Another way of using the hourglass is to determine the number of prospects(inventory) that you need in each part of your hourglass. This is tremendous opportunity to really understand what is taking place in your process and will enable you to determine what is and what is not working. Where is your bottleneck or if you have ever read The Goal, where is your Herbie?

In your process do you understand your conversion rates? Are you converting 50% of your prospects from the Try phase to the Buy phase? You may not know each of these, but if you know several of them, you will have the ability to interpolate some of the others. The ability to create this chart will allow you to significantly increase your sales result. Have you ever considered where your constraints were in your marketing? Many people spend the majority of the time, money and even skill in developing new leads. They may be just piling prospects(inventory) in front of a constraint. Going through this exercise may significantly increase your awareness on what is your limiting factor.

An obvious example, is we alll know that a referral is our best form of creating business. Duct Tape Marketing emphasizes referrals and in fact, John Jantsch, author of DTM, next book is based on building a Referral Marketing System. I mention this, because, I believe your marketing is incomplete without a formal Referral Marketing system in place and by the way, I offer such a package. Seldom do I see the true cost of what it means to gain a referral. I think the chart below, demonstrates quite vividly what it means in the overall marketing flow. If you get a repeat buyer or a referral, you would drop them into one of the phases above. Notice, how it significantly it could change your marketing efforts. Consider the dollars and time you spend in the top of the hourglass. How productive would your efforts be in using the same amount of time and effort in the bottom of the hourglass?

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We realize that referral efforts are probably short changed in most marketing practices. But that may or may not be your limiting factor. Every System typically has relatively few constraints. However, to operate at maximum efficiency, the limiting constraint must be identified. The Five Steps of Continuous Improvement from the Theory of Constraints methodology help identify and improve the constraint. That is the next stage and next blog.

Related Blog Posts:

Using the Theory of Constraints in Marketing

The Marketing Hourglass