When sales and profit decline, business owners react in various ways. Some look to cut expenses while others look to get more sales and customers by investing in advertising and other lead generation strategies.
Controlling expenses is important whether profit is up or down. But cost cutting is typically a short-term fix. You can only cut so much and still have a business. While a 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, the number of transactions and average dollar sale.
For many small businesses, these are untapped profit opportunities. They offer a lot of room for improvement at substantially lower costs!
Sales Conversion – Your Efficiency Measure
Sales conversion rate is simply how many leads you or your sales team 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!
Tips to Improve Your Sales Conversion Rates
- Define your ideal customers and understand what is important to them. Without clear targets, every lead looks like a great opportunity.
- Recognize your company’s strengths and weaknesses. Be honest with yourself. What do you do well from the customers’ perspective and profitably? If you are not sure, ask your ideal customers. Then focus on prospects that NEED what you do well and be willing to let go of the others.
- Differentiate yourself with a guarantee. If you consistently deliver critical benefits for your target customers, a guarantee is a great way to reduce the buyer’s perceived risk, overcome obstacles and convert sales. The key to an effective guarantee – make sure your delivery is consistent and make sure it is relevant or important to your target market.
- Create a sales management system – a consistent approach you use for every lead. Know the key points of contacts and where prospects are in your sales funnel.
- Know why customers buy. What benefits do your customers get when purchasing your products or services? Ensure sales messages and discussions communicate this. Prospects may ask about features, but they buy benefits.
- Set sales and milestone goals and track them. Key events in the sales cycle, such as face-to-face meetings or requests for quotes, are indicators of progress. Tracking tells you where prospects fall off so you can improve your sales system. Remember, what you measure, you can manage and improve.
How Much & How Often Measures
The number of transactions relates to frequency – how many times your customers purchase from you over a specific time period, typically one year. The average dollar sale represents how much customers spend each time they do purchase. What would your bottom line look like if your customers made one additional purchase each year or bought one more product or service when they purchased from you?
For most owners, the answer is ‘substantially better than it does right now’. Small improvements in these areas can increase revenue or sales without acquiring new customers. Tap into your existing customer base and watch your profits grow.
Ways to Increase Transactions and Average Dollar Sale
- Develop or maintain your customer database so you can keep in touch or quickly respond to sales opportunities. Think email, mail and phone so you capture the relevant information.
- Stay connected with your customers by phone, mail, email or through social media. While the frequency may vary based on the type of business, every customer should receive a ‘touch’ at least once per quarter.
- Make valuable customers feel more appreciated than non-customers or prospects. While new customers are critical to growth, make sure current customers get some VIP treatment. Programs, offers or specials just for current customers work well.
- Look for opportunities to sell multiple products or services. Educate customers on the range of services you offer, create checklists of typical add-on offerings for key products or services, bundle or package products and services, implement sales scripts, free trials, or special offers on additional services with their primary purchase.
- Train your team in sales and service. Wow your customers with consistent delivery so you create raving fans who spend more and buy more often!
On a final note, know the numbers! If you want to improve sales conversion, the number of transactions or your average dollar sale then track it, set goals, implement a strategy and celebrate your teams’ success. Your bottom line will thank you!
Ready to Put Your Business on the Path to Success?
Would working with a business coach help you take your business to a whole new level? Then let’s explore the possibilities with a complimentary consultation. It’s a chance to get to know each other, discuss your goals and the obstacles that hold you back. Together we can determine if there is a good fit between your needs and my services.
To learn more or schedule an appointment, call me at (856) 533-2344 or drop me an email Joan@HybridBizAdvisors.com