As we make the final push to reach our goals for 2015, it is only natural to begin looking forward to 2016. Many business owners and managers take time to plan and set goals, and rightly so. If you want to grow your business and be more profitable in 2016, there are essentially 5 different broad strategies in any business. Brad Sugars, in his book Instant Cashflow, calls this the Business Chassis.
As you sit down and plan for 2016, here is some food for thought and ideas for you and your team to dig into. This is not a one-hour process. I plan to take 2 full days with my team to evaluate where we’ve been in 2015 and forecast and plan for 2016.
The Business Chassis
- Generate more leads
- Increase your sales conversion rate
- Increase the buying frequency (the average number of times a customer / client / patient buys from you during the year)
- Increase the average transaction amount
- Increase your average profit margin
Even small improvements in each of these areas can yield big, compound results for you and your business. I’d like to dig a little deeper into each area as we look forward to 2016 and helping you grow your business.
Generate more leads:
How are you generating leads for your business? Are you still advertising in the yellow pages with a strategy of “hope”? Speaking from experience, “hope” is not a real business strategy, and certainly not when it comes to advertising. “I ‘hope’ more leads come in next month and next year” … if this is your strategy – stop it. Let’s get real about how you generate more leads and reach more people.
- Referrals: Yes, referrals can be and should be a big way to generate more leads. Do you have a specific model in place to encourage more referrals and word of mouth marketing? Do you ask your customers / clients / patients for referrals? Even simple positioning can make a difference. For example, we recently hung a sign up near the entrance to our conference room with a big visual “We love referrals” headline and the specific type of customer we are looking for. But this gets people thinking, and educates them on who a good referral for us is when they come into our office.
- Reactivation of lost customers: Do you keep in touch with people on your list? How about the ones who are no longer doing business with you? If you can proactively reach back out to customers who used to do business with you with a special offer to come back, or just keep in touch with them and maintain a relationship, you can almost always generate ‘new’ leads.
- Strategic partnerships: Who is already selling to your customer base? Is there a way to do a strategic partnership? For example, we recently started a strategic partnership with an IT firm. We don’t provide IT services, and they don’t provide digital marketing services. But we both sell to a very similar customer demographic. By working together, we can both generate new leads for each other and grow our business next year.
- New products or services: Do you have any new products or services that you can introduce this next year? Oftentimes this can open up a new target market that can generate new leads for your business. People who maybe didn’t have a reason to buy from you now would with your new product offering.
- New markets or businesses: You might even consider starting, or buying, a new complimentary business. Again, think about who is already selling to your target market, and find ways to get in front of them with your offer. For example, one of my friends owns a very successful HVAC company. He recently added electrical and plumbing services to his service mix because he was already serving customers who needed those services, and his business has grown exponentially.
- Paid advertising: Yes, paid advertising is still a great strategy … just not in the yellow pages (in our opinion). With organic ranking on Google getting harder and harder to achieve, and organic page reach on Facebook declining like crazy, both platforms are becoming a pay to play arena. However, done right, both platforms can be very effective to generate more leads. With digital paid advertising, it is also much easy to track results. We’re generating very good results for our customers using paid Google Adwords, Facebook ads, and retargeting, and believe this next year will be even bigger in this area. There are also other paid advertising options that may make sense for your business to generate more leads.
- Organic SEO (search engine optimization): While it is definitely harder than ever to achieve top rankings for your keywords, there are certainly things that can be done to improve your positioning in the search engines. This can be an important way to increase the number of times your website get’s visited, and the number of leads that you generate. I was speaking with a local business the other day, and the owner was talking about how “nice” of a website they had, but nobody visited it. This is the classic paradox, since “If you build it, they will come”, does not necessarily apply to websites. [Read more about Local SEO].
- Strategic networking: Be smart with your networking. Are you getting in front of new people and building new relationships every week? Do more people know about your business today than yesterday? Attend Chamber events, offer to speak in front of groups on your area of expertise, and build relationships. For example, I just offered to be part of a panel on social media for a Chamber group in several local cities. Position yourself as an expert. Offer your knowledge, even if it is for free.
These are just a few of the ideas on how to generate more leads. It is by no means comprehensive, but it should give you and your team ample strategies to talk about.
