EP 338: Why Staying Small Leads To Big Results

May 25, 2021 | Customers & Clients, Growth, Podcast

This month, we’ve explored finding customers and building an audience—which are not the same things.

Every business needs to find customers. But not every business—not even most businesses—needs to build an audience.

Yet, so many small business owners get hung up on building their following counts or email lists instead of doing the things that actually lead to sales.

The drive to build an audience partially comes from the false belief that “scale” is the universal goal for all businesses.

Many successful businesses never scale—or they don’t scale in terms of serving thousands of people instead of tens of people. They might scale in terms of efficiency or price or team—but scaling up one or all of those things does not require you to build an audience.

But everywhere you look on social media, someone is telling you that you have to scale.

As Maggie Patterson put it, they’re serving you poison and then selling you the cure.

Now look, if you’re excited about scaling up or you’ve found success with scaling up, wonderful!! I personally love the idea of serving at scale and enjoy speaking to an audience.

But I also recognize that this is the best way to build a business for only a teeny tiny segment of the business owner community.

A stronger, more sustainable, more effective way to build a highly profitable business is to…

wait for it…

Stay small and do things that don’t scale.

Today, I have 3 more stories of people who are serving and building in a really impactful ways without building an audience in the way you might have been taught.

You’ll hear from messaging consultant Dr. Michelle Mazur, branding expert Amy Walsh, and leadership consultant Nancy Hess.

Tara McMullin: This special episode of What Works is brought to you by Mighty Networks. Mighty Networks makes it easy to bring your audience, content courses and events all together under one roof. Instead of sending your customers to three or four different spots on the internet to get what they need, you can give them easy simplified access to all your best stuff and others who are working toward the same goals. Here at What Works we've been a Mighty Networks customer for almost five years. They've helped us build our brand, nurture our community and explore new ways of supporting small business owners like you. What could a Mighty Network help you do? Find out for yourself by going to mightynetworks.com.

I'm Tara McMullin and you're listening to What Works, the show that explores how small business owners are building stronger businesses without the shoulds and supposed tos. This month we've explored finding customers and building an audience and how those are not the same things. Every business needs to find customers, but not every business, not even most businesses need to build an audience. Yet so many small business owners get hung up on building their follower accounts or email lists instead of doing the things that actually lead to sales.

Now this drive to build an audience partially comes from the false belief that scale is the universal goal for all businesses. Many successful businesses never scale, or they don't scale in terms of serving thousands of people instead of tens of people, they might scale in terms of efficiency or price or team, but scaling up one or all of those things does not require you to build an audience. But everywhere you look on social media, someone is telling you that you have to scale. As Maggie Patterson put it, "They're serving you poison and then selling you the cure."

Now look, if you're excited about scaling up or you've found success with scaling up, wonderful. I personally love the idea of serving at scale and I enjoy speaking to an audience, but I also recognize that this is the best way to build a business for only a teeny tiny segment of the business owner community. A stronger, more sustainable, more effective way to build a highly profitable business is to ... Wait for it, stay small and do things that don't scale.

Today I have three more stories of people who are serving and building in a really impactful way without building an audience in the way you might have been taught. You'll hear from messaging consultant, Dr. Michelle Mazur, branding expert, Amy Walsh and leadership consultant, Nancy J. Hess. I'm going to let Michelle Mazur set this all up and then I'll be back to give you a way to think about how many people you actually need to reach to be successful.

Michelle Mazur: The number one question clients always ask me is how big does my audience need to be? And this is a question I've struggled with too. And I think it was because early on in my business, before I was a messaging strategist, before I wrote the 3 Word Rebellion, before I even started creating brand messages for clients who are doing something different in their industry, I had an experience of an article on LinkedIn going viral. So this was way back in the day when LinkedIn just announced their new article feature, and you could post like blog posts to LinkedIn.

So what I did is I took a blog post that I created around, something around public speaking, I don't even remember what the article was, and I thought, oh, okay, I'll just try this out. And I posted it, and then I walked away. And then I came back several hours later and my inbox was flooded and I had like 2,000 new subscribers to my email list. And it was just being shared all over the place, which most of us, like that's what we dream about. Like, oh yeah, if I could just have that one viral thing. Except there's a huge downside to it.

