Last week I was sharing with Revive Me Women in Business coaching group ‘ways to grow your business and your profit’ as part of our Accelerate business success meeting. Incidentally, I was looking for resources when preparing for our meeting to discus and workshop practical actions we can take to forward to move to the next level of financial success for our business. I chanced upon the book ‘Know your numbers’ which was sent to me as a member of the Chamber of Commerce. So here’s some credit to author John Dazley, CMK, as I read to expanded on what I thought were good actions points.
1. Increase retention rate
Research and empirical evidence have shown that it is more cost effective to retain customers and get word-of-mouth referrals, and advocacy from influencers through social and business networks, than to obtain new ones through direct sales, advertising, and promotions.
Ways to retain customers:
Select the ones which you currently are doing and identify the ones you like to improve
- Provide excellent service: Customers feel like you really care about them
- Setting the right price point for goods and services for different category of customers
- Build strong rapport and relationship with client on regular basis
- Provide continuous value and care
Being conscious of these actions would instill a sense of brand loyalty from your customers and help build a better reputation.
- What is your customer base previously (last quarter, last year)
- How many are still your customers, and will be transacting with you this year?
- What is the percent of your client base have you retained? ______%
- How do you intend to increase customer retention and value? What will you do to plan and execute these steps?
2. Lead generation system
Generating new leads by reaching out to new customer is often the most important task a business would undertake to grow.
The internet has various mediums and channels just as to generate lead through social media, events, and promotions offers, free subscriptions as a hook and network marketing:
What are your online and offline efforts steps to attract new customers?
- An outstanding website with interesting and fresh content with growing database
- Newsletters to existing clients and prospective ones
- Personal outreach of sales and follow up
- Party invite with network marketing, partner marketing
One of the most effective best ways to generate new lead is by word of mouth.
Do you currently ask your customers that you know had a delightful experience to refer you?
Check-in Questions for online marketing: Yes/No
- Are you active on these efforts social media account for marketing? _______.
- Are you getting constant online traffic, viewers or prospective customers? _______
- Are the viewers translating into increased sales revenue? _______.
- Set a monthly/week target of new viewers to get ______ number of new enquiries/ proposals/ quotations/ workshops/ training/ client bookings.
3. Average transaction value
As a small business, pick a price point that protects your interest such as your gross margin. You don’t necessarily have to price your product or service to that of your competitor’s. The misconception of compromising the price to vie for market share is just a lazy competitive strategy. If your product or service is good, price it accordingly.
- Are your profits being squeezed because of a low price point to remain competitive?
- Instead of delving into a price war, what can you do to improve the quality of the goods and services so that the higher price set is justifiable?
4. Transaction frequency
Are you offering more services to your clients?
Outline 3 ways to increase sales and service to existing customer.
Tip: Emphasis on customer service would boost the customer experience and advocacy. (Referrals)
But direct sales and creating a lead generating system is what will give you consistent results.
Check in Questions:
- How often are sales being made? _______units or appointments is sold per month.
- How much would you want to increase the frequency of transaction by?
_________units/ booking slots/ value of transaction is your target sales /month?
- What steps have you taken to give your customers a pleasant experience and what additional steps can you take, especially in the area of service?
5. Cost of goods sold (COGS) & Overheads
Reducing the cost of purchases may require some effort but as the current systems and processes would need to be reviewed to ensure they are cost-effective and efficient. This would help to increase your profit margin without having to alter the prices.
Just like COGS, overheads are non-operating expenses that can be reduced to boost the profits of your company too.
Some methods to reduce the COGS:
- Make purchases in larger quantities
- Automate with machines/ use of technology
- Lock in long-term pricing for raw materials/ enable group buying
- Create digital assets, know-how and sell solutions that can be scalable
Some ways to reduce overheads:
- Reduce business IT cost by switching computing to cloud services
- Switch business communications
- Reduce premises costs
- Reduce staff overheads
- Rent rather than buy equipment
- Activate joint promotions and offers with cross marketing partners
- Reduce cost to acquire a new client
Tip: Generate better cost-effective ideas by challenging both yourself, business partners, and employees to find ways of saving a specific sum or producing lean innovative ideas to enhance an aspect of your business.
Check in questions:
- Do you have plans to reduce COGS or overheads? Yes/ No.
- Is there any way you can renegotiate the terms to reduce the cost?
- What plans do you have this year to reduce your overheads?
6. Know your planning
Have a clear end goal in mind and take the time to plan your steps towards it.
Write these down:
- Short term vs long term goals
- Prioritise and schedule your plan for execution
- Set KPIs to keep track
- Review and reflect at every milestone
- Make tweaks and changes to your schedule/execution for improved efficiency
Check in Questions:
What are your quarterly financial goals for 2017?
Q1. _______ Q2. _______ Q3. _______ Q4. ________
- Increase efficiency by using online tools, outsourcing ________, joint promotions and bundling with _________etc.
- What steps do you intend to take to achieve your goals?
- Do you put this actions into a task management tool with a calendar to keep track?
Here’s a table for you to track of sales and marketing budget with basic measurement:
|Cost allocation||Quality measurement||Quantity:
|An average number of customers I would like to have: _______||Value of customers.
How much is average spent, per month I would like?_______
|How much I would like to increased it by?||How long do I have to attain the desired customers?|
|Conversion rate from prospect to sales||%||%||Timeline|