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Cohen’s implementation of key book ideas as Claude skills

Jason Cohen has built two SaaS companies to billion dollar valuations, and advised many other startups on their growth strategies. This book takes you behind the curtain to see the hidden levers available to business owners to create more revenue (and profit!) without additional resources. I have been reading his newsletter for several years so I was excited that he finally published a book sharing more tips on how to grow a successful company.

What impressed me was that I consider myself a business strategy guy, and even I discovered new frameworks to help startups succeed. A few of my takeaways from the book:

• Focus on profit. He suggests creating a plot where you “order your customers by the profit each one individually generates” (gross profit), then plotting cumulative profit vs. cumulative customers. He shares that graph from his company WP Engine in 2013, which showed that 40% of total company profit came from 5% of customers, and 50 customers generated 20% of the total company profit (20x more profit than the average customer). On the tail side, 10% of customers were lowering company profit by 30%; in fact, by getting rid of the bottom 100 customers, they would have increased profits by one million dollars.
• Target your ideal customers and filter out the bad fits. Based on that profit graph, you should be willing to spend a lot more to acquire customers like the top 50 (worth 20x the profit), and should be doing everything you can to avoid the bottom 100 (costing significant profits). How do you do that? By aligning your marketing message and positioning to appeal to the ideal customer, and push away those who don’t fit. This is counter-intuitive if you believe “the customer is always right”, because then your customer service will do whatever it takes to retain customers. But if you want to lose those customers that aren’t a good fit, what do you do?
• Share what you’re not doing. Cohen says that your ideal customer (who he calls Carol) loves your product or service for its strengths, and doesn’t care about its weaknesses, what it can’t do. The anti-Carol, the customers that cost you money, don’t appreciate the strengths and care deeply about the weaknesses. So emphasizing your strengths and highlighting what you are not doing will filter out the anti-Carols and attract the Carols. He uses the example of Subaru leaning into its strengths (low-cost, reliable, safe, rugged) _and_ its weaknesses (not sporty or cool, ugly, low performance). Anybody that wanted a cool sports car would be pushed away, while those that wanted a low-cost reliable car would be attracted.
• Targeting works on larger audiences. My first instinct was that targeting Carol with your messaging will push away all other customers, but Cohen makes the case that your message will still work with broader audiences. He suggests that there might be 10x more customers who value the positives but don’t view the weaknesses as dealbreakers (he calls these customers Diana), and 10x more customers beyond that who might be willing to make the tradeoff of the weaknesses for the positives (he calls these customers Eddie). The point is that “Targeting Carol makes your message clear and compelling” as well as consistent, and “because you were so clear about what those trade-offs are and showcased your best qualities in the best light, you’ve paved the road for Diana and Eddie to choose you”.
• With better targeting, you can raise prices. If you are trying to appeal to the average customer, who hasn’t accepted the tradeoffs of positives vs. weaknesses, then you have to keep prices low. But the Carols and Dianas disproportionately value your positives relatives to the weaknesses, so they are willing to pay a lot more money. At Cohen’s startup Smart Bear, Cohen shares “we raised prices from $35 to $1,300 over several years, yet the number of sales per year also increased”. Part of this was sharing the context of what the prices were enabling; Cohen wrote a personal email describing the price increase which helped it land well because “Most people are reasonable and want you to succeed, both to support a small business and because they want an improving product and quality customer service.” If you’re clear about the value you provide, and that value matches what’s important to them, they will be willing to pay. That matches my experience: in my first few years as a coach, my clients were telling me I should be charging more because they wanted me to succeed.
• Churn disproportionately limits growth of subscription businesses. I knew churn was bad, but this hit home: “Shifting cancellation from 5% to 4% raises the growth ceiling by 25% even if marketing doesn’t improve” because if marketing is bringing in X number of customers per month, then you will stall out when churn equals X (see more details in this Cohen post). Understanding what makes customers cancel is one of the highest-leverage things you can do to increase growth, and Cohen shares several tactics to actually get to an answer there.

Cohen knows his stuff, and his clear writing style helps readers instantly understand the hidden multipliers that will grow a business faster. Highly recommend.

P.S. I also appreciated his closing chapter musings on how to build a business that aligns with your strengths: “What you do control — small and unglamorous as it may be — is which game you choose to play. … Success is living in alignment with who you are, while striving to become better. Success is obsessing over something that you were meant to create, and then sharing it with those who appreciate it. … You control whether you stand up for your values, even if it means you lose a deal. What you do in your most difficult moments is who you truly are.” In other words, You Have A Choice.

P.P.S. Writing this post finally got me over the hump to try the Claude skills Cohen shares to implement the ideas in the book. I actually found it very helpful to zero in on my “Carol” (ideal customer) and to update how I position my coaching to appeal to my best clients. I updated my LinkedIn and company page to use that positioning so we will see if it helps bring in more clients.