I mean, the obvious downside was that these people were not my right people, right? So I added 2,000 wrong people to my email list. The other downside to it was a few weeks later, I got an envelope in the mail that had my article printed out and marked up in red pen for grammatical errors, which was frightening because this person took the time to print out my article, track down my home mailing address to tell me how bad my grammar was. And it was anonymously sent, and it just freaked me out. And I realized then that maybe I don't need as big of an audience as I think I need. And when I'm tackling this question for myself and for my clients, what has helped me recently is I stumbled upon Kevin Kelly's article that's super old now, about 1,000 true fans. And in it, he basically hypothesizes that what you really need is 1,000 true fans who will directly buy from you whatever you're selling and that you would make $100 in profit, not gross revenue, but profit from each of these people, and that would mean you would make $100,000 a year.

And I was like, oh, that makes a lot of logical sense, really just focusing on 1,000 people. But then I also realized, and I always pass this on to my clients, that if you are a one-on-one service provider like I am, you don't really need 1,000 true fans, you might need 250 of them. And really that then changes your strategy for getting your message out into the world. So maybe instead of being on Instagram posting three to five times a day, which I hear is the common knowledge for like how to grow your audience there, you don't have to do that, you really focus on maybe going to LinkedIn and building relationships with people there. And for me, like as my business model has evolved and I have a book and I wanted to reach more people with the book, I had to find different ways to create more of those true fans. And for me, that's always podcast interviews. I love talking to other people and borrowing their audiences, it's the best way for me to create a true fan.

Tara McMullin: I completely agree with Michelle. There are so many incredible business models that don't require 1,000 true fans. They might require 250 or 100, or even 50, or fewer, and here's why. Imagine you run a coaching business and you have spots for 20 clients per year. You know there's about a 50/50 shot that someone who gets on the phone with you will book into your program, and so throughout the year, you need to talk to about 40 people to hit your numbers. Many of your 20 clients send a few referrals your way, you also do a few podcast interviews and contribute a column to a website frequented by your ideal customer. You spend some time genuinely connecting with people online and off. You can easily find 40 people to talk to with minimal marketing.

On the other hand, imagine you run a business with a signature course. To cover your expenses, pay yourself and leave money to invest in your next round of advertising, you need to sell to about 100 students. The average conversion rate on a sales page for this kind of program is about 2 to 3%. And that means you need more like 3,400 people to land on your sales page. And because the click-through rate on your sales emails is probably about 15%, you need to have an email list with about 23,000 subscribers to hit your traffic goal. To build that list you write a compelling newsletter every week, you invest in advertising, you post daily to Instagram and Facebook, you host a podcast and you're starting a YouTube channel. It takes a lot of work work, but you make it happen.

Either way, the business models might be generating the same amount of money profit. The difference here is stark. When we're just looking at the difference between enrolling 20 people and 100 people, it doesn't sound that different, right? It's a factor of five, but because the rate of actual sales tends to drop so precipitously when you start moving away from a high touch offer into a more leveraged offer, the real impact of this move is immense. So now, instead of finding 40 people to talk to, we need to find 23,000 people to talk to, a factor of 575. You would likely have to have the ear of 575 times more people to sell an online course to 100 people than you would to sell a group coaching program to 20 people.

Now, I know that sounds shocking, and it certainly can be done with higher sales rates and a smaller audience, but I literally wouldn't bank on it. I will also admit that this example is reductive. It's not like finding 40 people to talk to about your program is effortless, but it's likely something that you can wrap your head around and create a plan for. So what accounts for this disparity in the numbers? It's proximity. The closer someone is to already wanting to make a change, the closer they are to buying. The farther someone is from wanting to make a change, the farther they are from buying. These people might have a general interest in your field or a question that can be eventually answered with your offer, but they need a lot more time to come to that conclusion.

