At the beginning of the year, many business professionals set sales goals as a way of building their business. They might say, “I’m going to increase sales by 10% this year.” If you want to make significant strides in your business this year I would suggest a different approach.
There are only four ways to increase sales.
1. You can increase the number of clients that you serve.
2. You can increase the average sale per client.
3. You can increase the number of sales or transactions per client per year.
4. You can increase your prices.
Instead of setting a goal to just increase sales, I would like to suggest a focused synergistic approach to your business growth. Set a goal to increase all of the four areas by 10%. The difference between these two models is astronomical!
Let’s say for example that your metrics look as follows:
$1000.00 average sale per client
1 sale per year per client
Your annual sales would be $200,000.00. If you increased sales by 10%, that would mean your sales this year would increase by $20,000.00 for a total of $220,000.00.
Now let’s look at Synergistic Sales Growth (SSG). Say that you increase each of the three major components listed above by 10%. Your metrics would look like this:
$1100.00 average sale per client
1.1 sales per year per client
This is where it gets exciting! Your annual sales would be 230 x $1,100.00 x 1.1 or a total of $266,200.00. That is an increase in sales of $66,200.00!
The SSG approach has you focus on all three components of your sales story. By not focusing specifically on “sales” but rather the components that make it up, you will be able to create a far greater opportunity to accelerate the growth of your business.
First of all, let’s look at your clients. You need to continually think about how you can increase the number of clients you serve. Do you have a good referral program? Are you prospecting enough? Are your marketing efforts and investments supporting your growth desires?
Increasing your clients by 10% will allow you to reach the original sales goal you set for yourself in the first example. But this is only the beginning. Now analyze the average sale per client. Are there ways of increasing how much you sell on an average order? Are there add-on possibilities?
McDonalds asks you if you want fries or an apple pie with your order. They also ask you if you want to “super size” the order. Their additional costs are minimal compared to the additional revenues they generate. Look at your products and services. What additions can you add on? What could your client use that would make what they have already invested in even better?
If you track how many times a year your clients make a purchase, (and you should), then you are taking a step in the right direction. Now I want you to think about ways to increase that number.
I go to get my hair cut every four or five weeks. If I go every five weeks that translates into 10.4 hair cuts a year. If I go every four weeks, then that translates into 13.0 cuts a year. The difference is 1.6 cuts a year. This doesn’t seem like much, but if a stylist has 200 clients and charges $30.00 a cut, not counting any possible additional services such as manicures, color, perms, etc. then the additional revenue of making sure their clients get their hair cut every four weeks would equal $8,400.00 per year!
Instead of waiting for the clients call to make an appointment to get a hair cut, the stylist should be calling and setting appointments based on the optimal length of time that each client prefers. This means more money for the stylist and even better service provided for the client. Everyone wins!
So you see how SSG can have an incredible impact on your bottom line. There is one factor that I left out, –the raising of prices.
Most business people that I know hate to raise prices. They are worried about their competition, what their clients will think, or what the market will bear. Although all of these concerns are valid, I find that most business people are just scared.
When they finally do get around to raising prices, they have lost months and even years of additional profits and opportunities. Also, by waiting a long time to raise prices you sometimes have to raise them so much to get them back in line that you upset your client with this huge increase.
Your quality and service must always justify your price. If in the above example we raised prices by just 5% then the total sales figure would be $279,510.00. Now that is a year worth having!
Look at the four areas you can increase your business. Work diligently on all f of them, and you will be on the road to Building a Better Business.