Wednesday, June 19, 2013
WHAT IS YOUR FLIGHT PLAN FOR BUSINESS GROWTH? - Part 2
How To
Increase Your Number Of Clients
It is interesting how many companies when income curves become stagnant tend to whip sales & account management teams to do more of the same, when better incentives might be the simple solution.
For example, a company experiencing income stagnation applied a compensation program that paid the sales person 10% of the profit per sale. So when a $1,000 sale was made the company retained $900 whilst the sales person was compensated with $100.
Upon consultation the company calculated the following 3 simple questions:
- Average worth of
first purchase from new client?
- Average number of
times new client will purchase in the first year?
- Average number of
years client will continue to purchase?
The company responded...
- Average profit of
$200 for each new client first purchase of which the company kept $180
& compensated the salesperson with $20
- Average number of
purchases per year was 5
- Average number of
years new client continued to purchase was 3
Based on this the company accumulated approximately $3,000 profit over the average lifetime of a new client of which the company kept $2,700 and compensated the salesperson with $300.
Upon further consultation, the company was advised to:
- Compensate the salesperson with
100% of the profit from every first sale they produce
- Compensate salesperson with 10%
of every ongoing purchase from new client
- 10% ongoing compensation to
continue ONLY if salesperson maintained new client to continue average
purchases (5 x per year over 3 years)
What do you think happened?
First, the salesperson was compensated $200 instead of $20 for every new clients sale therefore, the sales team was 9 x more motivated
Second, the life time value of each new client was worth approximately $3,000 therefore, with this strategy the company now keeps $2,520 and compensates the salesperson with $480
Ultimately, with the sales team greater motivated, the company TRIPLED it's number of new clients in only 9 months!!!
Evidently there are many additional ways to increase your number of clients and so, look out for our next newsletters.
All the best with your business!
If you would like to discuss how to improve your organisations capability in the areas of Leadership, Communication, Presentation & Sales then simply contact us for a complimentary, no obligation conversation.
Go to www.EffectiveCommunication.com.au to find out more
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Wednesday, June 5, 2013
What Is Your Flight Plan For Business Growth? - Part 1
3 Ways To
Geometrically Grow Your Business
The human brain is a remarkable, creative asset capable of processing and understanding complex and intricate concepts. Yet at times, unable to recognise the obvious and simple.
Some examples of this are:
Ice cream was invented approximately 2000 B.C. Yet, it was almost 3,900 years later (1900's) that someone figured out the ice-cream cone.
Meat has been on the planet at least 6,000 years. Bread was baked since 2,600 B.C. Yet, it took almost 4,300 years after this (1700's) to commercialise the meat sandwich.
The modern flush toilet was invented in 1775, but it wasn't't until 1857 (82 years later) that someone developed toilet paper.
Once these and similar connections are made they seem so obvious and our remarkable brains consider why these ideas were not materialised sooner.
Believe this or not but a number of ideas and unmade connections exist today, even in this generation known as 'Technological'.
Many of the non-materialised ideas and connections are 'right under our noses' in the business world. In other words, you are surrounded by untapped solutions that can dramatically increase your income, leverage, influence and success!!!
The question you must ask yourself is, "do you see them"?
Very simple ideas and connections can quickly develop your and your organisations ability to better lead, communicate and sell in totally ethical, respectful and honorable ways.
EffectiveCommunication.com.au helps to uncover hidden assets, opportunities and possibilities that are not producing maximum results.
Here's one simple idea:
There are only 3 ways to successfully increase your business. Yes, three.
Ice cream was invented approximately 2000 B.C. Yet, it was almost 3,900 years later (1900's) that someone figured out the ice-cream cone.
Meat has been on the planet at least 6,000 years. Bread was baked since 2,600 B.C. Yet, it took almost 4,300 years after this (1700's) to commercialise the meat sandwich.
The modern flush toilet was invented in 1775, but it wasn't't until 1857 (82 years later) that someone developed toilet paper.
Once these and similar connections are made they seem so obvious and our remarkable brains consider why these ideas were not materialised sooner.
Believe this or not but a number of ideas and unmade connections exist today, even in this generation known as 'Technological'.
Many of the non-materialised ideas and connections are 'right under our noses' in the business world. In other words, you are surrounded by untapped solutions that can dramatically increase your income, leverage, influence and success!!!
The question you must ask yourself is, "do you see them"?
Very simple ideas and connections can quickly develop your and your organisations ability to better lead, communicate and sell in totally ethical, respectful and honorable ways.
EffectiveCommunication.com.au helps to uncover hidden assets, opportunities and possibilities that are not producing maximum results.
Here's one simple idea:
There are only 3 ways to successfully increase your business. Yes, three.
- Increase your number of clients
- Increase the average value of each sale per client
- Increase the number of times your clients return and buy again
As a business leader, it's significantly less daunting for you to focus on and develop these 3 criteria. It's so easy that you should take a look at this simple example:
- Calculate your
current number of clients
- Calculate the
average value each client spends per sale
- Determine how
many times these clients purchase from you per year
By way of example, let's say you have 1,000 clients who average $100 per sale and purchase 2 times per year.
1,000 clients x $100 per transaction x 2 transactions per year = $200,000 total income
Now, look what happens when you improve these 3 criteria by just 10%
1,100 clients x $110 per transaction x 2.2 transactions per year = $266,200 total income
Wow, a mere 10% improvement in these 3 criteria increases your income by 33.1%
A 25% improvement in these 3 criteria almost doubles your income to $390,625. Yes, almost 100% additional income!!!
By focusing on this idea alone is one small way organisations improve by increasing income by 20%, 50%, 100% and more.
This simple geometric growth formula works equally as well with non-financial goals. For example, peak performance sports coaches break down every element of a game and it's plays into an identifiable process. They then rate the team per element based on a scale of 1-10. Then by simply focusing on 2 or 3 elements to improve them by only a small percentage produces exponential, compound impact and results.
So you see this simple idea and concept works for business, sports and every area of your life when applied.
Look out for our next newsletter titled 'WHAT IS YOUR FLIGHT PLAN FOR BUSINESS GROWTH? - Part 2'
In the mean time, if you would like to discuss how to improve your organisations capability in the areas of Leadership, Communication, Presentation & Sales then simply contact us for a complimentary, no obligation conversation.
Go to www.EffectiveCommunication.com.au to find out more
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I involved EC with our Westmead Hospital team in a High Performance Team Workshop to better align our project objectives to the performance of each key staff member. This was a critical process as the project team was relatively new.
Accountability Maps were created against each identified objective. The outcome was the creation key performance communication indicators stating the involvement of particular members of the team. We are monitoring this process quarterly to ensure we achieve what we agreed.
The process that EC put us through in
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examples above without the preparation work EC put them through leading up to
the workshop. EC are retained on an ongoing basis to conduct training for our
business and to assist on individual assignments as required. I highly
recommend EC to future clients."Steve Holden - Building Manager
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