If the ultimate desired improvement is turnover growth, then this is a great model.
I’d personally recommend a holistic approach when working on the development of your business, but with greater income and the related profits, then you will find that you have more choices for other matters in the business (eg recruitment, operations, promotional).
The 7 systemised steps for growing your business revenue
The marginal gains philosophy demonstrates the benefit of working on all the 7 steps at the same time, demonstrating how you could improve each by a small percentage to give you a greater cumulative effect to your bottom line (do your numbers, with 10% uplift, what is your cumulative impact):
1. Number of leads – Is your marketing strategy and the chosen tactics all considered to pull your prospects towards you actually working? How can you generate more leads?
2. Conversion rate – How can you continually improve your sales process for greater proposal to acceptance success?
3. Number of sales – Whilst your prospect is in buying mode, are you maximising the cross-sale opportunities? Could you sell more, package more at this initial stage?
4. Value of sales – What is your pricing strategy to maximise the value of each sale? Are you pricing effectively? How are you packing or presenting your products or services? Could you increase your prices?
5. Margin – Are you proactively reviewing and managing your costs to maximise your return on investment? Are you able to reduce your direct costs or those costs to resource your delivery?
6. Encourage your customers to buy more often – How are you encouraging repeat business or other sales income (eg commissions) from your existing customer base?
7. Increase lifetime value – What are you doing to retain your hard earned customers for longer?
Consider how you could improve each of these 7 areas in a systemised way, so that the activity becomes a habit in your business and not just a one-off exercise.
Everyone likes the sound of business growth, but please make sure the profit growth is going in the same direction as the sales turnover growth. It is not worth increasing your business turnover and working harder if it is not bringing you the profits.
At the start up stage it is important that you have systems and controls in place to maximise the growth of your business or there is a danger that profits may be eroded as quickly as the sales growth. How will you manage the increased business? Will you need more staff? Will you need different premises?
Perhaps we should look at the 7 steps in a little more detail;
Increase the number of leads. Do you have a marketing plan? How effective is your marketing? How are most of your existing leads generated? What resources are required to obtain the level of leads you need for the financial forecast? How can you change or improve the number of enquiries you receive?
Improve your sales conversion rate. What is your target conversion rate? How clear is your unique selling point when you are in a sales meeting? Test different approaches that maximises the conversion of those leads generated to actual sales. Know why you do not convert leads to sales.
Increase the average number of transactions (sales) a customer makes in a year. Can you make additional cross sales to your client base? What can you do to help the customer purchase from you more regularly? Is there something you can sell direct or for a commission that links with your product or service?
Raise the average value of each transaction Review your pricing policy and look at opportunities to increase your prices. Can you offer above your desired price to allow for negotiation or to receive a premium? Can you package your products or services together to increase the value? Retain the demand in your product or service, as when demand falls it is likely the price expectation will also fall.
Improve the profit margin Review your resourcing and look at cost savings available. Cut your costs.
Increase the average number of referrals Do you have a referral strategy that proactively seeks referrals of new clients? If so, how effective is it? Do you know where and why your best referrals come from?
Extend the average number of years that a customer buys from you. What is your retention policy to increase the buying lifetime of a client? Are you communicating? Are you listening? Do you know your client, their wants and demands?