Of all the skills you can have — the ability to speak like Winston Churchill, to paint like Rembrandt, to calculate like Albert Einstein — none will help you achieve wealth as well as knowing how to sell things.
Every private enterprise — every school, every art gallery, every restaurant, law office, hospital, building supplier, hardware store, and entertainment complex — survives and prospers by virtue of its commercial activity.
In my own life, this lesson was hard to learn. Coming from a non-business background, I looked at the commercial world from the outside in. A bookstore, to me, was a place where bookish people gathered to page through old volumes, talk about literature, and make bookish friends. When I fantasized about owning my own (as I often did), I saw myself sitting in a comfortable leather chair, catching up on the classics and having conversations with beautiful women wearing reading glasses.
I had a similar delusion about art galleries. Until I actually bought one. A successful local art dealer I knew told me in passing one day that he was planning on retiring in a few years. I immediately suggested that he allow me to buy into his business.
In my mind, I was going to be sitting in that same leather chair, reading those same classic books, and chatting with those same bespectacled women in my bookstore dreams. The only difference was the conversation. Instead of chatting about Proust, we’d be musing about Pollack.
A month after I started, I bought myself out of the art business. I realized almost immediately that the dream I’d bought into was, in fact, a business based on hard-core selling. Something that I found offensive at the time.
It was a very expensive lesson. But it taught me a great deal about business and life that has been enormously helpful to me since then.
The reason this art dealer had been so successful (he was making a very high income even during periods when other dealers were going out of business) was because he was an expert at selling art. His knowledge of art history was limited. He wasn’t ignorant, by any means. He knew the important, inside stuff. What type of paintings a particular artist was admired for, what periods of production were considered the most valuable, etc. But his main skill was in (a) getting people to come into his shop and then (b) getting those who bought to keep buying, year after year.
I began to see that virtually every private enterprise functions that way. To keep doing what you want to do (and to make a profit from it), you have to (a) attract customers at a reasonable cost and then (b) convert them into repeat buyers.
Let’s call the first task making the “front-end” sale and the second task making the “back-end” sale. In the years that have passed, I’ve learned to look at virtually every private enterprise — from regional theatres to restaurants to pet hotels — in terms of these two selling skills.
And this perspective has given me an inside view as to how these businesses operate. It’s no longer a mystery to me why, for example, so many restaurants and small hotels go out of business. Why people in the travel and leisure business make so little money. Why you shouldn’t even try (as I explained to a Bootcamp attendee just the other week) to make a business out of a llama farm. And why most good small businesses fail when they attempt to get bigger.
This fundamental perspective has also allowed me to provide advice to all sorts of different businesses in almost every conceivable industry. I can see now how every successful business is based on understanding the correct answers to two very simple questions:
1. What is the most cost-effective way of attracting customers?
2. What is the best way to keep those customers buying?
If you can learn to see your business that way and can one day discover the correct answer to these two questions, you will quickly become known by everyone in your company as a bit of a marketing genius. That will happen because you will understand your business from the inside out. You will know it better than 90% of your fellow workers.
Even the stickiest problems in business — which are always “people problems” — can be analyzed effectively by considering possible outcomes against these two objectives:
* Lowering the cost of acquiring new customers.
* Increasing the lifetime value of each existing customer.
The primary purpose of a good business is not to produce profits. It is to provide good value. But the most effective, least political, and ultimately most enduring way of measuring the value you provide is twofold.
First, by the profit you generate each year. (That pays the bills.) And second, by the long-term profit value of each customer. (Which is a measurement of how much they value your products and services.)
If you want to radically increase your income, my advice is to turn yourself into a marketing genius. And the best way to do that is to:
* Understand how your business works in terms of front-end and back-end selling.
* Become an expert in one or both of these forms of selling.[Ed. Note. Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]