Coach Frank Bonnin
As a business owner you want more customers, more clients. You want to have greater revenue and to increase your profits. Because those are the things that really define a business and make it work. If you are seeking more clients, more revenue and greater profits, it’s really hard to affect change in those things. Because those are results of other activities.
So ultimately, there are 5 ways that you can affect change in your business and increase your profits. Those 5 Ways affect change to those three result-driven items: Clients, Revenue, and Profits.
- # of Leads – how many potential clients do you attract?
- Conversion Rate – How many leads do you convert into clients?
- # of Transactions – How many times a year do your clients buy from you?
- Average $ Sale – How much do your clients spend each time they buy from you?
- Margins – What is the gross or net margin your business achieves?
#1 – Leads
To gain more clients or customers, you have to first look at your leads. Leads are defined as people who have in some fashion raised their hand, at least a little, showing interest in what you have to offer. A lead has not purchased from you yet. While you can’t have a direct effect on increasing the number of customers you have, you can affect change on how many leads you get. First identify the number of leads you are currently getting and where they’re coming from. Then you begin to identify additional ways to gain more leads. ActionCOACH has 87 different strategies to do so. Some of these include: Tradeshows, Strategic Alliances, writing articles or ebooks.
#2 – Conversion Rate
Next you want to look at what your conversion rate is. The conversion rate is the percentage of those leads who actually buy something. When you multiply the number of leads by the conversion rate, you end up with your number of customers or clients. While you can’t affect change directly on your number of customers, you can affect change on leads and conversion rate which translates into more customers. ActionCOACH shares with our clients a list of 85 different strategies to do so, including providing guarantees, educating prospects on value, selling an exclusive line.
#3 – Number of Transactions
You can affect change on how often a customer comes back. If you own a hardware store, how often do customers come back in a month or six months? If you are an insurance salesman, how often do clients come in and look at different products that you might be selling? In any business, the frequency of purchases relates directly to the actual revenue. So, you can’t directly affect change on your revenue, but you can affect change on how often customers come back. ActionCOACH has 68 tried and true strategies to increase the number of transactions, including under promise & over deliver, post-purchase reassurance, special occasion gifts, creating magical moments for your customers.
#4 – Average Dollar Sale
Similarly, you can affect change on how much your customers buy, what the average dollar of sale is. If you have defined what your value is and communicated that value to the client, they are no longer making a decision based on price. They are making a purchase decision based on value. So you are not competing on price. Instead, you’re going to be going to be selling based on your value and you can affect change on the average dollar of sale that you have. We share 58 strategies for increasing the average dollar sale with our coaching clients, including creating a loyalty program, in-store video promotions, creating package deals.
#5 – Profit Margins
There are numerous ways a business can improve their profit margin. Sometimes the simple act of measuring can improve your profit margin. Let’s say you own a restaurant. Start measuring the amount of food that is wasted by the end of each day. Your team will become more conscious about the amount of food prepped in advance because they know if it isn’t used, it will be measured. Another possibility is continuous improvement processes. Building systems that are focused on efficiency, monitoring and measuring those systems. You and your team continually asking how each process can be improved can have a significant impact on your bottom line.
Essentially, this is the formula to Increase Your Profits:
Take the number of Leads and multiply by Conversion Rate, which gives you your number of Customers. If you take the number of clients or Customers you have, multiply that by the average Number of Transactions and then by Average Dollar Sale, you arrive at your Revenue. Multiply Revenue by your Margins and you get your Profits.
These are the 5 Ways that you can increase your profits! In further articles we will discuss them each more in depth.
If you’d like to learn more about the 5 Ways and how they can significantly increase your profits, schedule a free coaching strategy session.