’m a client.” What’s the percentage drop-offs in each of those? That tells you exactly how much you can spend in each of those phases. And that tells you what you can do in marketing.

Joe: I love it and I love that we’re getting a little more advanced because sometimes we cover the start-up phase, but getting into the growth and scaling phase, if people look at each of those levels of lifetime value of a customer, what return do I want, or what can I do to acquire a client? Say they know their percentages and they say, you know what, I really want to double my percentages. So instead of having a 10% opt in, I want to have a 20% opt in. Or instead of having the lifetime value be $1,000, I want it to be $2,000. How at each of those levels can we increase the amount of people that stick around and overall it’s going to help our income go up, it’s going to help us serve more people. How do we increase those different levels?

Sam: So that is the entire professional discipline of sales and marketing…

Joe: Now sum it, Sam, in five sentences…

Sam: No, it’s not that hard. So there are four problems in sales and marketing. So you’ve got traffic, leads, customers, and then customer lifetime value. Traffic, leads, and customers – those percentages add up to the cost of customer acquisition and then that as a ratio to customer lifetime value tells you the health of your business. That’s the unit economics, the health of your business model.

Joe: You said that really quick. Slow it down a little. Traffic, leads, and customers – because there are some people who have never taken a business class. So say that again.

Sam: So remember TLC and then V. To get customers, they need TLC and then you have the customer lifetime value and those two things work as a ration. The cost of acquiring a customer and the customer lifetime value. Now the cost of acquiring a customer has those three variables. T, which is traffic. L, which is leads. And then C which is the number of people who become customers. So if you want to drive more traffic, that’s what most people focus on, and because most people focus on it, it’s hard. Pay per click. Social media. Blogging. Search engine optimization. It’s really, really hard.

Now when somebody comes to your website (the T) and you want to convert them into a lead (the L), that’s a discipline called Conversation Rate Optimization. So that’s where website personalization, A/B testing your landing pages, simplifying the experience. Making it so it’s very clear, very easy. Adding reviews so that people feel like they can trust you. The whole discipline of Conversation Rate Optimization is how to get a higher percentage of Ts to become Ls. And then you have the L to C. So somebody is a lead, they’re engaged with me, they’re considering becoming a client or a patient, and I want them to become a customer, become a patient. And that is the discipline of – for example – marketing automation and sales enablement.

So marketing automation is, if you’re getting 1,000 leads per month and some people take a really long time to make a decision, how can you be really good at staying in touch with them, sending them emails if you want to, for example, to help them make that decision. To guide them down that process. And then sales enablement is how do you equip the person who is talking to the client, or to the prospective client, how do you equip them with information to help them make a decision.

Joe: So that would be like Intake Coordinator, Virtual Assistant, someone that’s on the phone or replying via email to get that person scheduled in?

Sam: Yeah, so that person at my chiropractor’s office should have a list of all of the blog articles that I read on their website. It’s like, hey – Sam is obviously super interested in back pain or ask me on the form. When I fill out the form ask, what is your primary complaint? It’s back pain. The person who is calling should then be equipped with some information about back pain specifically.

Generally your coordinator or whatever is going to call and say, “When do you want to come in?” And I’m going to not answer because I’m not even going to want to answer the phone because I haven’t gotten there yet, the pain is not quite that bad. I’m not ready to jump right into the relationship yet. But if instead they called me and said, “Hey, I understand you’re interested in back pain, let me send you over some information on back pain and chiropractor and then let’s set up a call for tomorrow or two days from now to schedule a time to come in.” That makes me more comfortable, helps me make a decision, that’s sales enablement. It’s going to increase the number of Ls that become Cs, leads that become customers. That probably took four minutes or so. The four minute summary of the entire discipline of sales and marketing.

Joe: I like it. When I’ve taught a similar concept, but different ways I labeled it, I took that know, like, and trust. When I first met women in high school and college, the amount that ended up liking me got a lot smaller, and then the one that ended up trusting me and marrying me got much smaller. And I’ll often times talk about that process of moving from dating to being engaged and getting married. It’s basically, there are people who are scoping you out and then they decide they might want to trust you a little bit more and then they end up becoming your clients. I love that we’re learning the actual terms for those things so that we can all be on the same page with it.

Sam: Yeah, you brought the Harvard guy onto the podcast, you should have expected that. But actually dating is really a common metaphor. So if I go to a bar or a website or a social club, whatever I’m using to meet people, and I just walk up to everybody and I’m like, “Hey, would you like to get married?” It’s really creepy, but that’s how most businesses run. So the only thing they care about is whether or not I want to get married and that’s really weird. And it’s obnoxious and it’s not building any trust and you haven’t asked anything about me. So, yeah, that’s why your conversion rates are probably ludicrously low. All of your marketing is about you and it’s my producers, my services, my pricing, my reviews. When the experience is about them making a decision, so it’s you asking questions about them.

My favorite example for this is Netflix. So I love Netflix. I have rated over 900 movies for Netflix. And most of us would kill to get our customers to fill out a 900-question survey. But the reason I do it is because I know Netflix is going to use that information to help me make a purchase decision or, in their case, I’ve already purchased, but to help me decide what to do, what to use. Netflix doesn’t just say, “You should watch Sci-fi” because anyone who follows me for more than 10 minutes on Twitter knows that I should watch Sci-fi. Netflix is like “You will probably like gritty, war-based, sci-fi movies set on an alien planet at night with a strong female lead and here are three good ones.” They make it all about me. They’re asking questions about me. What do you like? What are your thoughts? And that’s why Netflix is a big, huge, successful, profitable business with very high retention and very high conversion is because they are the best in their industry at helping people make a decision. A really hard decision, by the way, what movie to watch? Super tough decision.

