Perhaps you have heard of the business growth equation (otherwise known as the 5 ways to increase the profitability of your business).
As part of that equation, there are two areas that (I find) most business professionals overlook and, as a result, end up costing themselves big money (no matter whether they’re in the online or offline space).
Let’s take a look at what they are. …
First – let’s look at a key performance indicator that almost all businesses get wrong – their conversion rate. Many business owners think that their conversion rates are 5 or 6 or sometimes even 7 or more out of 10 but what happens when they monitor and measure their conversion rates? Most find that it’s as low as 2 or 3 out of 10.
So start measuring your conversion rates. When you do that, if it looks like they could do with a boost, here are some quick things you can do to increase your results:
Improve the sales skills of your team.
Create a follow-up system for communicating with unconverted prospects AND communicate with them regularly.
Start offering a guarantee, a free trial, more attractive upfront offers.
Let’s say that your average sale figure is currently $500 and for every 3000 leads you attract, 900 of those people turn into clients. With that, your conversion rate is 3 in 10.
What would happen then if you put in place some of the measures above and increased your conversion rate ever so slightly, from 3 in 10 to 3.3 in 10?
Your client numbers would increase by 100 to 1000 which would end up being a $45 000 increase in sales or a total of $495 000 (instead of $450,000).
Now – let’s take a look at another important area of your business. By doing one or two very small things, I’m going to show you that it’s very easy to increase your average sale figure from $500 to $550.
For the purposes of this exercise, let’s assume you have put in place measures to increase your conversion rates and your client numbers are now sitting at 1000 with a total revenue of $495,000.
When you increase your average transaction value from $500 to $550 your revenue jumps to $550,000 … a healthy 22.2% increase from the $450,000 starting figure.
Or – an extra $100,000 in your pocket.
So what can you do to achieve these results?
- Cross sell other add-on products.
- Upsell to a more expensive package.
- Offer bounce-backs – another great value offer just after the sale.
- Increase your prices by 10%.
- Package other goods and services together … and more.
One of our mortgage broking clients has experienced some incredible results by cross-selling other financial products to their clients … insurances, financial planning services and the like.
A printing business started upsell by promoting with comps slips with every letterhead order and blank business cards with every normal business card order.
So what can you do?
Some parting advice … Start with one of these initiatives and do it well. Roll it out to all areas of your business. Create systems and checklists and training to ensure all your people embrace these value-added selling initiatives.
If you’d like some help identifying the best ways to implement these ideas into your business, one of our marketing consultants would be delighted to help you with that. Just call our office.