Marketing to those people is fine, but we absolutely have to adjust our expectations when we do. A business that's focused on enrolling 20 clients per year will go out and find 20 people who are ready to make a change, ready to buy. This business purposely positions it's marketing and sales to engage with people already looking for support or a product. On the flip side, an audience member has farther to go before becoming a customer than someone actively looking for a solution to a problem or a path to a goal. And that's why the conversion rate dips so low. It takes more effort and guidance to take someone from follower to customer.

Okay, so how do you actually figure out the number of people you need to reach to make your business sustainable? This is the project I gave to a member of the What Works network in our hot seat coaching session this month. They told me that they needed to be actively working with 10 clients per month to be stress-free about finances. They have the capacity for more, but that was a good baseline. Now it is incredibly difficult to try to extrapolate audience size needs from the number of sales you ultimately need to make if you don't already have data to work with. So we've got to start much closer to home. So I asked the business owner to consider how many people they needed to get on a call with to close 10 clients. They told me they close just about everyone they get on a call with, which is pretty typical at this phase. But as we do more marketing and broaden our networks even a little bit, that conversion rate starts to go down.

So I suggested starting with a hypothesis of about a 50% conversion rate, that should be pretty safe. So to close 10 clients, they need to get on a call with 20 people. That becomes the initial goal, just to do what it takes to talk with 20 people about their needs and whether coaching is a good fit for them. Once that goal is achieved, you can get a new baseline for your conversion rate. Maybe it was 60 or 70%. Great. Maybe it was more like 30% and you decided you need to take some different actions to bring it back up. No problem, it's just data that we're using to create a stronger hypothesis. With this baseline, now you can make a prediction of how many people you need to reach to get 20 more calls.

Maybe you need to invite a 100 people to a free webinar, or you need to talk with 10 Mastermind groups or speak at three events. Again, this is going to be fuzzy at first, but by making an initial prediction, you can refine your numbers as you gather new data. You can continue this for as many steps as you need, depending on your business model offer and marketing strategy. Ultimately, you start to figure out just how many people you need to be engaging with, and it might be far fewer than you think. If it is, you might very well decide to rethink how you're showing up online and what you're using social media or content marketing to do. And that's where artist, branding expert and founder of The Bureau of Tactical Imagination, Amy Walsh, found herself, but I'll let her tell the story.

Amy Walsh: I recently made a big change in my relationship to social media and its purpose in my business, a change that until recently would have seemed really counterintuitive to my business and even scary to me. About a month ago, I decided to lift all of the burden I was placing on social media to help me find customers and shift all of that to personal networking, relationship building, speaking, and teaching opportunities out in the wild, outside of my programs. And I'm finding these opportunities, not through social media primarily, but through old school networking.

I'm still using social, but to build my audience organically, creatively, and for the fun of it, and that is like a breath of fresh air, let me tell you. So why does this change seem so radical to me? It has a lot to do with who I was and the conditions that were present in my life when I started my business about six years ago. Up until that point, my whole adult life I was a gig worker. Like many artists, I was doing freelance design and branding projects, I was teaching adjunct in several university art departments, I was being an exhibiting artist, I was even running a small non-profit, all at the same time. And these are all jobs which paid me minimum wage or less. I was one of those people who was always working and barely making ends meet.

A couple of years after my son was born, it became really clear that my brain and my body could no longer take it, and I crashed. I was diagnosed with an auto-immune disease and I had to use that new limitation to make one of the best decisions of my life, which was to quit all my jobs and create one job, The Bureau of Tactical Imagination. My marketing strategy starting out the gates was to find a way to market my work in such a way that protected my very shaky, emotional, and especially physical energy, because it was a time that I barely had enough of those precious resources for my own new child. It felt like it would be easier to sit in bed and make graphics and write posts whenever I had a chance to, than to do the messier work of going back and forth with a lot of other humans and create a web of referrals and collaborations, et cetera. I've wanted to reserve my energy for my paying clients only.

Another reason that social media content strategy seemed key, and this felt like a real no-brainer, is that I'm a visual artist and social media is obviously a visual medium, so to be an artist who can easily generate standout images is a real super power in the digital marketing world. I found it easy to stand out, easy to get attention, just by making somewhat imaginative images and show people, not tell them why images matter. Back when my business was new and my mailing list had about 10 people on it, my very first Facebook challenge drew a few hundred signups just on the power of one image, which effectively launched my business.