Joe: Rather than just say, “This has four stars out of five.” It’s, “This one connects to you at 98%.” I wouldn’t have even thought to watch that movie. I even feel like they roll out other things like you can skip the intro. That was the most annoying part of any of those shows where it’s like, I’ve seen the same intro 50 times. And I’ll go on HBO Go or Amazon or these other places where they are streaming things and now I’m like an entitled little kid, what I can’t skip the intro? This is ridiculous!

Sam: They’re taking the time to understand you and they take a level deeper. So there’s an experience framework called, “Jobs to be done.” And Henry Ford has the most famous quote on this. He said, “If I had asked my customers what they wanted, they would have said a faster horse.” And obviously he didn’t found the Henry Ford Horse Rooting Corporation, he founded the Henry Ford Motor Company because it understood it was mobility. It was getting from point A to point B cost-effectively, quickly, and safely was the actual job to be done that people were hiring “a car” or a horse to do.

And it’s the same thing with my chiropractor. I don’t care about chiropractic medicine. I want to live pain-free. Second level of abstraction. I want to eventually at some point go back to the Army. These are the actual reasons that I’m going to a chiropractor and they have nothing to do with my spine and everything else like that.

The companies that do really, really well at attracting consumers and converting them and retaining them are the ones who have defined this out really well and built the experience around that. Actually asking the question, what are you trying to do with this? What is solving this pain – and in the health profession, by the way, is quite a literal term as opposed to in business where we use it metaphorically – what is solving this pain mean to you? Why is this important? That is something that not a lot of people do. They don’t take the time to create the content that’s around that and create the experiences around that and ask those questions. And the people that do are the people that win.

Joe: I feel like what you’re saying is applicable to the practice owners, but I almost feel like anyone who has an Intake Coordinator or Virtual Assistant should rewrite their script based on what you’re saying, Sam. Because imagine if you called a mental health provider, you called a physical therapist and they started with, “What’s going on that you’re reaching to us and how would your life be different, why do you want to work on this?” And you hear, “Oh, well I want to go back into the Army or I want to go back and do these things and I want to have more peace in my home.” That gives you that tangible why that then you can say, “Well how we’re going to help you do that is through therapy or by working with this clinician or by doing these sets of repetitions with a physical therapist.”

Sam: The thing is, ok I get it, especially in the medical profession, the person who is doing the initial outreach may not be able to answer those questions, from a legal or practice perspective, but at least they ask. That means a lot that you ask, that you care, and that I’m articulating this and that you’re writing it down and that you’re going to share it with the doctor. Just asking. That simple act of asking.

By the way, my favorite person at my chiropractic’s office is the woman at the front desk, Dee. And it’s because – first of all, we spend more time together probably than the chiropractor because when I’m in the waiting room and everything else like that, she has to get me set up on the machine. But she probably knows more about me than the chiropractor because she asks me. What were you doing this weekend, etc. She knows I like Star Wars, she likes Star Wars too. We’ve developed this tight relationship and that’s a competitive advantage, especially in an industry where trust and comfort is so important. Just making me feel like a person, like a human being, is in it of itself a hug competitive advantage.

Joe: Well Sam, the last question I always ask my guest is if every private practice owner in the world was listening right now, what would you want them to know?

Sam: I would want you to know that the decision to become your client is a difficult one and it’s one that we don’t want to make. Again, there is some level of pain – with the way that becoming your patient right now is set up – there is some level of pain that is just worth it. It’s worth dealing with rather than going through that process. You need to think that through. Define that pain. What’s stopping me from doing that? And rebuild the entire way you think about customer acquisition, patient acquisition, around addressing that.
If you can fix that problem, you’ll not only grow your business, but you’re also going to have better, healthier clients because they’ll come to you earlier before things aren’t quite so bad. You’re doing a service both to the patient and to your business when you really think through and build the web experience – that research, that trust that I go through, around what’s stopping me from becoming your patient right now.

Joe: Sam, if people want to connect with you, what’s the best way for them to connect with you?

Sam: Sure, so if you Google anything even close to my name, Mallikarjunan, you’ll find my personal website. But I also encourage you to go to the HubSpot Marketing Blog and we have a ton of articles on these specific topics. So if you want specific how-tos, etc. Obviously we drink our own champagne, we practice what we preach. So all of the questions you may have, the mechanics of how to do this, we have a lot of content there that’s designed to help you.

Joe: Awesome, well thanks so much for being on the Practice of the Practice Podcast.

Sam: My pleasure, thanks for having me!

Wrap-Up

Thank you so much for hanging out with us today. I am so blown away with everything that Sam taught us, especially that idea of knowing the lifetime value of your client and then knowing what kind of ROI you want to get. It’s so important and we’re going to have so many resources over at practiceofthepractice.com/resources also on the show notes page we have a summary of this show, so check that out at practiceofthepractice.com.

Brighter Vision

But even more so, if you need a website, if you’re starting a practice, if you have an ugly website, if you’re sick of your website developer, you’ve got to go over to brightervision.com/joe and you’re going to get a month for free of Brighter Vision for signing up with them. They’re doing so many incredible things, I’m going to share with you in the next episode some of those things that they’ve developed since they were sponsors last January. It’s incredible to see how fast they’re developing things. You’ve got to go over to brightervision.com/joe if you’re frustrated with your website or if you don’t have a website at all. It’s only $59/month, totally worth it for what you again. So again, brightervision.com/joe.

Thanks for letting me into your ears and into your brain. Have an awesome week, I’ll talk to you soon.

This podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. It is given with the understanding that neither the host, the publisher, or the guests are rendering legal, accounting, clinical, or other professional information. If you need a professional, you should find one. And super big thanks to our intro musicians, Silence is Sexy, thanks for that music.

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