What is leverage?
Leverage is a simple idea: getting other people to sell your stuff. They do this by using their own networks/ability to reach potential clients to sell your products or services.
Do I need to know about leverage?
It depends if you like the idea of selling more, without doing more work on the selling side. Use it right and your business can grow to a much larger scale that it would if you were plugging away all by yourself.
As the creator of Wealth Dynamics, Roger Hamilton, puts it: Wealth equals Value times Leverage. What this means is that your wealth is a product of the value you create (ie: the value of your product or service) and your ability to leverage it (ie: get it to the most buyers).
Most self-employed people are fixated on increasing their value: improving their products, developing something new to offer, getting training to improve the skills they use with clients. But they think far less about leverage... and that's the point that can make your business take off.
If what you offer can be delivered without your presence, then leverage becomes really exciting - because now you can multiply your income without multiplying your work.
Here are some examples of leverage:
- If you make physical products, it might be signing a deal with a distributor or retailer. Or signing a famous spokesperson. They have a larger reach that you could attain, and they will get buyers aware of your products in a way that would take you much longer.
- Getting national press about your business.
- For example, when I got profiled by The Times and The Sunday Times for my book, it sold thousands of extra books without me doing anything - I didn't have to write anything new or print the books or sell them myself - Pearson, Amazon and WHSmith did all of the work for me. That's leverage.
- Partnering with other people to get more sales: Joint Ventures (JV).
- Here's how JVs work: Imagine you have created an ebook that you sell for £100. You find someone with an email list of several thousand people that match your target market and ask them to promote your ebook to their readers. You will need to offer real value in exchange. For instance if you had a large email list, you could promote their business. Or, more likely if you're just starting out, you would pay them commission on every sale by setting them up as an affiliate (see below).
- Affiliate marketing.
- It's common to pay affiliates as much as 50% of your sale price. While this might seem like a lot, just think what you're getting. If you sell an ebook for £100 and you pay your marketing partner £50 per sale, if they make just 20 sales, you still make £1000 for almost no extra work.
- For example, Chris Guillebeau of the Art of Nonconformity uses an excellently managed affiliate marketing programme to sell his eBooks across the world. People write blog posts recommending him and his work... encouraged by the affiliate material they are selling. He has a big network, but doesn't need to sell to them all the time because others sell to their networks for him.
- Going under another banner.
- Partnering can also mean delivering your service under the banner of another organisation who reaches the audience you want to work with. This works well when that organisation need the skills you have. For example you can launch a new product or service on their behalf, filled from their network, where you share out the profit in return for you running/delivering the service (see our personal example below).
Other ways of creating leverage
- A link or promotion by a website with high traffic
- A promotion in an email to a large database of people. Bear in mind it's not unusual to only sell to around 1-5% of readers so the bigger the readership the better (and the email needs to be written well to sell!).
- A retweet by someone with 1000s (or ideally 10s of 1000s) of Twitter followers
- Media exposure - radio/TV slot, newspapers/magazine article
- Individual referrals from other people with related or complementary offerings. You may pay them commission for the referral or refer some of your clients to them.
- Speaking in front of a live audience of people in your target market (sourced by someone else from their network)
Note you may use leverage opportunities like these above solely to get website traffic or grow your own email list rather than selling anything. For example, write a guest blog post on a high traffic site and place a link at the end to your own blog or a link to a page on your website encouraging visitors to sign up to your email list in order to get a free download.
How to find leverage opportunities
Leverage opportunities depend on relationships and trust. Asking Stephen Fry to retweet your sales page is unlikely to get you a good result (unless you happen to know him). Look to people you know who already have access to a suitable (large) audience.
Answer these 3 questions:
- Where can you find a large number of people who have the problem you solve?
- How (or who) can you place yourself in front of these people?
- What is in it for the person or organisation helping you?
Or think of your ideal client:
- What do they read?
- What websites/blogs do they visit?
- What exhibitions and networking meetings do they frequent?
- What other services do they often use? For instance someone who has regular beauty treatments might also pay for your massages. People who pay for a gardener designer might also pay for an interior decorator. If you're an artist, try approaching interior designers and not just galleries. Find two interior designers who absolutely love your work and they will be out there selling you even when you're sitting at home!
Think about this when you're at networking events. Forget handing your business card to a single potential buyer. Network for networks instead. Go to the event with the thought "Who can promote what I do to a whole new audience of people?"
My very simple 'just starting out' leverage example
Bear in mind that your partners may at first look like competitors.
When I first saw Careershifters (an organisation helping people change careers), I felt a little despondent, thinking "I should have set that up - now someone's beaten me to it". Then I remembered the principle of leverage. I realised I didn't really want to set up an organisation anyway but I could partner with Careershifters and use what they'd created as leverage.
I approached Careershifters and wrote some articles for their website. I didn't get paid but I included a link to my website where visitors were encouraged to signup to my email list. The result was lots of well-targeted traffic and I built a list of approximately 1500 people who I could then market my products and programmes to.
I went on to co-run their evening workshops, again unpaid. I learned a huge amount about what my target market struggled with and what they wanted, I created content, practiced giving talks, and at the end of the evening promoted my coaching services to gain clients.
In a good leverage example like this, everybody wins. Careershifters got good content and coaching expertise (at no cost), I got practice, website traffic, email signups and clients. The Careershifters audience got content and expertise.
Note: sometimes leverage can be bigger with your own confidence. After I left (after refocussing my business direction), Marianne came in and used the same strategy as I did above... but she got the same organisation to PAY her for the privilege of being in a room full of potential clients, AND to guarantee her exclusive right to do so! Why? Because she put together a good case that benefitted them. And because she had the initiative to suggest something different.
What problem can you solve for your partners?
Perhaps they are just craving the extra income that your commission will provide. Perhaps their clients or readers regularly ask for something they don't offer. Or perhaps they can bundle your product or service into their own and add value to their entire offering?
Whatever it is, get to know them first, and make sure you speak their language.
Your turn - the leverage exercise
WARNING: This could seriously increase your income!
Let's get you leveraging. Answer these 4 questions and share them with the eSchool. Then start making it happen.
- The product I am leveraging is...
[taken from the final page of your Killer Offer sheets]
- The partners I want to approach are...
- What I will provide to them for the promotion...
[content for their blog/newsletter, an article for their publication, a sales letter to email, a speech you will give...]
- The benefit for them is...
[content/commission/cross-referrals of clients etc]