Step By Step Process To Increase Your Profits by 61%
In this article, you learn how, with 10% improvements in five areas, you can grow your profits by 61%.
What would you do with the extra money? Will the kids have the Disney experience? I bet you have already selected your next car (complete with colour and full spec on the audio system!). If you regularly visualise this holiday or car, you edge a step closer to experiencing it (look out for a future article showing how this works).
Let’s look at the five areas we need to grow by 10%, each with thoughts on how to do it.
1. Increase number of leads by 10%
A lead is someone who has expressed an interest in buying from you. They may have called you after reading your advert, mailshot or walked into your shop asking about the price of an item.
How do we increase leads?
If we are recording the result of each lead source (e.g. the advert, the mailshot) we should know which performs best.
If you send a flyer to 400,000 houses a year and receive 4000 calls on average, then, if you increase the next years mailshots to 440,000, you should increase leads by around 10% (receive 4,400 calls).
Increasing the volume of a campaign that works is the best strategy.
If none of your strategies are working, we need to find out why? Are you sending to the correct target market? Is the messaging attractive enough to the reader? If the headline does not compel the reader to read on, they won’t even see the offer you make. The offer needs to be compelling to take the action you want (e.g. call you).
2. Increase sales conversion by 10%
If the phone is ringing, we need to ensure that the staff taking the calls are optimising the opportunity. Let’s look at how this can be done.
- Record and regularly review call waiting times and abandoned calls. This data can help identify ways to improve the customer experience. Changing rotas or multi skilling staff can help with this.
- Staff training on how to convert calls to sales. This is can be enhanced by a process where call recordings of the best sales person are shared with follow up role plays.
- Introduce a formalised sales process. If we map the customer journey from the call to a sale and test each stage for effectiveness, we can quickly identify opportunities for improvement. (e.g. is it best for the staff member receiving the call to make the sale, book an appointment or schedule a call back with a member of the sales team?)
If a combination of the above is improved, at least a 10% improvement in sales conversion should be experienced.
3. Increase average sale value by 10%
The easiest way to do this is to increase prices. Most business owners I meet are scared to do this as they have not identified how they differentiate from the competition so compete on price. This can eventually lead to hard work resulting in no profit if competition increases. Every sustainable business has certain lines that can be increased by 10% without any reduction in profits. It may mean certain customers will shop elsewhere (usually the ones who take up your time, so losing them is beneficial). The price increase more than compensates for this loss.
4. Increase the number of transactions per customer by 10%
Most businesses that have multiple lines have great opportunities to increase sales by offering existing products to customers who can benefit, but do not have them. A regular review of products bought by customer can highlight this opportunity.
5. Increase margins by 10%
Lots of quick wins here. Here are some of the most frequent successes:
- Stop the advert that does not work.
- Chase outstanding debts (reduces bad debt expense)
- Challenge your book keeper to find a 10% reduction in costs.
- Analyse the productivity of each staff member with regular reviews. This can lead to a change of roles and better staff motivation, reducing staff attrition rates. This is enhanced if staff ideas are heard, implemented, where appropriate, with the relevant recognition.
Please find below how a 10% increase in all the areas covered above can increase your profits by 61%. In the example below, it shows how a £50,000 annual profit can increase to £80,525 .50 (61%).