The real ROI you should be measuring
When it comes to professional services and the “advice based” business model it can be hard to create both a point of difference and get paid your true worth.
Have you ever asked yourself this simple question?
Based on all the experience and expertise I have accumulated, the revenue I generate, and the impact my service has on my clients “Am I getting the best return on my intellect?”
If the answer is no, then read on.
The Old Fashioned ROI
Business is a numbers game. We use numbers as the best way to keep score of how well we are doing. Accountants have a bunch of industry-specific phrases, aka jargon, they bandy about all the time. Balance sheet, cash flow, assets and profit and loss statements. When we assign a particular amount of money and then track its profit we call it a return on investment or ROI. In its simplest format, this one is easy to measure. You spend $1000 on a marketing campaign. It generates 20 leads. Of which you convert 4 of them and they each pay you $500. Your ROI is $1000. Simple to understand. Right.
To get a more accurate figure you could get a little more complex. Include how long it took you to develop the marketing, follow up the leads and service these clients. Coming up with an hourly ROI. If all this activity cost you 10 hours in time spent then your ROI is $100 per hour. Which isn’t as good as the $1000 we first calculated unfortunately.
The 21st Century ROI
The cloud has revolutionised software development and anyone with a credit card can use Amazon Web Services to get all the computer/database services they need. So have independent professional services firms begun to tap into the new information economy. The geographical limitations of many peoples IP (intellectual property) no longer have any restrictions. Owning specialist knowledge and business intellect (your personal experience, expertise and thought process) can be used in multiple different ways to reach a bigger audience and have a greater impact. This expertise needs a new measuring metric. We call it a Return On Intellect™.
Most Experts Make This Mistake
Most experts make the same critical mistake. Picking only one mode to deliver their expertise through – and then sticking to that. Accountants make money through accounting. Trainers make money from training. Chef’s cook. You get the picture. Stuck competing with their competitors on price alone. This way of thinking is outdated. The secret to having a better ROI (Return On Intellect™) is to diversify how you deliver what you already know. Having the ability to offer more than one option to your existing clients. A new portfolio of services.
The more services you can offer your customers, the more opportunities you have to create touch points with these clients. Creating greater “stickiness” and loyalty, by satisfying as many of their needs as you can. That’s a great competitive advantage. A Unique Selling Point. It also moves you up the value chain from a tactical adviser to a strategic advisor.
How To Increase Your ROI
Here’s the really good news. To increase your revenue you don’t need to learn new information. Only how to package up your existing IP and deliver it in multiple ways. Just as relying on one big client is often fatal to a business, relying on one revenue stream for your IP is also risky. Well-known entrepreneur author Dorie Clark labels it as “a portfolio career”. Think about all the ways your knowledge and experience could be delivered. Books, consulting, speaking, teaching (Mastermind groups), coaching.
When you look at category leaders you see that they have one thing in common. They have created additional revenue from their existing knowledge and are having a bigger impact and effecting change through education. Information products and services also have a higher profit margin. Often around 70% vs a traditional business that is approx 20%. That’s at 3.5 X increase.
However, the biggest advantage is that when you teach others you become an authority in your field. Helping you to leverage your ROI even further. It becomes a self-fulfilling loop. As an authority you get to charge more for your existing services as well as your information products.
Knowledge Lost Forever
My in-laws recently retired after 35 years as professional photographers. I tried several times to explain the idea of creating a teaching model around all their valuable experience. Every tip, trick, and shortcut that made the photographs, and their clients, look amazing. Sadly they couldn’t see how valuable their information was. Instead, they have taken it into retirement with them. Lost to a budding generation of photographers.
Photography studio starts ups who could quickly learn how to run a successful portrait studio if they had access to this knowledge. Studies show that many self-employed professionals struggle to sell their business. So it makes sense to maximize your intellectual property whilst you can.
Time To Repeat The Question
Time to ask yourself the tough question (again).
Is all the experience (including mistakes), knowledge, and information of what I do or how I do it, giving me the greatest Return On Intellect? If the answer is no, then find a way to bridge the gap. What additional products or services can deliver your intellectual property to multiple people? How can you shift from the one-to-one to the one-to-many model that will increase your impact and create that extra revenue stream?
If you are not sure where to begin then contact us for a free assessment to help you unlock your Return On Intellect.
Ready to Measure Yours?
If you’re a service based professional and want to calculate your ROI you can quickly calculate it here