As a rule, I’m not a big fan of business quotations.
But there’s one that I love.
It’s by Jack Welch, the former head of General Electric. Jack said,
“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
To me – a PPC / SaaS guy – that perfectly describes my worldview. And it’s something I always want to drum into my clients.
Here’s why: Let’s say you’re a SaaS company and you’re spending $100,000 a month on Google Ads.
And let’s say that $100k generates signups worth $200k.
So you’re getting 2:1 return on ad spend.
And let’s say you decide that, for the next 12 months, you’re not going to touch your PPC account. You’re just going to let your ads run.
Not only that, you’re not going to change your landing pages, your conversion funnel, your onboarding, your retention process, your product, your prices…
Everything is just going to stay the same.
Where will you be 12 months from now?
It’s hard to say – because no-one is crazy enough to let their ads just run. But if I were to guess, I’d guess you might only be spending $50,000.
(Individual mileage will, of course, vary.)
But how much would you be getting back?
Maybe $60,000… maybe much, much less…
Why your traffic disappears
So why does performance degrade so much?
It/s because the rate of change in your business was zero, but the rate of change outside your business was greater than zero.
While you were doing nothing, your competitors were busy testing. They were testing:
- Their ads
- Their landing pages
- Their sign up form
- Their offers
- Their prices
- Their bonuses
- Their welcome email series
- Their follow ups
- Their client retention sequences
- Their client reactivation
- Their upsells
And, every time their tests produce a winner, that improves the economics of their business.
And, if they’re testing like crazy, they’re going to have a lot of winners. (And, sure, a lot of losers – but those are temporary.)
So, with better economics – higher conversion rates, higher conversion from trial to paid, higher lifetime value – they can bid far more for clicks.
And that shoves your ad further and further down the page.
And you’re left with nothing more than the scraps that fall from their table.
The solution
There’s a corollary to Jack Welch’s comment. That is,
“If the rate of change inside your business exceeds the rate of change inside your competitors, the end is near for your competitors.”
Your goal should be to test more – and evolve faster – than your competitors.
And how do you do that?
Well, you talk to me.
All the best,
Steve Gibson
