My goal as a business coach with ActionCOACH is to help business owners THRIVE not merely SURVIVE. What does that mean? It means I work with my clients on how to be a top performer in terms of Time, Team and Money.
- TIME: Teach you as the owner how to systemize the business so you can work ON building the business rather then having to work IN the business to produce the product or service.
- TEAM: Help you hire the right people and inspire them to produce the products or services your customers want, when they want them, at a price they are willing to pay.
- MONEY: Mentor you on how to increase revenue and profits by 50-100 percent.
For this month’s article, let’s focus on the money aspect – how can you increase your revenue and profits massively?
ActionCOACH looks at the profit generating process for all business types in the same way. There are five key profit-generating areas:
- Lead Generation
- Conversion Rate
- Average Dollar Sale
- Average Number of Transactions
- Profit Margins
Those five keys fit into the following equation:
Lead Generation X Conversion Rate = Number of Customers
Number of Customers X Avg. Dollar Sale X Avg. Number of Transactions= Revenue
Revenues X Profit Margins= $ Profit
This equation for profitability works with any business, in any market, in any industry sector.
We have developed 367 different systems and strategies under these five variables. For example, Lead Generation has 73 strategies that can be implemented to help business owners increase their lead flow. In addition, we have 86 strategies that may be used to increase your Conversion Rate, and so on down the line.
Lead generation can be increased by improving your marketing, utilizing referral systems and/or employing strategic alliances. One of my clients dramatically improved his lead generation by using Action’s 4 Steps to Effective Advertising. Another client is launching a cutting-edge referral system that will enable his existing customers to help him grow explosively.
We’re going to explore the role of conversion rate in maximizing profits.
The conversion rate is simply how many of your leads become customers. This is an area where very simple and inexpensive changes can lead to dramatic results.
Consider the typical department-store salesperson. You enter the store and the salesperson says, “May I help you?” and you probably reply “No thanks, I’m just looking.” When this happens, the well-paid salesperson is sidelined- literally sent off to stand somewhere and hope that you ask for help.
What is his/her conversion rate at this point?
If instead the salesperson is trained to use a different opening line, we could prevent the salesperson from being sidelined.
If the salesperson said “Good afternoon, is this the first time you have shopped with us?” it is very hard for her/him to be sidelined. If you say “Yes”, the salesperson will say “Great let me show you what we have in our women’s (men’s) department”. And if you say “No I shop here all the time” the salesperson will say “Great, let me show you what just came in last night.”
In either case, the salesperson is with you, selling you. That simple change can double the conversion rate.
Another way of increasing the conversion rate is sales scripts. If you have more than one salesperson, you probably have one who sells more than the other.
If you were to record the dialog the more successful salesperson uses in making a sale and turn that into a script for the less successful salesperson, what do you think would happen?
If you increased your conversion rate by 50 percent – say from 25 percent to 37.5 percent- you would increase your net profits by 50 percent, without any other changes in the five key variables. And if you could double the conversion rate, that would DOUBLE your net profit.
We’ll look at increasing the number of transactions and the average dollar sale in future articles.
Remember, my goal is to help you THRIVE not merely SURVIVE!
Brad Sugars founded the brand Action International in 1993 when he realized there was a disconnect between business advice and implementation. The answer was Action! Brad Sugars created a business coaching company so that business owners throughout the world can realize their goals in business. Today the company is known as ActionCOACH. To learn more about business, visit Brad Sugars Review blog!