Conventional wisdom in our little corner of the universe has popularized linear thinking. Many ‘gurus’ believe (and teach) that the path to success is a funnel that can be optimized one piece at a time.
Examples include:
- Traffic > Sales Page > Upsell(s)
- Traffic > Opt In > Sales Page > Upsell(s)
- Traffic > Webinar > Sales Page
- Traffic > Strategy Session > Offer > Sales Page
When the ‘magic funnel’ doesn’t perform, you’re encouraged to focus on and fix (or ‘funnel hack’) the parts. Maybe paid traffic targeting isn’t quite right …
Or the lead magnet isn’t compelling enough (or gives away too much) …
Or there’s not enough urgency on the sales page …
Before you know it, you’re buying more traffic on more platforms, A/B testing lead magnets, hiring copywriters, and adding countdown timers to your sales page as you clutch for straws …
… with no guarantee anything you’ve done will make a meaningful difference.
The problem isn’t the tactics.
The problem is linear thinking. Where A leads to B which leads to C. That’s just not how the world works.
When we change our thinking upstream, we improve everything that follows downstream.
Your business is not a collection of parts that can be tweaked one at a time. Instead, your business is a system from which results emerge from the interactions of the parts.
Let that really sink in.
Yes, we can optimize the parts, but that optimization only matters when it interacts with the other parts to enhance the system’s emergent properties.
Let’s look at business …
You need three non-negotiable ingredients to create and sustain a durable business system. They are:
- Awareness (traffic).
- Engagement (leads/prospects).
- Conversion (sales).
Awareness comes in many forms:
- Word of mouth,
- personal referrals,
- paid traffic,
- organic traffic,
- guest blog posts,
- books,
- interviews,
- podcast sponsorships,
- radio,
- TV,
- etc.
Anytime someone sees or hears something about you or your product, you’re generating awareness.
Engagement is an exchange of attention:
- Someone reads your articles,
- opts-in for a lead magnet,
- watches a video,
- reads your emails,
- listens to your point of view,
- or interacts with your ‘world’,
- Etc.
Think about engagement as activities where prospects take steps closer to you. Sometimes those are baby steps (e.g., reading a short Facebook post); other times, they’re significant (e.g., opting in to an email newsletter, then reading every email that’s sent).
Conversion is the exchange of monetary value:
- Someone buys your stuff (which could be a $7 ebook or a $25,000 membership program),
- digital products,
- physical products,
- virtual or brick and mortar,
- one-time or recurring,
- Etc.
Every business needs awareness, engagement, and conversion. Each is necessary, but none of them, on their own, is sufficient.
Now that we understand the three non-negotiable ingredients of a durable business, that interact in ways from which meaningful results emerge, we need to decide what we want those results to be.
Systems theory tells us that, to optimize a system, we must know what we’re optimizing for.
Fortunately, there’s an easy answer to this question …
Optimize your business to produce happy customers (which is meaningfully different than just customers).
We know that ‘happy’ is a subjective term with many variables. Some happy customers become superfans and tell all their friends, others buy every product, some send raving unsolicited testimonials, etc.
To help describe a happy customer, it can be easier to start by looking at what a happy customer is not. Broadly speaking:
- a customer who refunds (especially, quickly),
- a customer who never uses the product,
- who doesn’t remember what they purchased sometime later,
- does not get a result from using the product (they’re not left better off),
- who hated the customer experience,
- who tells their friends to never buy from (insert name of product or brand),
- Etc.
We all know this feeling.
In fact: feeling is where to focus your attention when thinking about what represents a happy customer in the real world vs. a spreadsheet.
No doubt you’re a happy customer of some product or brand, right?
- Example: Apple (brand)
- Example: Your iPad or AirPods (products)
Ultimately it’s not the product itself that makes a happy customer; it’s the feeling we get from using, interacting with, producing something from, a product or service.
(How the product improves the context that matters to us.)
Having Netflix does nothing on its own. Enjoying good movies with friends and family is meaningful.
The amazing photos taken from your new phone camera, which you share with your family on WhatsApp and social friends on FB or IG, contribute to this feeling of BEING a happy customer.
Feelings — the essence of being a happy customer — can’t be easily measured and represented in a spreadsheet, which is why marketers focus on less meaningful KPIs like # of clicks on a paid ad campaign, # of new subscribers, total customers from a product launch, etc.
But these KPIs never tell the whole picture. More often than not, the picture revealed in a spreadsheet is incomplete.
So a good question to ask is:
If I were to become a customer of my own product, would this change/tactic/addition move me closer or further away from becoming a happy customer?
Insert YOURSELF into your prospect’s perspective; does the urgency countdown, exit pop, and more aggressive webinar script make you a happy customer, or do these devices move you away (or downright piss you off)?
Use this as your guiding star.
We also want to pay close attention to the nuances over time. Capture customer feedback (emails, comments, etc.). Look for patterns. If you offer more than one product, identify repeat customers.
This data will tell your business performance story and you can take action accordingly.
For our purposes, systems theory reveals four powerful insights:
- Insight #1 — businesses are systems from which results emerge from the relationships among the essential parts.
- Insight #2 — awareness, engagement, and conversion are all necessary, but none of them individually is sufficient to produce the results we want on their own. All three must be present for our business system to be successful.
- Insight #3 — success is measured subjectively by the number of happy customers our business system creates. A happy customer is someone who is left significantly better off from using your product or service.
- Insight #4 — the rate at which your business produces happy customers — called throughput in systems theory — is the most important metric for you to measure. It will tell you — unerringly — if you’re making real improvements.
Simple. Easy. Effective.
NEXT: System Theory 101