What’s Your Multiplier?

Happy #TBT! Here’s an oldie-but-goodie post from Jim: “What’s Your Multiplier?”

Lately, for reasons that are too dull to bother explaining, we’ve been looking at the “multiplier” we have here at Goldstar whenever a person signs up. Specifically, we’ve been thinking about what happens when we actually spend money to reach out to a person through either a sponsorship or our affiliate network or some other paid program whose goal is to get new people signing up for Goldstar.

Let’s say that you’re the head of marketing for the World Oompa-pah Orchestra, and you spend $10,000 sponsoring Youth Tuba Week in the expectation that tuba teachers worldwide will buy more subscriptions to your lederhosen-clad concerts.

And, let’s say you’re right, and 200 of them do that. That’s good, but what comes next? Will there be a multiplier, or will it die with the 200?

Some businesses have an incredibly high multiplier. Twitter, for example, right now [circa 2009] has a multiplier of far greater than 1. That is, for every person that signs up, more than 1 person is coming along with them.

For businesses where large amounts of money being spent are involved, this is hard to achieve, but the difference between having a 0 multiplier (like, for example, someone who sells lice remedies) and having a .5 multiplier is dramatic.

For example, in just 12 months, if you have a multiplier of .5, meaning that for every person you enroll, half of another person gets the word and signs up too within a year, you end up with 30% more patrons, and if you extend that model out for another year it gets even more dramatic. Eventually, compounding interest kicks in, and you’re an unstoppable force.

What gives you a multiplier? Being good at what you do is one thing. You can’t short cut that. Taking care of customers does too, but the real deal is to be special. Not just solid, but special.

So check out your data and find out what your multiplier is. If you don’t know it, you might be missing a big opportunity.

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