The No. 1 Reason Most Businesses Never Scale and Often Fail

By Entrepreneur
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Empowering People in the Business of Changing the World | Entrepreneur® is dedicated to fueling the world’s visionary leaders compelled to make a difference through their innovative ideas, businesses, and points of view.
October 4, 2021 Updated: October 4, 2021
Epoch Times Photo
By Mike Koenigs

The number one reason most businesses never scale and ultimately fail is that they don’t understand who their perfect customer is. In other words, who they want to be a hero for.

In this article, I’ll show you how we craft our “Hero Magnet” which leads to being able to craft extremely focused sales messages that rapidly convert prospects into buyers for products and services in the $10,000, $100,000, and even $1,000,000 or greater offers in just one or two conversations.

Each of the bold headings represents a “non-negotiable mindset and value” that drives our company culture and client focus.

Narrow and Deep vs Wide and Shallow

I’ve worked with over 60,000 businesses over the course of my 30+ year career and it’s been my experience that most business owners don’t realize how incredibly important it is to focus on a narrow market before they scale. I like to say “narrow and deep beats wide and shallow every time.”

I’m going to show you the detailed demographic and psychographic profile that I use in defining my perfect client. My hope is that you can model this in your business to0.

When you nail this… crafting great offers, determining your marketing, messaging, and how to reach your audience becomes considerably easier. In fact, your marketing practically writes itself.

Related: Free On-Demand Webinar: How to Grow a Disruptive Software Company & Scale Globally

Let’s go through my ideal customer and how I go about attracting them to us.

They are b2b business owners, founders, partners, or CEOs. They run $3mm to $100mm companies and, even though we have international clients, our preferred clients are in the United States and Canada. This way we don’t have timezone, language or travel issues.

What’s Your Operating System?

We use personality profiles to identify our perfect client. We give our clients (and sometimes prospects) KOLBE, Enneagram and WHYos assessments. KOLBE rates you as a Fact-Finder, Follow Through, Quick Start and Implementer on a 1-10 scale. I only want 8-10 Quick Starts. We’ve found “fact-finders” take weeks or months to make up their minds and aren’t fun to work with.

We find fact-finders to be time-consuming, annoying, and expensive from a sales perspective. If someone can’t make up their mind and know what they want, we’ve found that they’re not easy to work with or would rather challenge and fight advice. Smart marketers create messaging that purposely polarizes or even offends an audience they don’t want to attract.

For example, I’ll say “if you require multiple conversations and weeks or months to make up your mind and feel the need to bring in multiple people for the decision-making process, we won’t accept you as a client or charge you double. The fee for a written proposal is $10,000.” That’s by design.

Collaboration and Relationships

One of our key marketing strategies is something we call Ambassador Marketing, which means we find ways to gain access to large groups of our ideal customers quickly by creating deep relationships with major influencers of affinity groups.

In our case, our ideal customers are “belongers” and “joiners.” That means they’re paying members of organizations including: EO, YPO, Vistage, Strategic Coach, Genius Network, Tiger 21, Summit, Darren Hardy, Brian Tracy, Tony Robbins Platinum Partners, or any high-value, expensive executive coaching or mastermind group.

Mastery of Self

That tells me they’re coachable, value shortcuts, and saving time. They’ve paid for coaching and advice. I often joke that the worst people to work with are willing to drive 50 miles to save a nickel on a gallon of gasoline. They spend hours searching for free information on Google and YouTube instead of paying an experienced thought-leader to provide a proven solution or answer in 5 minutes.

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Those types of people will fight you every step of the way and challenge your experience and credibility. Life is too short to deal with them. Go count beans and wrangle lobsters and cats… (see how I’ve purposely created polarizing language? Push away the wrong ones and attract those who resonate with you.)

Philanthropic and Charitable

Never confuse charity and business. I believe in philanthropy and charity. However, I don’t work with broke or broken people or businesses.

“If you work with broken you’ll wind up broken and resent your business and your customers.” Make lots of money, give away whatever you can to a professional organization with proven results and get a tax deduction. Everyone wins.

Our next criteria: we don’t work with newbies or startups that aren’t funded. The exception is if you’re a founder or owner who’s built and sold a business and this is your next round. You need a real 3+ year old B2B business with customers, that is making money.

