Ask nearly any businessperson what they want most for their business, and the answer you’ll most often hear is that they want more customers.
And that’s exactly what most of them spend the majority of their marketing time, money and effort on… acquiring new customers. Getting customers is critical to the success of any business, to be sure, but there are other, more effective ways to reap windfall profits from a business.
The number one way to increase the profitability of a business is to increase the positive cash flow of that business. When you consider that it costs up to six times more to acquire a new customer than it does to sell to an existing customer, and that most businesses acquire new customers at break even, or maybe even a little less, it’s easy to see that getting new customers is not the most cost-effective way to build a business.
Double Your Profits
Most businesses can actually double or triple their bottom-line profits very easily and nearly overnight by concentrating their efforts on a few key areas that are overlooked by nearly every business owner.
One of the first things to consider is how to get leads. That is, people who are interested in, and are willing to listen to your sales story. But be careful, here. “Leads” doesn’t necessarily mean raw new prospects (remember, selling to new prospects is a costly proposition).
“Conversion Rate” is another consideration not to overlook. All the leads in the world (no matter how qualified and interested they may be) will do you absolutely no good unless you can convert those leads into buying customers.
Other areas to pay particular attention to have to do with the average number of dollars you get from each sale, the profit margin of each item sold, the number of transactions your clients make with you in a given period of time, the total dollar value your customers are to you over their “lifetime” of doing business with you, and the number of referrals you get from your clients.
If you’re not paying attention to each of these areas (as well as a number of other factors that can make a major impact on your business’ profitability), you’re either leaving ridiculous amounts of money on the table, or you’re strengthening your competition by allowing them to harvest those dollars… dollars that could be yours, and not theirs.
Make Small Incremental Improvements
Now, here’s the exciting part: You don’t have to make big improvements in these areas to see massive results. All it takes is small, incremental improvements, and the results will be exponential!
Let’s suppose you attract (through various means) 100 people per month to your business who are interested in purchasing the products or services you sell. And let’s say that you convert 30% of those leads into buying customers.
And for example’s sake, let’s say that on average, each of those 30 customers spend $100 with you twice a year at a 50% profit margin, and that they refer an average of 1 person to you during the 3 years they do business with you. Your “lifetime income” from those customers would add up to $162,000.
Now, if you were to implement some very easy-to-do, very inexpensive strategies in your business, and were able to increase each of those areas by just 10%, your lifetime income would shoot all the way to $308,688… an incredible increase of 90.5%!
Again, it’s not necessary to have massive increases in any one area. And it’s not likely that you’ll increase each area by the same percentage.
The point is, even if you make minor, incremental improvements, you can realize incredible changes to your bottom-line profits.
Investing your money, time and effort in learning new marketing strategies is one of the most important things you can do to maximize and optimize the enormous profits your business can provide you.