Day: November 3, 2024

Believe it or not not every business has the same 5 building blocks needed for success

It’s not uncommon for business owners to get stuck in a pattern where they are focused on marketing that is only about lead generation. The truth is, it can be quite hard to create a massive increase in new enquiry year in and year out. A well-rounded marketing approach requires you to focus on more than just generating new leads.

BOX 1 – Lead generation

This enables you to measure where your leads (potential customers) are coming from and how many are coming, e.g. from newspaper ads, website, word of mouth, radio etc. It lets you see what is effective in drawing people to your business. Remember that the more you do this, the better picture of your business you will have.

BOX 2 – Conversion rate

This enables you to see how many of the leads coming into your business are being converted to customers. We would all like 100% but that is not realistic, so you need to measure what your conversion rate really is. To do this you need to see how many customers you end up getting and then compare this to the number of leads you have. E.g. In an average week you may have sold to 30 customers out of a total of 100 leads who walked into your shop. Your conversion rate is therefore 30%.

BOX 3 – Number of transactions

This lets you see how many times customers will buy from you. Do they pay a monthly fee or maybe are due for a mechanical check twice a year? Originally you will have a gut feeling for this but over time more concrete data will help. With this information your Holloways Marketing Consultant can look at practical ways to increase the number of times your customers deal with you, e.g. telemarketing to your database of customers and letting them know of a promotion or seminar that you are running.

BOX 4 – Average dollar sale

Finding out what the average sale is worth to your business is really interesting and could be surprising – either it will make you happy or show you that you need to lift your game! Once your average dollar sale has been identified you can look at ways to increase the dollar amount people spend with you each time they come back. This is surprisingly easy to do and can easily add 25% to your turnover over time. By multiplying the number of customers by the number of transactions and then the average dollar sale, you find out your turnover from those customers.

BOX 5 – Profit margins

This is a critical part of the equation. You have to know your margins to see what kind of profit you are going to end up with. After you have found your turnover multiply this by the profit margin to get your profit. Again, your consultant can work with you to show you how the margin you are getting can be improved.

By putting the boxes together we get a powerful picture of your business and where it is at. This is how they all fit together if we use an example of a business who has built up enough data to get an average for a week:

• Take the leads you have on a weekly basis (for example 100) and multiply these by your conversion rate (30%) to find out how many customers you will sell to in that week (30).
• Now multiply (30) customers by the number of times they will buy from you in the next year, (let’s say they will buy 4 times), this gives us 120.
• Now multiply 120 by the average dollar sale, (let’s say every transaction is worth $100), this gives us your annual turnover for those (30) customers (which is $12,000).
• Now we multiply this turnover figure by your margin (which is 30%), to get your profit from these (30) customers (which comes out as $3,600).

Not bad! And if for your business you can be adding more and more leads and increasing conversion rates to get more customers who are buying more than they currently are and spending more each time, you can see how your turnover can quickly jump up. Then if you can improve your margins your profit levels will be on the increase as well. This is where Holloways love to get involved – in the nitty gritty of your business.