Momentum Podcast: 146
5 Core Functions
by Alex Charfen
Every business in the world has essentially five core functions, and I want to share these with you today, because this is how I coach every single company I work with, and every organization I own. We evaluate them through the five core functions of business.
They are: lead generation, lead nurture, conversion, delivery and then retention, resell and upsell. So let's say it again. Lead generation, nurture, conversion, delivery, retention resell and upsell. I'll explain each one, and then I want to tell you why these are so critically important, because here's what's going to happen to you as an entrepreneur.
Growing a business can be confusing. Where should you spend your time, what should you do next to give you the absolute biggest result, and where does the company need the most energy?
While growing the business can be confusing, the answers to these questions don't have to be.
When you understand the five core functions of your business, you will very quickly identify the answers to these questions and how you can grow your company faster.
Unfortunately there are a lot of consultants and coaches out there that claim to understand how to help someone grow their business. If you're working with someone that has you focusing on anything other than these five core functions, run.
Full Audio Transcript
I'm Alex Charfen, and this is the Momentum Podcast. Made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers, and creators of all kinds. Those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so we can bend them, break them, then re-write them around our own will. We don't accept our destiny. We define it. We don't understand defeat, because you only lose if you stop. And we don't know how.
While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few, who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We, are the evolutionary hunters. Clearly, the most important people in the world, because entrepreneurs are the only source of consistent, positive, human evolution, and we always will be.
Five core functions. Every business in the world has essentially five core functions, and I want to share these with you today, because this is how I coach every single company I work with, and every organization I own. We evaluate them through the five core functions of business. They are: lead generation, lead nurture, conversion, delivery and then retention, resell and upsell. So let's say it again. Lead generation, nurture, conversion, delivery, retention resell and upsell. I'll explain each one, and then I want to tell you why these are so critically important, because here's what's going to happen to you as an entrepreneur.
There will come a time, as you grow your business, as you grow your success, as you do more, as you build a team, as you get your company up and running, that somebody's going to come along. Some consultant, someone on your team, an executive that you're working with, someone's who's probably trying to tell you something, and they're going to try and get you to focus on something other than the five core functions of the business. Somebody's going to say, "You know, this quarter, I think you really need to focus on finance or operations or you know, building culture, having events," or whatever it is, and I want you to have a defensive mechanism that says, "If it doesn't improve our status in the five core functions of the business, then we shouldn't do it.
Now, we have a detailed assessment we take our clients through, where they rank themselves on the five core functions. You can do this too. On a scale of one to five, where are you on lead gen? Lead nurture? Conversion? Delivery? Retention? Resell and upsell? You can tell me you have a business where these are not the five core functions, and I will quickly turn it around and show you how they absolutely are. Because it doesn't matter if you're a practitioner, if you have hard good products, if you're selling a service, if you're a coach, if you're a speaker. Whatever it is, these are the five core functions of your business. And if you're doing something in your business that doesn't directly affect these, it will crush you.
Here's how I learned this. After working with hundreds of different organizations, and after being involved with that many different corporate cultures, I started looking for what are the things that you really focus on to really grow business? How do you make a business grow? How do you make the business do more, be more? What is the lens you can use to evaluate what you should be doing right now in your company, because I think a lot of get up in the morning. We say, "What are we going to do today?" Or we look at our business, and we say, "I wonder what I can do to make it better?" But if you go through a five core functions analysis, and you rank yourself one to five, one being worst, five being best, on lead gen, nurture, delivery ... Or sorry, conversion. I was going to do the four core functions. Conversion, delivery, retention, resell and upsell, you will very quickly find where your effort, your energy, your investment, and your time should go.
Because if you are a three out of five on all of these, you have a growing business that's doing really well. You get to a four out of five on all of these, you have a fast growing business that's doing well and creating a massive customer effect. And if you're a five out of five on a couple of these, and four or three on the rest, you have an incredibly fast growing business. Because when I go into any organization, here's what we do. We review. Where are you on lead gen? Are you getting enough leads? Can you turn a dial up and get more leads? In today's day and age, if you have a business where you don't have a mechanism to turn a dial up and get more leads, pay more to Facebook, do more advertising, make more calls, whatever it is, to have another event. However you get leads, if you can't turn it up, then you can't rank yourself over a two in lead gen. Are your leads automated. Are they the right leads? Are they converting well. Are they the people that you want to talk to?
In nurture, do you have a sequence so that if somebody doesn't buy from you, or a system, so that if somebody doesn't buy from you, they're consistently followed up with over time? So it's not just buy or die. Far too many companies these days are buy or die. You either purchase or you go away. Today a friend of mine and I went out to a BMW dealership. We wanted to try the new M3. We drove. I drove it. He drove it. We spent about an hour and a half with the sales guy. He gave us his business card. I guarantee you there will be absolutely zero lead nurture from that BMW dealership. Even though we were looking at $80,000 cars, they're not going to call me. They're not going to follow up. They're not going to have a system to make sure that I come back there and buy, because so few companies focus on these things. It's buy or die.