And the final reason why I was so committed to this strategy for so long was that everyone was doing it. All the business influencers I was watching and learning from were all talking about building funnels, and filling that top of the funnel is the first step towards converting people into paying customers. I was really new to the digital business world in those first years, so I followed along.

So let's fast forward to the present. What changed? I now have a successful business with a flagship program at its core, which is called The Visionary Syndicate, and it's a much more high touch program, and it's at a higher price point than the low cost classes and challenges and things that I offered in the early days. As my business has changed, I've noticed that my relationship to social media has become kind of stale. As much as I tried to go all in on organically building a big audience there, my audience size and my enthusiasm plateaued at around 3,000 people, and my email list plateaued too. A large part of that social audience was, and is really interested in what I post and what I share, but not so interested in buying my program.

Also, as my businesses become more successful, I'm spending a lot more time just serving my clients and focusing on other operations, and I have a lot less time for tons of content creation. So, especially since I can't tell if it's really working for me in the way it used to, I think I could go all in if I felt like it was the right strategy, but I haven't. So this year I stepped back, way back. I hired a coach to be my thought partner, Michelle Warner, who's terrific, and I re-evaluated the whole system. And what I realized is that since my offers have become more high touch, people who actually join my program do so because they have some kind of meaningful live personal interaction with me beforehand, or they hear about me from someone they trust.

Usually people aren't coming straight from social media and through the little funnels that I've created, and while I still really value that audience on social media, I've made friends there, they still benefit my business in many ways, I don't have to treat that audience as the source of my sales, I can separate the two. Using this new information has allowed me to revisit that decision I made way back in that tough, early stretch of exhaustion when I first started my business. Back then social gave me a way to find my first students and clients, build some brand recognition and build a small list, but it was also a way to keep people at arms length, if I'm being honest.

At a time when I didn't really have the emotional energy for a ton of new relationships, I'm really happy to say that that's changed. And I'm glad to ground my business now in a strong foundation of personal relationships, collaborations, and friendships going forward. I'm stronger, I'm healthier, my kid is older, all these things make a difference. So now I can offer myself to teach and facilitate branding and creativity workshops in other people's platforms, I can give real life people real life chances to learn from me, ask me questions and speak to me, and then join my email list from there and be much more qualified and much more interested in purchasing my program.

So that's how I find my customers now, and social media, I'm in love with it again. Now it's a place for self-expression, for experimentation, for building my brand awareness, getting to know people that I can keep communicating with beyond social, and yes, I'm still doing writing and art that supports my brand message there, but without the burden that I placed on it to generate customers for me. So my creative flexibility is returning and I'm remembering what a great place it is just to work out my ideas. Ironically, this is actually reviving my numbers and my stats again, but only when I bother to look, do I notice that.

I know that audience building and customer generation through social is still a really smart strategy for many people, and I still help some of my clients and customers master that for themselves where it makes sense. But for me, I had to take stock of my journey as a business owner, see a place that I was stuck in a past decision and past circumstances, and refresh my perspective, and I'm so glad I did.

Tara McMullin: Amy's story reminds me of something else that I shared on that last hot seat coaching session. It was a question, what would it take for you to feel free to show up the way you really want to online? Now, I realized that there are all sorts of considerations here, the first and foremost one being safety. But for my money, it's time to course correct from the sort of, it has to be strategic or it's garbage mindset many of us have brought to our online lives. Using social media to experiment instead of building an audience is a perfectly reasonable way to use social media. Using social media to engage primarily with close friends and family is perfectly reasonable. Writing a newsletter that doesn't follow all of the best practices for content marketing, but does allow you to share in a way that lights you up, well, that's also perfectly reasonable. And using networking, speaking, or workshops to find your clients is a good marketing strategy.

Finally, let's hear from leadership consultant, Nancy Hess. Nancy's story is a brilliant example of what can happen when you get up close and personal with a small group of people.

