How Can I Grow My Business When My Customers Are Going Away? by Alan Sartain, ActionCoach November 2007
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The secret to a better business lies on our ability to break the business down into logical pieces that we can build upon. Virtually any business can be divided into five segments:

• Lead Generation
• Lead Conversion
• Number of Transactions
• Average Dollar Sales
• Profit Margin.

By breaking each segment down and focusing your attention on each segment separately, the process is much more manageable. Remember this formula:

Lead Generation X Lead Conversion = Customers X Number of Transactions X Average Dollar Sales = Revenue X Profit Margin = $ Profits.

By focusing on each of these segments individually, you will get a powerful return. With a concentrated effort, you could grow each of these segments by 10%. As you will note from the example, if you increase each segment by 10% your business would grow by an amazing 43% in Revenue and 61% increase in profits. Let’s look at each segment.

Lead Generation: While lead generation is the most glamorous segment, it is also the most expensive. Lead generation includes: advertising, promotion, direct mail, Yellow Pages, networking, strategic alliances and word of mouth. Every marketing campaign must use the AIDA principle (see my September 2004 article) and have a mechanism to measure the results. A carefully constructed lead generation campaign tailored to the specific needs of your business can easily increase the leads for your business by 10%.

Lead Conversion: Once you have a prospect interested in your product or a service, the next step is to convince the prospect to buy. Lead Conversion (total number of customers divided by the total number of leads for a give period.) For instance, if your business is similar to the example you would have 4,000 leads generating 1,000 customers which would be a 25% lead conversion rate. Lead conversion is one of the most cost effective methods for increasing your business. By developing and communicating a high impact Unique Selling Proposition (USP) and Guarantee as well as well crafted sales scripts, you could easily increase your conversion by 10%.

Number of Transactions: Most people are aware that it costs six times as much to find a new customer as it does to get repeat business from existing customers. However, most business owners only communicate with their customers when they send them an invoice and possibly a quick thank you during the holiday season. If you fall into this category, pay attention! In countless studies, the number one reason a customer leaves a business is perceived indifference. By marketing directly to your customers you can increase the likelihood that your customer will stay with you indefinitely. You should send them thank you cards, emails, questionnaires, targeted offers, frequent buyer club offers, and many other communications. With these types of communications, it will be easy to increase the number of transactions by 10%.

Average Dollar Sales: While the quickest way to increase your average dollar sales is to increase your prices, you can also significantly increase you average dollar sales with up-selling, cross-selling, check lists and sales scripts. Why do you thing the fast food industry asks: “Would you like fries with that order?” It works. With a combination of a price increase and up-selling, cross-selling and sales scripts, you can easily increase your average dollar sales by 10%.

Profit Margin: If you hold your overhead constant and increase your sales, you will increase your profit margin. Do not stop there. If you look for it, you can significantly reduce your overhead costs. If you target a 1% reduction in your overhead per week for ten weeks, you will take 10% out of your overhead costs. Some areas to consider include: better planning so you do not incur overtime; stop running ads that do not work; and check your phone bills, just to name a few. Serious cost cutting combined with the leverage of the additional sales can easily increase your profit margin by at least 10%.

There is great power in breaking you business down and then putting specific action plans in place to grow each segment. Just a 10% growth in each segment will grow your revenue by 43% and your profits by 61%. Ask yourself: “What would it mean to grow my revenue by 43% and profits 61%?” The rest is up to you.  It is time to get into action!

Alan Sartain is a Senior Executive with more than 20 years of general management, marketing and sales experience. He has a highly successful track record in leading organizations through the development and implementation of strategic, marketing and sales plans, operations, customer service and obtaining bottom-line results.  He is a creative, articulate leader and achiever who utilizes analysis, strategy, teamwork and continuous improvement to achieve results.  He is especially skilled in generating growth for the businesses with which he works.

Alan formed ReSults, LLC in 2003, and teamed up with ActionCOACH, “The World’s Number 1 Business Coaching Team” to introduce Business Coaching to the Rochester area.  He combines his love for coaching (a football coach and ski instructor) with his business knowledge to help business owners in the Rochester area make more money and have more free time.

Email: alan@getbusinessresults.com
Company Profile: ActionCoach
Company URL: http://www.getbusinessresults.com

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