I want to share with you all some ways to help improve your profits, but first what happens when profit declines?
Every business owner reacts in a different way. Some look to cut expenses while others look to get more leads and customers by investing in advertising and other strategies. While controlling expenses is important whether profit is up or down, cost cutting is typically a short-term fix – you can only cut so much and still have a business. This is not the preferred option. While every business requires a steady flow of leads to sustain growth and replace lost customers, lead generation strategies are typically the most costly methods to grow revenue.
So what should you do?
Before you invest time and money generating new leads, know and understand the other factors that drive your revenue: sales conversion rate, number of transactions and average dollar sale.
For many businesses, these are untapped profit opportunities – lots of room for improvement at substantially lower costs!
The sales conversion rate is simply how many leads you or your sales people convert to paying customers. Think of it as an efficiency measure for sales. What is your sales conversion rate? If you don’t know, track it. After all, leads that are not converted to sales are a waste of time and money!
An example of this – 10 people walk through your store and you sold to only 3 of them, you would end up with a conversion rates of 3 out of 10, or 30%.
Exercise for this week – measure the number of customers (includes telephone, walk ins etc) that make enquiries to your busines, then note how many actually brought from you. What is your conversion rate?
Building Systems Into your business
