We have shared an overview of the 5 Ways to significantly increase profits and have shared a more thorough explanation of #1 – Leads and #2 – Conversion Rate. The third of the 5 ways is the Number of Transactions. This is the number of times each client or customer returns to make a purchase from you.
If you have gone through the first two of the 5 Ways, you have multiplied your number of leads by your conversion rate to come up with your number of customers.
The next step to increase profits is to positively impact how frequently those customers purchase from you. To start out, currently how often do your customers come back to purchase from you? This will be different in every industry. For instance, there are many subscription-based industries where the number of purchases they make is exactly 12 times each year (think Hulu, Netflix). And there may not be much you can do to change that. If you are in an industry such as that, you may simply need to focus more on the other four of the 5 ways.
In most industries you can affect change on how frequently the customers make a purchase. For instance, let’s say you have a retail store. How often do your customers come back? How often do they choose your store over the other stores in the area? If you’re an automotive shop, how often do your clients bring their car in? If you’re a hairdresser, how often do your clients come in to get their hair cut?
Let’s use the hair stylist as an example. When the stylist is finished with the client’s haircut, what do they do? Do they walk the client to the cash register, take care of payment as the client says, ‘See you next time I need a haircut’? If that stylist doesn’t schedule the next appointment right then, what’s going to happen? The client won’t think about calling for an appointment until their hair is getting too long for them. Then they’ll forget for a week or so. By that point, the stylist is probably booked out several weeks.
If instead, the hair stylist always schedules the client’s next appointment before they leave, over the course of a year it will result in more transactions from that client. Something as simple as immediately scheduling the next appointment can have a significant impact on number of transactions, which will increase profits. This simple act can apply to many industries, for instance chiropractors, massage therapists, dentists, etc.
At ActionCOACH, we have 68 different strategies to affect change on how often customers return. Some of the 86 strategies include offering service contracts, having a product of the week, creating a membership card, and a reminder system for booked appointments. (Think about the text message you get reminding you about your next dentist/chiropractor/spa/etc. appointment.)
As another example, let’s say you own a retail store. How often do you advertise to your current client base? I’m sure you’re advertising to potential new clients, but it’s eight times less expensive to advertise to your current clients. If you send them an email, they’re more likely to open it because they know your name and products. If you are advertising to your current client base, do so more often. The goal can be a small incremental increase. So, if they currently come back twice in a month, aim for 2.2 times a month. Small changes like this can make a difference and increase profits.
Ultimately you want to make incremental changes in each of the 5 ways to massively increase profits. If you improve each of the 5 Ways with just a 10% change, this will result in a 46% increase in Revenue and increase profits 61%!
If you’d like to learn more about the 5 Ways and how they can significantly improve your business and increase profits, schedule a free coaching strategy session.