You can drive sales revenues any number of different ways but what is right for you and how do you decide? This is the question we are seeking to answer in todays blog.
Obviously, much is going to depend on your growth ambitions as well as the tools, techniques and channels you currently employ, but some things are harder than others and there are “rules of thumb” that help dictate the order in which things should be done. The first of which, is that it makes no sense to “go for more” when you’re not making the most of what you’ve got.
The above diagram shows eight ways to drive revenue that will immediately impact on your top line, some of these things you may already be doing, some you may not, so let’s take a peek at each.
Keep more customers
As we all know, there have been numerous studies published on how much it costs to win a new customer verses how much it costs to keep an old one. So, if you’re losing customers you’re losing money. This, given it’s a problem, is without doubt, the first gap to plug..
A sobering question to ask yourself is; “If we’d have kept every customer we ever had how big would our business be now?” Another might be “Are there any recurring reasons we lose them?”
So, if your sales initiatives are focused solely on getting new clients at the expense of retaining existing clients it’s a bit like pouring water into a bucket full of holes.
Keeping customers and obtaining new ones can be boiled down into three, pretty basic, but often overlooked, core activities:
- Find out what they want
- Go and get it
- Give it to them
Let’s explore each of these in a little more detail:
Find out what they want:
Deep down we all know that customers don’t care in the slightest about your products or services. They care about solutions to their needs. This means they are the ones that get to define success. It’s the main reasons why, at Statius, we like the idea of a company “purpose” where “purpose” is defined as the benefits and capabilities that your products and services deliver to your client. This shifts the focus of attention from being tuned to your products and services and focuses it squarely at your customers’ needs and wants. The question you need to ask is; “What is it specifically that you do for your customer that they cannot do for themselves?”
Go and get it:
After you (or your people) have defined the pain, frustration, needs and expectations of your ideal customers TO DO’, it is your job as a business owner to, as Keith Cunningham puts it… “find the pain reliever”, but not just any pain reliever, the pain reliever that meets your customer’s definition of success. This approach is made even more powerful if you can design a solution that specifically addresses your customers problems in a way that is significantly different from your competitors solutions.
Give it to them:
This is about delivery. As an example, I might go to a garage and get my car serviced, the technical aspects of which (to me) would be no different from one garage to another, but in one garage I might be greeted by a dirty technician emerging from grubby surroundings, in the other I’d sink into a deep, plush sofa in a high tech air conditioned waiting room, provided with the best freshly brewed coffee and the latest car magazines.
This is really about “how” you do what you do not the “what”.
Increase referrals and repeat business
Personally, I find it offensive the way in which some companies, often big insurance companies and banks, entice new customers with discounts and freebies. In my view the freebies and goodies should be going to existing loyal customers. These companies are offering the goodies to the people that have never used them before. They should be properly taking care of the people that have been loyal to them for years.
The bottom line is sustainable growth requires two things:
- Keeping the customers you’ve already got and
- Adding new ones.
Essentially, you want to use tools like the Ladder of Loyalty to create raving fans and addicts. Check out the blog.
Define and enhance certainty of success
The question we need to answer here is what has to happen to ensure the customer comes to the conclusion that they would “have to be mad to do business with somebody else?”
This is about defining and quantifying, in ways the customer sees as important, the impact of your intervention. How will what you do leave the client in a better position?
It is also about answering the question “What has to happen to give the customer faith in your offering, how can you make them certain of success?”
The more you can get this right for each and every customer the better your chances of growth and success.
Enhance / train the sales process
The prima donnas in sales, and there are plenty of them, won’t like this, but sales is actually “a process”. And if there is a process it means there is a formula, a recipe, a script, a question set, a set sequence of events and activities that occur. And each and every stage of these activities can be tweaked to improve results over time.
This process needs to be recorded documented, question sets need to be developed and trained, objections need to be identified answers need to be developed in response to them.
The question here is “How slick is your training and your processes?”
Increase conversion percentage
The Five Ways is one of the most powerful tools for ratcheting up sales success.
The tool takes a generic view of the sales process accounting for leads, conversion rates, number of transactions, average sale price and a number of other aspects critical to the sales process in order to drive sales revenue. The generic tool needs to be modified to suit specific and individual circumstances, and routes to market, but there is a logical order in which things ought to be done, for instance, it’s far better to increase the conversion rate before you go pouring more leads into the top of the funnel.
If you are closing 25% of your leads, nudging up the close rate just 5% to 30% is equivalent to increasing the number of leads going in the top of the funnel by 20%.
Increase transaction size
How much additional revenue do you think McDonald’s make simply because they train their people to ask the very simple questions “Would you like fries with that?” or “Would you go large?”. I would hazard a guess it’s billions!
Increasing the transaction size is about having a menu that your customers can select from in order to drive up the transaction size.
So, what is your “fries with that” question? What additional products and services could you offer the client at a modest cost to you, which would enable you to increase your overall price and margin?
In a number of sectors that we work with in (I’m specifically thinking building services sectors) the trade association publishes a recommended price increase each year. Many companies don’t then apply the price increase but a 2% increase in price, assuming you make a 10% return, will have a bottom line impact equivalent to a 20% increase in revenue…. just think about that for a moment!
One company we work with, a £1m turnover plumber, had not increased call out prices for 12 years! We calculated the effect a year on year 2% price increase and its effect on margin. It was devastating. It was also extremely difficult, and very painful, for clients to bear a one off increase in the call out rate. So, the new rate was applied to new customers but it had to be applied to the far bigger existing customer base over a period of years, further depressing margins during this transition period.
Increase transaction frequency
This is the domain of the loyalty card. In employing loyalty cards the provider (Tesco’s Marks and Spencer, Costa’s, Starbucks, even BA, to name but a few) is really trying to get you to return, they are incentivising you not to take your business elsewhere. They are seeking to make themselves “sticky”.
Again, repeat business costs significantly less than winning new business.
Increase leads to drive traffic
Increasing the number of leads going into the top of the sales funnel is last on the hit list of things to do, simply because if the sales funnel, and the components of it, are not efficient, increasing the number of leads is going to compound the inefficiency. As stated at the outset, you need to optimise existing processes before pouring more leads into the system.
How does this fit with my management system?
Management systems are effectively about understanding the aims and objectives of the organisation and then linking processes to those aims and objectives making both sales and operational processes effective and efficient.
As a result, sales activities fall more into the domain of quality management systems (ISO 9001) and much less the domain of environmental (ISO 14001), information security (ISO 27001) and health and safety (ISO 45001) systems.
However, there are likely to be situations where the same ratcheting structure can be applied in each of these standards.
Conclusion
There are a number of tools and techniques which will help you improve your top and bottom line but I think the key point here is, as Cunningham suggests “optimise before you maximise”.
Also a word of warning, there are a number of little missives for instance “PIG accounting” Profit Is God and possibly the more well known “turnover is vanity, profit is sanity” both of which point to the fact that whilst the top line is important, at the same time as growing the top line you need to be ensuring you’re not destroying the bottom line.
Your job as a an owner or leader is to very carefully consider all of the strategies and levers available to you and then choose the right ones. I hope I have helped.
Finally, I’ve put together a series of questions that you might ask yourself for each of the above stages, check it out, have a go, see if you can use them to improve the way in which your work works…
Adapted from Keith Cunningham’s stunning book The Road Less Stupid
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Recommended references
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To find out how Statius can help you deliver:
• Better strategies
• Better systems
• Better measurement and
• Engaged people delivering
• Better results
Call us now on 0208 460 3345 or email sales@statius.co.uk
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