Breaking news, there is no silver bullet for your business.
You’ll sometimes hear people saying “if only this would happen” or “if only that would happen, we’d be made”. Well, in my experience there is no silver bullet within business. No if only and no one single answer or action to building a great business. It’s about small changes across every area of the business, so let’s look at these and give a worked example…
What we are going to is look at how working in each area of our business can have a huge impact on turnover, so first we need to consider the number of your:
This is anyone that has ever bought from you, and if you've been going for a while you’re going to have to consider how far back you are able or prepared to go. Do you have a database? If not, perhaps old invoices can provide this information and you could transfer it to a data base? Trust me when I say that this is one area you don’t want to fall down on – your financial future depends on having an up-to-date database of anyone that you've ever come into contact with.
The Active Ratio of customers will depend upon your product or service, as it’s focused on how often your clients will come back to you. It could be weekly, monthly, yearly, or even longer. For example, a car lease company may be looking at a three-year cycle for their clients, a sweet shop might be daily. But remember that 68% of clients leave because of perceived indifference – they just don’t think you care, so do make sure they feel the love no matter how long it takes them to come back.
This is any potential new business that comes your way, via whatever marketing methods you are engaging. So, emails, phone calls, quotes or people just walking through the door. And just going back to the database, do your absolute best to capture these potential customers’ details and add them.
Converting New Leads
This is the actual percentage of new clients that you get to hand over money and become one of your lucky new customers.
Average Number of Purchases Each Year
Which focuses on how often your clients return to you.
Average Value of Each Purchase
Which is the average value of a purchase – and even if your sales vary a lot, there will be an average.
So, looking at these figures what we’re going to do is increase each one by 10%. Not a huge number, and using tactics I can share with you, you should be able to do this easily. After all, it’s only getting your conversion ratio from 25% to 27.5% or equivalent – we’re not making huge leaps…
Past Customers 300 320
Active Ratio 40% 44%
Leads From New Prospects 80 88
Converting Leads From New Customers 25% 27.5%
Average Number of Purchase Per Year 9.3 10.23
Average Value of Each Purchase £375 £412.50
Total Sales £488,250 £696,279
So you can see here that just small changes across the whole business result in an increase of £208,029 or a 43% uplift!
By Alan Adams