5 Things to Increase Revenues
You understand that you have to boost sales. But write "increase small business revenue" on your to-do list and I'd be willing to bet that you won't get around to it. The issue will conquer you before you ever actually get started.
And therein lies your actual predicament: Where do you start? What levers can you pull to bring up your bottom line?
I Will show you, if you'll allow me to make a short detour back to high school mathematics.
To get your mind around it, here's a simple formula:
(#*%*$)/t ~ Earnings
OK, it doesn't look all that simple, but it is.
# = The number of leads you get per month.
% = The conversion rate of bargains into trades. For example, if you are called by 100 people, and out of those, 10 buy, your conversion rate is 10%.
$ = The average sum you accumulate from a customer in one trade.
t = The average amount of time it takes to close each deal.
~ (squiggly man) = This symbol indicates a proportional relationship.
Revenue = The sum your sales pipeline generates per month.
What does this all mean?
You'll get a larger number should you think back to Algebra course, by decreasing variables in the denominator of a fraction or increasing variants in the numerator. In addition, if you have an amount that is proportional to that amount increases and revenue, so does your sales. Therefore, if you can increase #, $, or %, you increase revenues; also, if t can be decreased by you you can raise earnings. Oh, and the really cool thing here is that if you're able to make quite little positive changes to all these variants you're essentially leveraging the "Compound Effect" as described best by Darren Hardy.
Let's say you are a business consultant. A month, you get 40 leads, and also you sell to two of them. Your average sale is $5,000 and it takes you 10 hours to close a typical deal . Units aside (to simplify), your formula would be (40*5%*5,000)/10 which gives you the magic number of 1,000.
The compound effect at work!
So how do you improve each one?
Amount of leads - Leads that are raising isn't difficult. Ciplex, for my Web design business, we focused on making sure that every web site we built for our clients contained a credit that linked back to us. When people saw the great websites we questioned who created them and assembled, they had an easy method to contact us. That's merely a small opportunity. Depending on your own company, you can attempt a number of marketing tactics, from trade-shows traditional advertisements and, to PPC, SEO, social networking, and word-of-mouth promotion.
Implement a better prequalification round, your job here will be to get better leads, optimize your site for conversion, and enhance your sales process and pitch. We focused on training our team associates to improve their product knowledge, to raise conversion rates at Ciplex. Instead of sales people, they became consultants, working with the customer to learn the most effective option for their business. Clients adored that and our conversion rate jump was seen by us because of this.
Average price size - Can you sell more in a transaction enhance your product quality, or try introducing higher ticket items into your product/service package? Be careful with this one as it does not consistently make sense to raise your costs. As we wanted to stay competitive we left this one out at Ciplex, as well as the market did not give much room to raise pricing to us.
Average time to close a deal - There is no replacement for excellent salespeople and empowering them with knowledge, tools, excellent systems, and procedures to get the task finished right. We also saw the typical time to close a deal go down, as we saw our conversion rate increase when we focused on training our team.
The end target will be to break down sales creation into specific, quantifiable action items. By making very small changes to each variable growth can be compounded by you in your revenue flows and boost the throughput of deals through your pipeline. After you get your sales to where you would like it, your focus should shift to maximizing profit margins (without losing qualify) to actually scale your business.
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