- December 11, 2014
- Posted by: Paul Foster
- Categories: Business Development Strategies, Business Growth Advice, Grow a Business
Get ready to take action and get easy business growth… but just reading this blog won’t make you money. That’s why we give you the tools and gauges to actually make it happen too!
By the way, none of this data is on your business’s income statement. That only reports the revenue your business did receive… we want you to find the revenues you missed out on!
Easy Growth Method 1: Increasing you conversion ratio
Starts with: A gauge for tracking the conversion from leads to actual sales
Big opportunities for growth lie in the leads that didn’t get converted to sales. The potential customers came to your business (i.e. the advertising worked), but they didn’t buy anything. The calculation is simply a percentage: Out of every 100 leads, how many were converted to sales? If you convert 30 out of every 100, your conversion ratio is 30%.
In a retail environment, it can be a simple sheet of paper at the sales desk that counts the potential customers that come through the door. For a contractor, it is a simple piece of paper documenting all your prospects, contact info, and when you made your proposal or quote.
We had a client that doubled his revenue when we asked him to follow up on the proposals he didn’t hear back from in two weeks. A lot of them said something like “Oh sorry, we have been too busy, why don’t you just go ahead and do the job”!
Action 1: Create a simple conversion calculation worksheet
Action 2: Collect the data and calculate your current conversion ratio
Action 3: Investigate what went wrong when the leads didn’t convert into sales
Action 4: Fix the problems in Action 3 that are within your control to do so
Easy Growth Method #2 – Increasing your average transaction value
Stars with – A gauge for tracking the average transaction value
Once you can track the average transaction value, you can move towards increasing it and seeing when it works. The most famous upsell is:
“Would you like fries with that?”
The upsell to fries is a result of a simple but consistent sales system. If a customer orders a hamburger but no fries, ask the question.
The big opportunity is in creating and enforcing the systems to make sure each upsell opportunity happens.
Sometimes sales people forget to ask if they want the extended warranty or if they buy oil, do they need an oil filter too?
Action 1: Calculate you average transaction value by recording the amount of the sale on your conversion ratio worksheet. Alternatively, ask your bookkeeper how to determine this number.
Action 2: Identify the most common upsell opportunities that your employees should ask, know they should ask, but still sometimes forget.
Action 3 : Create a fool proof system, checklist, string around their finger or whatever it takes to make sure the system is followed correctly every time. Most often this is a quick sales training update.
Easy Growth Method #3 – Ask them to return to do more business
Starts with – A gauge for calculating the lifetime value of a customer
This is calculated as the average transaction value times the number of transactions you will do with a customer in their lifetime.
Action 1: Calculate the lifetime value of your customers
Action 2: Implement systems to ask them to come back. Some examples are:
- Follow up phone call post purchase to assess satisfaction and advise of additional products and services.
- Collect addresses, phone numbers and email addresses at the point of purchase.
- Create a ‘value add’ offer and mail, email or call existing customers with the offer.
For all of these activities to happen they need to be implemented as part of a formal system with accountability to make it happen.
It may seem obvious, but the best way to get existing customers to return to your business is to actually ask them to.
In summary, you might be thinking all the above suggestions are easy and obvious.
But if your business is executing on every one of these system , every time and you have the gauges set up to prove it, I want to hear about it! Or if you have ever made a purchase from another business and observed all these important systems in place please let us know too. Please leave a comment below – thanks.
These businesses should be celebrated and we would be glad to share it with the world!