I spent almost 20 years working with “wantrepreneurs”—folks who talk about maybe someday starting a business. Or brand new startups run by confused people who didn’t know what they’re doing. It was fun for a while, but unless you are willing to build a “wide and shallow” business with lots of customers, inexpensive products, and an “escalating funnel” it’s tiresome.

It’s not that I don’t like these people. I just don’t enjoy working with this type of business or dealing with the operational, cash flow and HR challenges they’re experiencing. I also don’t work with solopreneurs, coaches or people who only speak.

Transformations, Not Transactions

Our ideal client understands and has experienced the power of story and transformation.

They understand how incredibly valuable a story is and know they’re only one connection away from exponentially improving their lives or their business, attracting better teams, selling their business, or whatever breakthrough they’re looking for.

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One of the key requirements of the businesses we work with is that they need to have happy customers and social proof that their products and services work.

That means they have at least 5 – 20 success stories, or “client transformations” so we can build powerful sales and marketing stories.

Next, they must sell a product that is $10,000, or higher. That’s because we’ve created systems for positioning, packaging and pricing products by 2x-20x. We can turn a few knobs and generate millions of dollars in increased revenue in a couple of days.

Platform Mindset

Next, I found that business owners who understand the power of having a personal platform and personal brand, understand leverage and how it creates a multiplier effect.

Many of the people we work with have written a book (or want to), want to start a podcast (or already have one) and do regular interviews. They speak or want to speak and if they’ve done a TEDx speech, even better.

But more importantly, they resonate with this message;

  • I am an expert.
  • I have a message to share.
  • I figured out how to overcome big life and business challenges.
  • I understand my message will help more people.
  • I want to connect with more people who think like I do.
  • I know my message and wisdom will increase the value of my business services and give me access to more people.

Generally speaking, someone who has reached this level of wisdom and understands that as a founder, their message will multiply and amplify their prices and success of their business by stepping out of their fear and into their courage to be a visible leader.

Opportunity Hunter

Next, we’ve found that the businesses we work with often are solving a problem their client doesn’t even know they have and requires a high degree of education. They are frequently selling complex products to sophisticated audiences.

Many of our clients are in the financial space, SaaS (software as service) companies, management consulting, manufacturing real estate, high tech or professional services. The truth is, the industry doesn’t matter as much as the non-negotiable values of the founder, organization and brand.

Constantly Evolving

Specifically, our perfect client is committed to their own development, is freedom-focused, demonstrates strong family values and philanthropic.

They consider themselves spiritual but generally aren’t religious, (which to me means they’re open-minded and tolerant.) They work for freedom of time, money, purpose and relationship, and are libertarian-minded without being political. They strongly believe the government is inefficient and filled with bureaucratic, rule-following “lowest common denominators”. (See – more polarizing language – on purpose).

Someone who is deeply religious or fits into the “social justice warrior” mold is probably judgmental and unpleasant to work with. If they enjoy polarizing other people, polarizing topics, being in a state of outrage or taking offense easily, they’re in my no-fly zone. I’ll go so far as to say if you feel the need to share your preferred pronoun or sexual orientation, we’re not right for each other.

I found the secret to choosing the profile of your perfect customer is by going deep. Spend some meditative time looking at a list of the best clients you’ve worked with and really feeling into them.

The Story Writes Itself

Asking yourself the questions, “how do I feel when I’m around these people? What are their mindsets, their beliefs? What do they love? What do they hate? Most importantly, what and who influences them and how do you collapse the barrier to their trust?”

Answering these questions as a narrative becomes your primary marketing message. I use “The Joseph Campbell Hero’s Journey” story structure. It’s essentially a move, starring your perfect customer with you, your products or services as their personal guide.

It goes something like this: “once upon a time, there was a person who ran a business who’s just like you. They had many dragons to slay in order to escape from the same challenges you have. They met a mentor with special powers who gave them a map of success, solved their problems, made lots of money, sold the business and lived happily ever!”

If you’d like to see an example of how we’ve turned our “Perfect Client” profile into a marketing brochure and sales video funnel, go here.

Entrepreneur
Empowering People in the Business of Changing the World | Entrepreneur® is dedicated to fueling the world’s visionary leaders compelled to make a difference through their innovative ideas, businesses, and points of view.