Increase your conversion rate
You have to be able to sell, or convert, your leads into new customers / clients / patients. A lot of business owners don’t focus enough on selling, and don’t pay attention at all to their conversion rate. This can apply to both visitor to lead conversion on your website or place of business , as well as lead to customer conversion. If you’re doing all the hard work of generating new leads, and driving people to your website, then you want to make sure that you are converting them.
- Clear messaging: Is your messaging clear? Do your prospects know what you do quickly and easily?
- Do you have a clear call to action? One of the things we see all the time is that a clear call to action is nowhere to be found on websites. If you are making your phone number hard to find, or don’t have a clear call to action or path that you want prospects to take, then you might be missing the boat when it comes to conversion.
- Strong reputation: Do you have a positive reputation and if so, are you showcasing that online? We spend a lot of time helping our customers leverage their reputation to generate more leads and customers, and believe it is one of the strongest conversion strategies that you can incorporate in your business today. When somebody meets you in person, is referred to you, or sees one of your ads — one of the first things they do is “Google” your business name. If they don’t see a strong review, social, and website presence, then your conversion will suffer.
- Do you have a USP (unique selling proposition)? How do you set yourself apart from your competition? Do you have a service guarantee or process that makes your business unique? If so, trumpet that difference and use it as a conversion tool. What can they get with you that they can’t get with anybody else?
- Tripwire or foot-in-the-door transaction: A tripwire or foot-in-the-door transaction is a simple way to get somebody in the door as a new customer. It might very well be a lost leader. We see it daily with examples of a $24.99 oil change, or a $1 new client exam and x-rays. Having a tripwire, even if it is for $1, can be the difference between bringing on a new customer / client / patient or not. There is a psychological change that happens when somebody becomes a new customer that positions you to be able to build trust and opens the door for future business and taps into the thought-process of the lifetime value of a customer.
- Online video: Video can be very engaging, and is also a great conversion tool. When you are able to connect via video, and tell your story, then people can visually see who you are as a company, and your brand messaging.
- Track conversion rates: Many businesses don’t have any idea on what their conversion rate is. You can’t improve something if you don’t measure it. How many website visitors are you turning into leads (name, email, phone number, etc)? How many leads are you turning into customers? If you provide bids or quotes, how many bids turn into new customers? For example, we use a software program called QuoteRoller for our proposals that allows us to track how many of our proposals turned into customers.
Again, these are just a few ways that you can increase your conversion rate.
Increase the buying frequency
How often does your typical customer buy from you? Dentists encourage a teeth cleaning at least every 6 months. Auto repair shops have you come in every 3000 – 7500 miles to get your oil changed. I recently saw a statistic for carpet and upholstery cleaners that showed a 507 day average between customer transactions. Increasing the buying frequency is an important aspect of growing your business and increasing your profits. If you don’t have a repeat business model – can you create something that is? Can you introduce new products and services that not only creates new leads (as mentioned above), but also increases your buying frequency?
- New products or services: Years ago I used to work for a company who was very good at the concept of introducing new products. My boss was really smart, and he would always talk about “what is the first thing out of your bag” (foot-in-the-door, tripwire), and then subsequently “how do we get back in front of them”. He built a very, very successful business on this concept.
- Continuity or membership programs: Is there a way to turn part of your business or knowledge into a continuity program, meaning that your customers / clients / patients pay you every month or annually instead of just one time or very sporadically? For example, you could have an auto repair club, or a carpet club, or a dental insurance alternative (like KeySmile). Costco is one of the biggest examples of a continuity model. They charge an annual membership and members ‘save’ big on purchases (or at least they think they do). Amazon Prime is another great example. By being a member of Amazon Prime, I get free shipping on thousands of products and a host of other benefits. Be creative and think outside the box. There are examples in just about every industry.
- Email newsletter: Many people think email is dead, which is far from the truth. Keeping in front of your customer base via email on a regular basis is a great way to not only maintain the relationship and stay top of mind, but it is also a great way to increase communicate about special offers and increase buying frequency.
- Do you own anything you can license? If you’re a fan of Shark Tank, you will know that Mr. Wonderful (Kevin O’Leary) is a big proponent of licensing. Do you have any proprietary product or service that you can license to other professionals or companies in your industry? If so, this might be a great way to increase buying frequency by getting other people selling / using / licensing your products or services. For example, you might know that we license our reputation marketing platform to select marketing agencies across the US and Canada.