Nancy J Hess: There is an old saying, "A funny thing happened on the way to the theater", and it is another way of saying, "Things don't always go as planned." I have been an HR and organization development consultant for over 35 years now in a niche space of a municipal government. Last year I decided to create a community with the idea that instead of investing all of my energy into one organization, I might work across organizations. My first move was to invite 40 people who were either longtime clients or people I knew who could bring value to the community. These were my founding members. I began to interview them one by one, post the interviews and highlights in my community platform and create posts within the community space to encourage connection.

Now, imagine 40 people you know well, and then all of the people they know, that's a huge network. So let me tell you what happened. Nothing. I had to really sit with the question, what are they waiting for? So my thought partner, a brilliant, helpful soul said, they will show up if you ask them to. And she meant, call them, email them, engage them. So I planned an event that had a boring title of Round Table Event Planning, and I reached out to my founding members by phone and email, and asked them to show up to help me plan round table events for the community. And she was exactly right, they indeed showed up for me. My thought partner suggested that I make this event about them and their planning priorities, but here is an important point. Even though I had little success, I knew my founding members enough to say this event has to generate interest beyond the personal, it has to resonate with their interest in leadership.

So I facilitated my first session and lo and behold, they told me exactly what they thought, so much so that I was taken aback. They told me, don't ask them to show up every month, because, well, just because an event is supposed to take place. Take time to plan for the round table. Whenever that happens, it happens. I asked them what they did not like about round table events, and they said, guest speakers who tell us war stories. Our time is valuable. They told me what they value and don't value about round tables, but here's the game changer. They said, we want to work on big, complex problems. Don't convene a round table just to exchange ideas, we want to work towards solutions even if it takes multiple sessions, a long period of time. We don't want guest experts to talk at us, we want to work together with colleagues on these big issues.

This is hard to convey, but initially my introverted self felt overwhelmed by this direct feedback, until I figured out that I had been handed a gift by people who not only trusted me, but believed in my leadership capabilities. This community is new, not yet six months old, but members are eager to volunteer the leadership in round table events where we invite larger audiences outside the community to our engaged discussions. The biggest impact this community has made so far is on a police study that I co-designed. The focus is on increasing feelings of safety among officers and community members that they serve. My members have been like an introduction making machine that has led me to connect with forward-thinking leaders within the state and national space who are able to support this initiative. Our project will gather narratives on safety from communities and map a leadership model for police departments. It is without a doubt, the biggest project of my career, and would not have happened without my 40 founding members.

Tara McMullin: Michelle Talked about how, when an article or a post goes viral, it can often just lead to getting a lot of the wrong kind of attention. But Nancy's story illustrates a much more powerful version of the epidemiology of ideas. By infecting those 40 founding members with her vision and enthusiasm, they're spreading her mission far and wide. All right, maybe that analogy is a little too real for us pandemic weary souls, but you get my drift. The bottom line here is that the actions you take in your business do not have to scale. Not only do they not have to, if you're looking for results, the action you take probably shouldn't scale. I hope that throughout this month, you've picked up some ideas for how you can approach your marketing strategy so that it actually matches your goals and your best ways of working.

Huge thanks to Dr. Michelle Mazur from Communication Rebel and the Rebels Rising Podcast, Amy Walsh from The Bureau of Tactical Imagination and Nancy J. Hess from the Pioneering Change Community. Next month, we're kicking off a series on teaming up. We're going to talk about team building, but we're also going to talk about getting emotional support as a business owner, why we need to think less individualistically as business owners, and so much more. So stay tuned.

What Works is produced by Yellow House Media. Our production coordinator is Lou Blaser, our production assistant is Emily Kilduff, Marty [inaudible 00:29:10] edited this episode. Special thanks to Shannon Paris for wrangling our contributors. What Works is recorded on the ancestral homeland of the Susquehannock and Conestoga people, and what is today known as Lititz, Pennsylvania. The Yellow House is on the unseated land of the Khatun Navajo nation, and what is now known as Kalispell, Montana.

Host of What Works

Tara is a podcaster, small business community leader, strategist, and speaker. She’s been helping small business owners build stronger businesses for over a decade.  

Tara McMullin, What Works Weekly Newsletter

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