Written by Wassim Karkabi Leading Business & Executive Coach, and Master Licensee of ActionCOACH in the Middle East
Conventional business looks at sales from the standpoint of three variables, namely sales, expenses and profits defined by the formula: Sales – Expenses = Profits.
In this narrow approach, each variable depends on the other forcing businesses to look at either increasing sales or decreasing expenses in order to influence profitability.
If you move away from this limiting view and break the sales variable into five separate components, these variables can be worked individually and across the board to leverage profits on the bottom line.
There are only five ways to truly grow your business: Getting more leads, converting those leads into customers, getting customers to make bigger purchases at higher price points, getting them to buy more often and getting more sales at higher profit margins. If you increase all of those factors by just 10 percent, you can give your bottom line a massive boost.
I want to share five simple, proven (and low-cost) strategies you can use immediately to get those increases to start feeding more profit to your bottom line. Most of them involve resources you probably already have in your business, or little “tweaks” to strategies you may already be using.
Find your bestselling product and increase the price by 10 percent. If you don’t know what your strongest product is, now is the time to find out. Once you figure it out, boost the price on that item or service by 10 percent. It’s an increase so small, most people won’t even notice. If someone does notice and complains, you probably don’t want them as a customer anyway.
To increase your average Rand sale, create sales scripts for you (and your salespeople). Sales scripts help to frame your sales process, especially if you don’t consider yourself a natural ‘salesperson’. The sales script should also help initiate and build rapport, which leads to higher sales.
To increase your average number of transactions, create loyalty and referral programs. While a lot of companies use this strategy, many don’t use it correctly. To get the most out of a reward program, it should be targeted at your highest-yield customers – those truly loyal customers or clients who don’t haggle on price. This involves segmenting your client base. Done right, you can create both a rewards program and a referral program that is profitable versus one that simply defaults to discounts or giveaways.
To increase your conversion rates create a guarantee, especially if none of your competitors have one. Guarantees are great ways to covert customers and establish long-term customer relationships. This is especially true in categories where guarantees are hard to “guarantee” or in industries that don’t offer any. Then advertise the guarantee. This will boost the number of referrals among current clients and increase the number of qualified leads.
To increase your number of leads, test and measure low-cost ways first; then move to paid advertising. Lead generation is actually the most costly of the profit-boosting strategies, so start with low-cost ways you can track for results before you start spending thousands on an advertising campaign. What’s low cost? These days, it could be as simple as a direct-response ad in a newsletter or trade publication. Online is also a great way to go, with a good website and online classifieds leading the way for low cost lead generation. The key is to make sure you are on target with your media and your audience, you have a compelling offer and your copy is both sales and response-oriented.
Remember, you are looking for incremental increases to your bottom line. A 10 percent increase in each of these areas will make a significant impact on your profits as long as you keep your costs in check