The Three-Axis Business Model
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The Three-Axis Business Model

Three-Axis Business Model

12 Apr The Three-Axis Business Model

Several decades ago, I began working with CEOS and entrepreneurs of moderately sized businesses in Australia and then particularly North America and across the world. I actually have kind of a heritage with all things to my brother and father who have been in this executive and CEO coaching space before I came along.

My father, in particular, ran Vestige in Australia which at that time was called “The Executive Connection or “TEC” for around about 9 years. He has always been in my living memory a CEO, General Manager of moderately sized businesses. When I say moderately, by the way, I mean on average $20-50 million in annual turnover, although I have spent a lot of time working with businesses smaller than that too. We’ve really aimed at those kinds of micro businesses, those entrepreneurs who are really trying to make a start.

Out of all of that work, what have now become 1000s of CEOs and entrepreneurs from stage and then in person, as I worked for them as clients in my various businesses, certain patterns have emerged. Now, this particular model that we call “The Three-Axis Model” has formed the basis for pretty much all the strategic work that I do with all of my clients and I’d like to share a few with you.

The Three-Axis Business Model

We’re talking here about smaller businesses: these honest entrepreneurs, song writers, musicians, sculptors, healers, coaches and speakers and so on who don’t necessarily think of themselves and their art as a business. These blog posts that we are releasing are aimed at very gently introducing some of the business concepts that are missing. I appreciate that not everybody wants to learn about this, not everybody wants to understand how this works. With that in mind, certainly, we formed a whole section of the project aimed at doing this work for you. This is so that you don’t have to understand but I think even a basic understanding is essential for everybody. So let’s begin.

The three-axis model is most easily visualized as “a Cartesian coordinates” sketch: one axis pointing up, one pointing across and one indicating depth; x, y, and z. The Cartesian system is how we measure three-dimensional space; up and across, or up and down, left and right, back and forth. And that’s how we measure three-dimensional space. That’s how we interact in three dimensional spaces. Well, the three-axis business model is very similar. It has its own up and down, left and right, backwards and forwards. And those three axes are traffic, conversion and slate.

What’s important to know about this model is that each of the three-axes is mission critical for every business. Your business, my business and every business out there needs these three axes in top proportions and if anyone lets one, two or three of these axes fail then the business will also fail. So, let’s talk them through.

Traffic

Traffic used to be physical traffic, which meant people driving or walking past your shop front. Back in the day, most businesses had a shop front, whether you were trying to get a shop in a strip mall or a mall or on the main street. If you were selling something, product or service, location was everything because location was an indication of your level of traffic. If you were in a mall, you had lots of traffic, you hope, so you paid more to be in the mall. If you were on a main street, also lots of traffic, you hoped — because if you were somewhere that no one was passing by, it was very difficult to do business. Of course, there are exceptions to this rule. Some businesses, like accountants, have long-term ongoing business. But even they need new business at some point.

So traffic these days has become more and more virtual, and the traffic we are talking about is people or potential clients going past your digital presence. That could be a website. It could just as easily be social media or perhaps a YouTube channel. It’s any way people can find you in the digital world. That’s traffic. And the bottom line is: the more traffic you have the better. So my question to you is how much traffic do you have: enough, too much? Where are you at?

Conversion

The second axis is conversion. It is the art and science of moving your traffic from “I am interested” to “I am in,” from a potential to an actual buyer, someone who is engaged in your business. There are many levels of conversion. Firstly, there are all the free levels. This is everything anyone can do to connect themselves to you or to your business without necessarily spending a dollar. How about liking a blog post, commenting on a YouTube video, subscribing to a YouTube channel, liking a Facebook page, pinning an image in Pinterest? All of these things value upon indications that someone is starting to orbit your business with a view, we hope, to landing. As soon as someone spends even $1, they cross a line and become more valuable to you with more of your time, more of your affection, energy and focus.
One of my colleagues in the internet marketing world once famously said to me that “for every 50 people who would be doing something for free, he would prefer to have even one who would even spend $1.” Because once you have converted from free to paid, you have made a big leap in the conversion scale of trust that someone would be able to handle money. Even if it is only a dollar, and especially if it involves an online sale. Their foreign grow involves the security association with credit cards for example little on logins and passwords and all of that. And then of course the deep conversion starts to go more higher priced into your business, something that maybe costs $5 or $50 or $500 or $5000. What about businesses who sell houses — maybe it’s half a million or multi-million dollar transactions? These are all levels of conversion. Ideally someone who converts more than once and ongoing customer — that’s the Holy Grail and that’s what conversion is.

Slate

The third axis is slate. I like to think of a slate as an old time chalkboard in which you write up a list of all the products and services that you sell. The important thing to know about this slate is it must have a variety of price points and a variety of delivery points over time. For example, if in your business the cheapest thing you can buy is $20,000 (I certainly ran into this person a couple of years back who had this very problem) then for someone to buy something from you, they have got to go from “I’ve never even met you” to “here is $20,000.” To make the very first step requires a lot of trust and that’s quite a high barrier for entry for most people. So, having a slate that only starts at $20,000 is not a brilliant slate.

For example, it’s having a slate that starts at free and moves up through five and ten and fifty and a hundred and five hundred and then five thousand and fifty thousand and all goes to the millions. That’s a healthy slate. But also it’s about delivery over time. One person I consulted with over a CEO space in Las Vegas, Nevada came to me and she sat down and she only had one product to sell, which was a knife for kitchen use. The problem was that’s all she had. So once her clients bought the knives that was it, it was done and there was nothing else they could ever buy even if they were her greatest fan. So, she was forced to find hundreds, if not thousands, of clients every month — which was exhausting. So, having something that you could buy more than once — perhaps a subscription of some kind that happened every month or a service that unfolded over the course of years — was something that just encouraged you to come back. Once you had one knife maybe you want to buy the set. Once you have one haircut maybe you want to have a trim. So, thinking about what they call continuity or continuous income.

So, those are the three axes: traffic, conversion and slate. And to have a healthy business you really need to have all three glowing and robust. Just to wrap this post up, I want to tell you that most businesses I have run into have a typical profile, and it’s not a good profile. The typical profile is that most businesses spend most of their time, especially in their early years — and this could be early decades — focusing on the slate, so they build out their products and services and somehow survive. But very few have any focus on conversion and almost none have any focus on traffic. And as a result they tend to struggle to stay alive especially these micro businesses we have to help.

So having a constant flow of quality traffic is something that almost every business would aspire to and then optimizing the conversion from “interested” to “varying levels of engagement” both free and paid, both paid in small amounts, large and ongoing is also something most businesses aspire to. So that’s what we are aiming to help you with. When we do the videos, the blogs, the books, the training and all of the packages that we have, these things for you, it’s all aimed at supporting your three-axis business.

So please, join me in thinking about your business in this way.

Tim Levy
tim@thelifesummit.com

Tim Levy is an author, speaker, consultant and coach working with CEOs and entrepreneurs on clarity, strategy and mindset. He runs a strategic marketing agency out of Austin, Texas. He routinely speaks for leading organizations like Vistage International, Conscious Capitalism and Secret Knock. Tim’s intention is to radically accelerate and enable highly purposeful CEOs and entrepreneurs in their business and personal lives.

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