There truly is an easy solution to a seemingly huge, complicated, income-increasing problem. You don’t have to be a ‘rocket scientist’ to figure this out. It’s really very simple …
- Increase the number of your clients
- Increase the average size of the sale per client
- Increase the number of times your clients return to buy again
This is all you really need to focus on to increase your bottom-line.
Ideally you need to work this formula in a spreadsheet. Down the left side insert the following …
- Number of Clients (1)
- Transaction Value per Client (2)
- Number of Yearly Transactions (3)
- Total Income
In a column next to each item, insert the numbers eg 1,000 (clients); $100 (average spend); and 2 (number of times client has bought in the year). The Total Income =
1 x 2 x 3 = $200,000.
Now, here’s where the fun begins … in the next column, increase each amount by 10% and look what you get … 1,100 x $110 x 2.2 = $266,200. Yet, 10% of $200,000 is $220,000. In effect your income has grown by 33.1%. A 25% increase using the same base nearly doubles your income.
You could also apply this formula to your products or services … replace ‘clients’ with the ‘product name’, ‘average spend’ with ‘average cost’ and ‘no of times client has bought in the year’ with ‘no of times product has been sold in a year’.
In this way you can quite easily increase your income or grow your business by 100%, 200% or more.
This formula can be applied to many things besides business, like sports. Imagine how you can out perform your competition in a sport that you play. For instance, say you want to lower your golf handicap. Use this formula in the following way … break down each key element of your game into an identifiable process. For example … driving (onto the fairway – not into the rough), your driving distance, your bunker shots and putting, etc. If you can focus on improving one of these processes at a time – your handicap has to improve!
I’d love to have your input and questions … as I’m sure many others would, so let’s have your comments below.
QUOTE OF THE DAY …
“Develop the “winning edge” in sales. Small differences in ability can translate into enormous differences in results.”