How to Create a Profit Multiplier for Your Consulting Business Learn how to radically increase your revenue by solving more expensive problems.
You get paid in direct proportion to the problems you solve. So, if you want to increase your revenue, you need to solve more expensive problems.
Great, so how do you do that? Create a profit multiplier for your business. For example, let's say you're an executive coach. Sure, you could do 1:1 coaching and charge a decent amount of money. Or, you could reach out to a large organization and offer to train all their executives. The solutions you leverage will be very similar to 1:1 coaching, but the problem you solve is much larger, and your fee will be proportional.
Your profit multiplier will be an extension of your overall business model, so let's address each step before skipping to the big bucks. The image below will provide more context and help you follow along.
Your lead magnet
Before anything else can happen, a prospect has to be aware that you exist. So, you'll have to develop a lead magnet, valuable content you share in exchange for a prospect's attention and to demonstrate your expertise. I provide more details in the article "How to Start a Consulting Business: 3 Steps to Booking Your First Sales Call."
While lead magnets are often guides, eBooks or some other free download, they don't have to be. At its core, the goal is to make people want to learn more about you and what you have to offer. If you've ever sat in on a Clubhouse chat, you know many of the presenters aren't shy about turning it into a lead generating opportunity. Heck, they'll even try to make it a lead multiplier by encouraging you to "ping three people who need to be in this chat right now"! First of all, don't do that. Second, make sure you can check this box before moving on.
This is much more passive and helpful than it sounds. As per ActiveCampaign "Tripwire marketing is the practice of offering leads a low-cost product with the intention of selling them more expensive products later. Tripwire marketing is a common practice intended to increase first customer acquisition."
Here's a quick example of how this can work for a consultant or professional service provider. Let's say you pay $22 for a "masterclass" on LinkedIn Marketing. You're about to check out, but then you see an offer to upgrade and buy a more robust program for $599. You'll never see it offered this low again, and you're cheating yourself if you don't buy it. In fact, you're going to make so much money, you're actually losing money by not buying it.
So, that's clearly an obnoxious way tripwire marketing can work, but there are more authentic ways to leverage this practice. For example, following up via email with a complimentary product or service after the initial purchase. I also recommend using these to help individuals who may not be able to afford your more expensive services.
Your core product is most likely where it all started for your business. This is the solution to your audience's high-impact problems, and you've developed a repeatable -- yet customizable -- process for implementation.
It's the primary offer you present after pre-qualifying a prospect, and where you expect to make the bulk of your revenue. Depending on your business, this can be from a one-time purchase or recurring subscription.
In a utopian situation, your core product should be scalable through automation and/or hiring employees. Otherwise, you'll eventually hit a ceiling in regard to how much revenue you can generate. This limitation is why many professional service providers struggle to make over $200,000 or even $100,000 per year.
In addition to -- or instead of -- automating and hiring, there is another solution to increasing your revenue; creating a profit multiplier.
The key to maximizing your revenue potential is to create a profit multiplier, this is your high-end solution that makes it easier and faster for clients to get their desired results. This could include more hands-on implementation, deeper analysis or other services that are added to your core product.
These are all options, but you can also increase your profit without drastically expanding the scope of your core services, you just need to offer them in a different context. Remember, if you want to increase your revenue, you need to solve more expensive problems.
Let's say you're a logistics consultant and you help companies reduce the amount they pay for shipping products. All things being equal, a company that pays $400k per year in shipping costs has a more expensive problem than a company that pays $40k per year to ship their products.
The company shelling out $400k may have the exact same problem, but it's a more expensive problem due to the amount being paid.
By sheer volume, larger organizations have more expensive problems. Mindset and curiosity are vital to discovering your profit multiplier.
You need to think "what's the next level up from what I'm currently doing?"
Here are a few examples:
I know making this leap can be intimidating, but the worst thing that can happen is hearing "no" from a prospective client. Guess what? That's going to happen regardless of what you offer! The power of your profit multiplier is the massive impact a "yes" can have on your business. Landing one or two of these per quarter can radically grow your business, and give you the lifestyle freedom to explore your personal interests.
Ready to start your consulting business? Join us May 25th at 2pm EST for the free webinar How to Price, Package and Promote Your Consulting Business.