Increase the average transaction amount
If your average transaction is, say, $100 … how can you increase that to $110, or $125. To calculate your average transaction amount, add up all of your transactions (revenue) for the year, and divide by the total number of transactions. For example, if you had a total of $100,000 in revenue, and you had 100 total transactions, then your average transaction amount would be $1000. Increasing your average transaction amount can make a big difference in your bottom line, even if it is small percentage-wise. Here are some potential ways to increase your average transaction amount.
- Up-sell & Cross-sell: Have you ever purchased something on impulse that you weren’t necessarily planning on buying? I know I have. McDonald’s is famous for the ultimate upsell — “do you want fries with that”? What opportunities might exist in your business to offer an upsell to an existing customer? For example, if you’re a landscaper, can you offer a fresh coat of mulch or some extra tree trimming? How about holiday lighting? Adding an additional service “while you are already there” or generating an upsell purchase in store is a great way to increase the average sale and / or buying frequency.
- Thank you page or emails: If you sell or book anything online, you could also include a special offer on a thank you page or even followup email. An oft-used strategy in internet marketing is multiple upsells, giving the purchaser an opportunity to purchase several additional items. For example, you might have a small tripwire or foot-in-the-door offer at $1, with an upsell offer of $7, and another upsell offer of $29 — all on thank you pages or followup emails.
- But wait, there’s more: Without being obnoxious … can you offer a “but wait, there’s more” offer to your purchasers. For example, if you’re cleaning carpets, you can offer to clean the upholstery while you’re there for a small additional price. Again, this is an upsell process. How can you add legitimate additional value that your customer is willing to pay for?
- Increase prices: Many small businesses are hesitant to raise prices. Competition is real, and the threat of losing customers based on price is something that certainly can happen depending on the nature of your business. However, in many businesses, you may be able to raise your prices without any issue. We have seen many situations where the business owner is afraid to raise prices, but they absolutely need to in order to build a sustainable business model.
- Tiered pricing: My good friend Kyle Sexton is an expert in tiered pricing for chambers of commerce and associations. He teaches organizations how to deliver more value (real or perceived) for more money as part of a tiered pricing structure. The same can be done with your business. Is there a good / better / best service level? Is there opportunity to do niche pricing? What are the needs of your customers, and how can you structure your pricing to meet the needs of your customers AND drive more sales at the same time?
These are all ways that can increase your average transaction amount and drive more sales and profitability.
Increase your average profit margin
Ahh, profit. That [minor] detail about running a successful business. As entrepreneurs, our number one priority should be to turn a profit. Why? Because in order to stay in business long term and be able to fuel our “why” … we have to be profitable. Here are a couple of ways that we’re focusing on improving our margins for 2016.
- Document everything: If you’ve ever looked at franchise business models, you know that they have (in most cases) substantial documentation on the step-by-step of their business process. We like to call this a “process process”. I was recently on a webinar with Ryan Deiss, CEO of DigitalMarketer, and he talked a lot about putting together systems for your business and documenting everything. Why? Because the more it is documented, the more you can train your team to consistently produce the same product efficiently and effectively every time, therefore reducing your costs and increasing your average profit margin. There are some great tools out there to help with this process, from Google Docs to more robust project management like Teamwork.
- Marketing and Technical Automation: This is a big area that we are working on ourselves, and believe it will be a major opportunity to help our customers to do the same thing in 2016. This past year we moved to a marketing automation software to help automate the redundant, repetitive tasks that otherwise take human capital to accomplish. It has been a great move and quite frankly we’ve only scratched the surface. During any given week, we have hundreds of small, automated tasks working in the background on our behalf that we never have to touch. This might include an email, a postcard, a phone call, or assigning a task to one of our team members. By automating, you can accomplish so much more, freeing up your time to do other more important things and also increasing your average profit margin.
Whew, that was a big list! Thanks for sticking with me to the very end.
What happens if you make small improvements in each of these 5 areas of the Business Chassis? Well, let’s look at an example:
Wow! In this simple example, when you increase all five of these components by just 25%, you increase your profit by 305%! This is not necessarily easy, but it could be very worthwhile.
If you would like to talk about growing your business and profitability in 2016, give us a call today at 503.581.4554 or fill out the form below to schedule a consultation.