The third step of the process is conversion. Like, how are you doing? Once there's a lead, if they've been nurtured or maybe they didn't need nurture, what is your closing percentage? How are you on converting people to actually sell? Is it being done in a very, you know, successful way? Are you getting the right clients? Are you bringing in the right people? And then delivery. Are you delivering in a way where the vast majority of clients are ecstatic with your product? If you are, then you're a five. If you're not, then you have to look at it and ask yourself why. And then the last one. This is such a massive area of lost business for almost every company that I ever start working with. Retention, resell and upsell. We all get excited about getting new clients, but what we don't realize is we have a massive potential in the clients who've already bought from us. If we're not retaining them in membership products or having them buy from us again or upselling them to new products, we need to think about why. We've already built trust with that person. We've already brought them into our fold. We've already delivered something to them. We should be selling them more.
And so when you go through these five core functions of your business: lead gen, nurture, conversion, delivery, retention, resell and upsell, this should be the framework that you use to evaluate your business and decide what you're going to do next. See, in my career, I had to very quickly figure out, how do you fix a broken business? My early career consulting at the Fortune 500, I never got a single phone call where they called and said, "Alex, we have a division, a department, a territory, that's running really well. We'd like you to come in and make sure its stays that way." You know, "Everybody's really happy, and we're getting what we want, but we just want somebody to come in and keep the status quo." I got that phone call zero times. Normally, I got the phone call that started out something like, "Hey, we probably should have called you six months ago, but we have a major issue. We've got product we can't sell. We have a territory that's failing. We have a division that we think is going to shut down. We need help figuring out how to sell this product. How to move the goods. How to get everybody on the same page. Moving in the same direction, and achieve the goals that we have."
And I would go in, and it was a different organization every time. It was a different group of people every time. It was a different product a different target market most of the time. But it was the exact same five core functions of the business. If I was called in to any failing division or department or territory, we just started talking about, "Okay, well what's the lead gen like? How many leads are we getting? How many people do we have lined up to sell? How many people do we have that are interested in the product? What's the nurture like? Is there a system so that they can continue to buy? What is our conversion mechanism? Are we selling it in the right way? Are we bringing in the right clients? When somebody is sold, do they stay sold? What's our delivery? Are people surprised, delighted, excited, to be getting this delivery of product? And, what's our retention resell and upsell plan once we've sold somebody? How do we keep them buying more from us?" And, that was my plan every single time I went into one of these divisions or territories or departments. And that's exactly how we turned them around.
Because what would invariably be happening when I got there, is they were talking about projects or process or different products that they were supposed to do. Or what they missed or what should have happened or what could have happened. And by getting an entire organization rallied around these five core functions, everything in the business changes. And as you evaluate your company, if you're thinking about it right now, and you go through it: lead gen, nurture, conversion, delivery, retention, resell and upsell. If any one of those is below a three, that's where you start, and you don't go on to the next one until you fix it. If your lead gen isn't a three or better, then you owe it to yourself to fix it today. If your nurture sequence doesn't exist, that could be 20, 30, 40, 50% of your business or more that you're just giving up.
If you're not converting at a high level, whatever the percentage is that you could be converting, you've already spent the time on lead gen. You've already spent the time on nurture. You improved conversion. You're making everything better. If you're falling down on delivery, that's where clients have made the investment. They've made the decision. They've given you their money, and now, you're letting them down. And if you're not retaining, upselling and reselling your clients, you're doing far too much work. And so I know there's a lot of different ways to look at your business, but here's my suggestion. Sit down right now with a sheet of paper, and write out the five things: lead gen, nurture, conversion, delivery, retention, resell and upsell, and then give yourself a rank from one to five and start asking how do you move everything to a three or better? How do you get everything to where it's actually working, and how do you get these five core functions of a business to move you forward?
Because it doesn't really matter what you've been focused on. It doesn't really matter what your projects have been. It doesn't really matter what you've been looking at. If you're not addressing these five core functions, you're not going to move your company forward. You're going to leave a gaping hole, an exposure, a vulnerability, somewhere in your business that is going to end up affecting you. And in a world where consultants and content and the people around you will tell you to look at a hundred different things. You know, there's a different system in every book I pick up. Verne Harnish says look at people, strategy, execution, and cash. Other people say, you need to look at infrastructure and finance and delivery and operations, and all of these different, confusing, and I would say really difficult to work with, frameworks. Use this one. It's easy. Delivery. I'm sorry. Lead gen. Nurture. Delivery. Conversion. Retention. Resell and upsell. If you focus here, and you fortify your company in these five core functions, you will not only have a business that's growing, you will have a business that's growing, delivering to your clients, profitable and, that you're excited to be working in.
There's a lot of people out there today that would prefer to confuse you and be able to pick up the pieces. I want you to be able to move your business forward fast. And once you get it to a million dollars or more, call us, so that we can help you scale it even further. By focusing on the five core functions of the business, you'll get there much faster than by focusing on just about anything else. If you're an entrepreneur and you like to learn more about yourself and understand yourself better than possibly you ever have, download a copy of my book for free. It's called, "The Entrepreneurial Personality Type." You can go to freemomentumbook.com, and if you're like a lot of the people who've read it, it might tell you more about yourself than anyone ever has. Reveal to you exactly why you're holding yourself back and show you how you can release the entrepreneurial suppression that you've experience for most of your life and turn things around, move forward, and create momentum. I want to help you.