The 5 ways to grow your business

[Carl Taylor]

Hi everyone, to try get some more interaction on the forums I thought i would start something a bit like a classroom.

I will start a topic and provide some information and then ask some questions to get you all thinking and some input.

So here is my first lesson this is the basic formula that Myself and many others around the world use to grow their business.

It is what Brad Sugars talks about in his books he calls it the Business Chassis.

Just like cars from different models can have the exact same chassis, so too can this formula apply to every single business under the sun.

The formula goes like this:

Leads
x
Conversion
=
Number of Customers
x
Number of Transactions
x
Average Dollar Sale
=
Turnover
x
Margins
=
Profit

Why do you think that the ones after the equal signs are in red?
Is it because they are most important or least important?




*Want more information right now?
Read my article series online at Entrepreneur Investments
Part 1 - The 5 Ways to Grow Your Business - Part 1 - Customers | Entrepreneur Investments

[Slade]

Well after reading your article, they are least important

Very interesting way to look at it and I guess it really is common sense, you cant force the number of customers to change without affecting the formula to get that result.

Great article.. maybe I will have to hit you up for a copy of a book.

[Carl Taylor]

thats right slade

it is common sense, business isn't rocket science it is challenging at times but it is still simple! I believe many business owners over complicate.

Thanks for the rap on the article.. stay tuned as there will be more to follow.


So to continue on...

Lets look at the first segment of this formula.
Leads x Conversion = Number of Customers

The end result we want is more customers right?

So what we need to do is either get more leads (potential clients making contact) or improve our conversion rate.

Getting a bit practical for a moment, we can look at this in a scenario.

Say i own a store that sells motorbikes.
In a month i know i have 600 leads, that is 600 people make contact either via phone, walk in to my store or contact me from my website.

I also know that for every 10 people that make contact, I get 2 sales.

so my conversion rate is 20% and my leads are 600.

600 x 20% = 120

Lets say i am currently running radio ads once a day, twice a week as my only advertising method and that is bringing me my 600 leads.

Say i upped my radio ad to 3 times a day, 5 days a week. Lets also say i contacted all my past clients and asked them for referrals.

The next month i get 1000 leads. At the moment i havn't even thought about my conversion rate.
So the formula is 1000 x 20% = 200

Now what if we had also thrown in some conversion rate strategies as well.
We provide a guarantee and offer financing options.
Which has changed our conversion rate from being 2 in 10 to 5 in 10 now buy.

1000 x 50% = 500

Can you see how these little things can compound to have a major effect on our number of customers.

We cant just go out and get customers but we can improve our business to make people want to buy and make it easier to buy and also market to the right audience to get them making contact.

You might say going from 120 customers to 500 customers isnt that great but if say those motor bikes were selling at $5000 each that is 2.5 million dollars, we will go into this more as i continue with the formula in my articles and in this thread.

So my next question is What are some other kinds of Strategies you might use to improve your leads or conversion rates?

[Brendan]

Great thread Carl.. I'm sure everyone can learn something from this kind of methodology.

Ok, so I'll add my contribution, I think things like a referral scheme could work well in attracting new clients, say everyone that refers some customers gets a discount on their next purchase. This would increase both the customer and hopefully an incentive to purchase improving conversion rates.

Loyalty schemes are also a great way or increasing sales, say buy 5 widgets, and get the 6th free..

Anyone else got any ideas, maybe something a little more innovative than myself and Carl have added?

[Carl Taylor]

Thats right Brendan.

Rewards programs and loyalty cards can be a great incentive to increase conversion rate, and can be used to encourage referals which will bring more leads.

Later on it can also come into play with increasing the average number of transactions and average $ sale so its a great one that can work on many aspects of the business 5 ways formula.

Did you know that one of the easiest ways to increase your conversion rate can be accepting Credit Cards as a payment method.

Making it easier for the customer to pay right there on the spot it 1 helps your cashflow as it goes straight into your account, but the customer is happy they can possibly get rewards points from their card provider plus they can get an interest free period on the payment.

It may seem obvious but many small business owners are scared of the costs involved to set themselves up to accept credit card when really as soon as their customers know they take credit card, most would be suprised in the response.

There are many many more strategies for building leads and conversion rates and those interested i recommend the book Instant Cashflow by Brad Sugars.

It has hundreds of practical ideas for improving all parts of the business chassis.

Stay tuned for the next instalment of this series.