Every business makes investments to create revenue for itself. All too often business owners consider cash as its only source of revenue worthy of investments. However, revenue actually comes in three flavors:
2. Attention and trust
Everyone can easily recognize cash as a source of revenue in a sales transaction; a business provides a product or service to a customer and the customer pays for it in the form of cash. As you can see, cash is an immediate source of revenue. However, the two other forms of revenue are one step removed from cash. They are revenue enablers whose currency is just as important as cash, yet are often overlooked by most business owners.
Attention & Trust
When a business has the attention and trust of an audience, they can use that attention and trust as an asset to make money. For example, I watch the local news each night along with thousands of others. I have watched the same station for many years primarily because their chief meteorologist gained my trust in forecasting the tricky weather patterns in the Rocky Mountains. Since I ride a motorcycle most days, weather plays an important role in my commute. Recently, the meteorologist announced her retirement. As a result, my bond with the station was open for re-calibration.
I spent the next several days watching the evening news on other channels to see who had the most accurate weather forecast. I’m sure I was not alone. Clearly, the more eyeballs that watch their nightly newscast translates into a greater market share (whose currency means higher ad revenue for the station).
What prompted my loyalty was the attention and trust the station had established with me through their meteorologist. Therefore, businesses should invest in activities and people that help gain the attention and trust of the audience, which they can then use to make more money.
Businesses also need to invest in activities that will get them new customers through referrals. This is especially important as a business scales.
Recently, a Trader Joe’s opened in my town. I had never heard of Trader Joe’s since previously there were none in Colorado (to my knowledge). However, Trader Joe’s invests heavily in its brand, and as a result, has created some really hardcore and loyal fans. As soon as it was announced that a Trader Joe’s was coming to town, fans of the grocery store chain were quick to spread the word and invite others to the Trader Joe’s experience. When they finally opened for business, there was literately a line of customers outside the store waiting to go in. In fact, Trader Joe’s had to employ a bouncer to regulate the number of people allowed in the store at any one time.
So, when you make investments in your business, remember that revenue really comes in three flavors: one that is immediate and two that enable revenue to be produced.
What investments can you make to gain more attention, trust, and referrals from your audience?
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