There are some tried and true simple formulas that can be implemented for increasing the profits of any small business:
Leads
The lifeblood for any small business is leads. It is essential to keep track of the people who are contacting your business either by fax, phone via email or the web. As a small business owner, you should also try to find out how these people got to know about your business, because once you have this information, you can invest your advertising and marketing money in the right direction to attract more customers.
You need to ask every person who contacts your business, either to make a purchase or just for information, about how they found out about you. Make sure that your employees also ask this question of all customers, so that their answers can be recorded and put into a database. Based on this database, you can direct your money into marketing and advertising your products or services towards that particular source. Now you’re not simply guessing about where your customers came from, you actually know.
Increase Your Conversion Rate
Even if you get the right leads, it will not help you take your business to new heights unless you convert them into sales. This is the most important area where you should have the right focus. There are many small business owners who fail to make a profit because they have leads but lack the strategies to convert them
into sales. It is not difficult to calculate your conversion rate, which is simply the number of sales divided by the number of prospects. If there are 10 people who are coming to buy your products in a day and only 4 are buying something, then your conversion rate is 40%.
Make sure that you are testing and measuring your conversion rate, because in business, you can only improve when you know what the numbers are; otherwise, you will not know what to change. To improve your conversion rate, you will have to define the sales process, identify the decision points and train your employees to
cooperate. Also work on ‘who and what’ your differentiators are, so that whenever you are compared with your competitors, you will know how to position yourself.
Transactions per Customer
According to an old adage, it is easier for every business owner to sell to existing customers as opposed to getting new ones. This is very true. There are some customers who will buy more from you than others. You have to determine the average number of times a customer will purchase something from you and then decide how you can get them to buy more. You may have to offer a one-off service and look for ways to cater to your repeat customers.
Average Money Spent On Every Customer
It is essential to know what amount a customer spends on your products on average. By doing this, you will be able to look for ways to encourage them to buy more. To make sure that you have the most accurate information possible, you need to make sure that you keep records of each and every sale, along with the customer’s contact information. By doing this religiously, you’ll be able to accurately develop targeted marketing programs.
Making and keeping your business profitable takes lots of hard work and meticulous planning. By following the tips above, you can ensure that your business stays in the black.
