Brad Sugar's 5 Ways
Flicking through the Entrepreneur mag, I came across a fella peddling his own fail-safe system on how business owners can generate crucial extra profit.
It’s not without merit, and reminded me of the simplistic approaches sales managers like to use when trying to get more activity out of their charges.
The first line of his system is:
Lead Generation x Conversion Rate = # Customers
Most reps realise that to gain more customers you either put more prospects into the top of your funnel, or close more at the bottom (… preferably both).
I guess the consultancy around this system walks people through all the myriad options for achieving these.
The second line is:
#Customers x Avg. Dollar Sale x Avg. # Transactions = Revenues
And again, pretty much every successful salesperson I’ve met has at some stage struggled with how to increase their personal average order values.
And finally, a laudable focus on the bottom-line:
Revenues x Profit Margins = $ Profits
So there appear a quartet of variables where improvement can unleash significant financial rewards for seemingly small incremental improvement; Leads, Conversions, Average sales, Margins.
I sense that a fifth also exists. Conversion rates alone are only part of the puzzle. Average order cycles are integral to sales success. Shortening the time it takes to switch from cold prospect to new customer can work wonders. Why are buying cycles the length they are, and what can be done to reduce them?