"Give me a lever long enough, and I will move the world" - Archimedes
Playing on the teeter-totter in kindergarten, we probably learned what "leverage" is. But what does the term mean in business?
Simply put, "leverage" is the ability to accomplish more by use of a tool than you could through your own direct effort. The most obvious use is in investing, when (for example) you borrow money to buy more shares than you could otherwise obtain.
When it comes to sales, finding a job, or whatever other business goal you are trying to achieve, your success is driven in large part by your ability to leverage the community you build around you. By positioning yourself appropriately, you can call upon not only your own knowledge, skills, and contacts, but also those of the people you know, with relatively little effort. Online networking tools in particular, can dramatically increase your leverage: more results with less effort.
Let’s look at a few specific ways you can apply the concept of leverage, particularly online:
Crossing the Action Threshold
Many people will respond if you ask them for a favor. But it’s far better if they proactively market you and seek out clients for you. It takes a certain degree of trust and relationship strength for them to act proactively — that’s when you have leverage. If your relationships aren’t above that "action threshold", they’re not really serving you at full capacity. To achieve this goal, you first and most obviously need a high credibility level in what you're selling. Assuming you have that, you can also motivate that proactive behavior in others by being proactive yourself in your service to them. A finder's fee is another way to motivate more people to look out for your interests.
The Power of Many
Any time you interact in a public venue rather than one-on-one, that’s leverage. For example, public speaking is a powerful way to reach more potential customers of what you're selling. The same conversation exposes you to, and connects you with, a large number of other people, all for the same amount of effort — plus you get the added benefit of the other people in the community sharing their experiences. When our readers write to us about issues we discuss at http://TheVirtualHandshake.com, rather than replying vie e-mail, we typically reply with a blog post… which thousands of people will read. When people send you a private message in a social networking site, you can suggest taking it to a public channel (where appropriate.) That’s leverage.
You can leverage your writing by repurposing it for multiple venues. Let's say you write something in a discussion forum. (Consider composing your replies to web forums in a word processor or HTML editor. That way you’ll have it saved for later revision or expansion, plus you get the benefit of spell-checking your web postings.) You can use your initial text as a discussion starter in another forum, then post it to your blog, include it in your company's newsletter, and expand it into an article for publication elsewhere. You get dramatically more value from your initial investment of effort.
Don't Spread Yourself too Thin
Something to keep in mind: with leverage comes risk — the risk of becoming over-extended. Only a very foolish investor would have all of his investments on leverage; you have to keep your debt levels under control.
Similarly, with your community of support, you have to invest the one-on-one time with the most important people, who are typically the people with the greatest buying power and likelihood to buy. You can't do this en masse. If you spend too much time doing "bulk networking" (also known as spam), you won't have enough time to spend developing those stronger relationships that you need to actually get your business done. If you become so over-extended that you can no longer service your relationships, don’t expect them to provide any returns when you need them.
Online, it’s very easy to become over-extended with your relationships because some of the tools make it so easy to make trivial connections with large numbers of people. Also, talking with people about business is, for many people, a lot more fun than actually working on your business. We have heard many anecdotes of people spending time on discussion forums and networking sites when, by their own admission, they should be pursuing existing leads, putting out proposals, or developing new products.
In Chapter 2 of The Virtual Handshake: Opening Doors and Closing Deals Online, we suggest a three-step process to help you keep your focus on high-return relationships. (For this example, we're focused on the sales process.)
- Review everyone in your contact database to create a list of hot leads: These are potential customers, employers, or whatever sort of person you are pursuing). This target list also includes people who are not themselves leads, but can introduce you to leads. The head of the local synagogue or church knows many people — it could be worthwhile to ask him if he might know customers for your business.
- Approach all of your leads over the next few weeks: Work on building your relationship with them. Over time, and depending on context, either try to sell to them or else ask for referrals.
- Focus on meeting new people only after you have pursued the majority of the existing leads: Serving your current customers should be your highest priority, followed by pursuing your hottest leads. Let us say that you sell your consulting services successfully to 50 percent of your leads (which would be a very impressive close ratio!) In a new, closed-entry chat room, there is only perhaps a 25 percent chance that you will meet someone with that 50 percent chance of revenues — so you only have a 12.5 percent chance of earning revenues from participating in the chat room. A bird in the hand is worth far more than a bird flitting through cyberspace.
Leverage is a powerful concept. Maintain your focus, don’t get over-extended, and you can expect a great return on your investment of time and energy.