How do you keep (or turn) your business into a profitable, growing and stable business?
The Small Business Administration (SBA) has a simple answer,
“all businesses should have procedures, plans, and policies…to test, evaluate, …validate..and report..information and data..(including) financial (data)”
In our work with more than 400 businesses over the last 29 years, the biggest difference we have found between Fortune 500 companies and startups and multi-million dollar companies are the use of systems and training. Fortune 500 companies invest hundreds of billions of dollars in systems and training EVERY year! Most smaller companies, on a proportionate basis, invest far less. Many smaller companies actual invest little or nothing! This is one of the major reasons that Fortune 500 companies grow more consistently, have more cash reserves, and consistently grow and survive in good times and bad. In contrast, the University of Tennessee Research in 2012 study (http://www.statisticbrain.com/startup-failure-by-industry) showed that 55% of all new businesses failed in the first 5 years, and at the end of 10 years, 71% failed.
So what is the “system” for implementing the SBAs recommendation?
At LoomView, we have identified the 10 components that every business regardless of size must track, test and measure in order to maximize their long-term growth opportunities, profits and survivability:
1. Lead Generation
2. Lead Conversion
3. Average Dollar Sale
4. Number of Transactions per Client
6. Gross Profit Margin
7. Leverage Opportunities
9. Cash Flow Budgeting & Forecasting
10. Key Performance Indicators
These 10 components are THE key for business success, whether you are a startup, multi-million dollar or even a Fortune 500 company. In our upcoming workshop (link) we will cover these in-depth. But since you’re reading this to improve your business right now, let me share with you some tips that you can use immediately.
A lead is any potential qualified buyer of your product or service. “Qualified” means that they would actually use your product or service, and can pay for it (or have or can obtain credit to pay for it). In a meeting of 8 successful and established business owners, Jake recently asked, “who here tracks and records every lead you get, the source of the lead, and the lead’s name and contact information?” Only 1 hand went up. Typically, only 1 in 10 small businesses do a good job in lead tracking.
Now you might think that it takes too much time. Or, if they’re really a buyer, you’ll get their information when they buy, and not waste your time with “looky-loos” (window shoppers??). An even better excuse is that you think you‘ll remember.
Is it only small companies that don’t do this, or do it poorly? Not in a long shot. Have you ever contacted a company, let’s say your cable company, because you have a problem. Before you can talk to someone, you have to enter your account # or your phone #. You go through their phone tree, and get connected to someone, who asks you for your account # or your phone # (again) and why you’re calling (again, didn’t the phone tree do that?). After you explain to them, they need to transfer you to another department, where they ask you for your account # or your phone # (now a third time), and what you’re calling about (at least for the second or third time). This continues until you get your problem solved, or you choose a new cable service company.
Now you say, “Hey, when I call for service, I’m already a customer, not a lead!” Right? Wrong! Your BEST leads are your existing customers!!
Here is the CRITICAL question. What can you do to provide such great service to your existing customers that they buy more products from services from you and refer others to you?
TIP - (and this is critical for NEW leads, as well as existing customers) Have a formal process; a piece of paper or index card (for those still in the 20th century), an excel spreadsheet, a Customer Relationship Management (CRM) or accounting or proprietary software where ALL your lead/prospect/customer information is captured and recorded. (We have more than 66 items we track on all of our leads. You can download this now or you can attend our workshop) Make it available to anyone and everyone that they would contact in your company (by phone, email, website, chat, social media, even in person, etc). That way whomever they interact with them is more like a friend, than a complete stranger. All things equal, most people prefer to do business with a friend than a stranger, which leads us to…..
What percentage of your leads become customers, clients, patients or guests of your business? This number is your Lead Conversion percentage. If your business is like most businesses, your Lead Conversion percentage is really the result of multiple conversion steps along the way. Let’s say you have a retail store. What percentage:
- Of the people who walk by your store, walk in?
- Of those who walk in talk to a sales associate?
- Look at an item?
- Interact (pick up, try on, test, use, etc) an item?
- Ask a question (price, size, features, etc.)?
- Initiate a purchase?
- Complete a purchase?
- Are offered another item?
- Purchase another item (at the same time)?
10. Sign up for your newsletter, email notice, sales notice, etc?
11. Join your loyalty program?
12. Apply for your credit card?
13. Make another purchase (in person, online, or by phone)?
14. Refer a family member, friend, or business associate?
Every business can do a better job at tracking and improving their lead conversion. What can you do to improve your lead conversion?
TIP – Analyze flowchart, blueprint and detail the path that every lead source might follow from their first interaction, to their becoming a customer, to their becoming a repeat customer, referral source, and a raving fan (they sell others on becoming your customer)! Then, track, test and measure your way to more and more sales!
How do you get each customer, client, patient or guest to spend more money with you more frequently? Click here