It is a sad fact that 80% of businesses fail in their first five years and over a 10 year period 24 out of 25 businesses fail. Why, because they don’t have enough customers buying from them on a regular basis.
The main reason is because they don’t have enough customers buying from them regularly! They literally run out of Cash…
- They don’t attract a sufficient number of qualified prospects.
- They fail to convert their prospects into profitable customers.
- They let their current customers slip away to do business with their competitors.
So, the ONLY way to succeed in business is for the owner to have a clear understanding of the market for its products and services.
The REAL Purpose Of A Business… The main function of any business is the acquisition of new customers and fulfilment of current customers needs to make a PROFIT.
So, regardless of the type of business, market, products or services:
ALL businesses are Sales & Marketing businesses.
“…Because its purpose is to create a customer, the business has two – and only two – functions; marketing and innovation. Marketing and Innovation produce results, all the rest are costs.”
Reality No. 1. Having a ‘great’ product or service alone will not achieve success… BUT a ‘quality’ product or service marketed in a superior way WILL GUARANTEE your success.
Reality No.2. The KEY to a profitable business is to successfully implement effective and affordable Marketing and Innovation.
Alchemise Consulting looks at Simple And Scientific Principles That Can Help Nearly Any Company Double Revenues And Profits Within 12 – 18 Months.
As part of the focus, businesses need to focus on proper priorities:
- Market Share: Focus on numbers –getting more customers
- Wallet Share: Focus on customer penetration – filling all their needs
The quickest, easiest, most inexpensive road to growth and profits is to concentrate on:-How much, how many, and for how long can you sell to each of your customers?
If you are not leveraging off this focus and leverage around these 7 Profit Multipliers with your clients then you are losing sales revenue and increased profit margin per client to your competition and not adding significant value.
There is a limit to how much you can CUT COSTS before quality and service is affected.
Therefore, it makes sense to use LIMITLESS STRATEGIES: The principal of Business Growth Multipliers- ‘7 profit Multipliers’
1. Lead Generation – Getting more qualified leads
Before a person becomes a customer, they are merely a name, a lead. A customer is someone who has made an actual purchase. A lead in merely a potential customer. A prospect. The more leads or prospects you have, the more you can convert into paying customers. How do you get more prospects? There are many ways: Ads, a direct mail campaign, a referral program, Internet marketing, promotional techniques, joint venture arrangements, and many, many more. Because the choices for finding more prospects are many — and not all created equal — choosing the correct ones becomes a prime area of concern.
2. Improving Conversion Rate
This means a higher percentage of sales based on people served. For example, if a company is averaging 20 sales per 100 people confronted, a worthy goal would be to increase sales to 35 or 50 per 100 prospects. There are ways to make this happen: Improved telemarketing scripts, more attractive offers, testing different prices, improving quality, and more.
3. Increasing Average Sales Value
One of the Holy Grails of marketing excellence is the repeat sale – or more specifically, creating repeat customers who come back to buy again and again. Far too many businesses ignore this simple-to implement, common sense strategy to boost profits. Repeat sales are sometimes called “back-end” sales. For many companies, sales on the back-end are where the true profits are made. For many companies, first sales may generate little or no profit, or even a small loss. This is sometimes called a “loss leader.” It’s a low-profit sale designed with an eye on making real money on the second and third sales. But whether one makes a profit on the first sale, or not, getting more sales after a first is a major key to higher success in marketing and selling.
4. Increasing Profit Margin
It takes a certain amount of time and effort to make each sale. Why not squeeze more out that transaction while the customer is in the process of buying? It’s easily done. For example, if a customer buys a shirt, he may also buy a tie at the same time – but the customer is far more likely to do so if actively prompted by the seller. If the salesperson does not ask for an additional sale, the customer is far less likely to make one or even think about it. Suggesting an additional sale at point of purchase is called ‘Cross-Selling’. Fast food restaurants have made billions with the Cross-Sell strategy. Buy a hamburger and the worker says, “Would you like french fries with your burger?” A cousin of Cross-Selling is ‘Up-Selling’. An example: “You can get the larger soft drink for just 25 cents more. It’s a better value.” The idea is to prompt the customer to buy a larger size, amount, etc.
Profits can be increased with each sale by manipulating packaging. Fast food restaurants are again on the cutting edge of this method. They offer toys, glassware or something else with the purchase of a basic meal package. The customer pays slightly more but gets an item of extra value.
The small amount of extra profit obtained from each sale represents a higher level of profit because no extra money needs to be spent on marketing. Even in packaging deals where premium products are given away, special deals from wholesale suppliers can make the extra giveaway items well worth the cost because of increased overall sales and mark-ups.
So remember: Cross-Selling, Up-Selling, Added-Value Packaging
5. Increasing the Number of Purchases
When customers buy an initial product from a company, and that products delivers value, benefits, and enjoyment to the purchaser, a good company should feel obligated to sell that person more, to improve that customer’s life even more. If a company is proud of the products it sells and the customer agrees that the company delivers high quality, all sides win if more purchases are made.
What if the company has no additional products to sell a customer who has been sold once? The obvious answer is that efforts should be made to obtain second-tier products. But if this is not immediately feasible, the original seller can refer the customer to another non-competing company who may have something the customer can use. Why make the effort? What’s in it for the original seller? Among other reasons, it’s a terrific opportunity to build good will with a future potential joint venture partner. The second business may often return the favor and send new customer back to the original seller. Finally, an arrangement can be made so that a commission or profit share is provided.
6. Increasing Lifetime Value
In knowing the ‘lifetime value’ of your customers tells you scientifically how much you can spend to acquire new customers.
What is the ‘Lifetime Value’ of a customer?
‘Lifetime Value’ is the true Total Worth of a customer to you! It is:
- Average purchase value x Average number of times they buy in a year x Average number of years they remain your customer + the monetary value of their referrals.
7. More Referrals from Customers
Established business owners know that as much as 90 percent of their new business comes through referrals of new customers made by existing customers. Better yet, referrals cost next to nothing. A referral is simply an existing customer telling a friend about a product they bought from X Company, prompting that person buys from X Company as well. Referrals are powerful because it’s an endorsement of a product from a trusted source – a friend, colleague, or acquaintance. People automatically distrust ads, for example, because they believe that most ads contain a least some hype, if not outright falsehoods. Not so a referral from a trusted friend. There are specific methods you can employ to encourage customers to make more referrals than they would normally do.
- Single Channel of distribution – Most businesses typically rely on one method of generating income from direct sales and hence time versus effort is the limited factor to achieving massive results
- Multiple Channels of distribution – This provides instant leverage and multiple income streams to boost sales revenue and profitability from a lower cost base exponentially than linearly. Based on limited resources and investment in overheads this is far more effective to select complimentary channels to help grow your business. With every referral obtained the growth potential is increased by the number of channels who are active.
Profit Multiplier summary:
Increasing just one of these profit multipliers will help your business to grow organically with existing clients and help acquire new clients.
BUT by increasing ALL of these Multipliers by just a small margin will exponentially skyrocket your bottom line profits!
For a confidential discussion around these profit multipliers and how they can help with your business, please contact Alchemise Consulting to understand how we can tailor effective sales strategies to help achieve your profit goals.
Our business is to help you grow your business and maximise your sales profits”
Chak Ng- Director, brings over 17 years experience with strategic sales, business consulting, business development management and marketing expertise. He also has specific global experience within ICT and Telecoms markets with leading organisations such as Ericsson, IBM and Singtel-Optus. He is able to provide strong insights and innovative approaches in developing and implementing effective business growth strategies with sales models and systems dealing directly with business owners or key stakeholders.