business growth

A timely reminder on key metrics…

How do yours stack up? Are you on track?

Even if you are exceeding budget, I am sure that you would not refuse the opportunity to greatly increase your profits by having your Sales Team focus on 5 Key Profit Drivers?

Remember, what gets measured gets results.Screen Shot 2016-12-05 at 1.22.44 pm.png

So what are these key drivers?

  • Leads
  • Conversion of these Leads
  • Frequency of Sales per Customer
  • Average Sales Value per Customer
  • Profit

Now to give you some idea of the potential gains to be achieved lets do a case study of a small to medium size business that gets 1000 leads with a 20% conversion ratio i.e. 200 customers:

The average sales value is $2,500 and the frequency of sales per customer yearly is 5 with a net profit of 20% before tax.

The business owner has just completed this year’s strategic workshop with his key personnel and they have committed to an aggressive 3 to 5 year expansion plan.

As part of this plan the senior management team agreed that a 10% increase in each of the Key Profit Drivers was feasible thru inter-department collaboration and employee buy-in.

So using these figures what is the potential?

                                                            Currently                    Increase%                   After
Leads                                                      1000                                10%                           1100

Conversion %                                       20%                                10%                           22%

Frequency  of Sales                                5                                  10%                            5.5

Average Sales Value                        $2,500                             10%                        $2,750

Profit     %                                              20%                              10%                           22%

So from increasing each of these key metrics by only 10% we now achieve the following:

  • Leads increasing from 1000 to 1100 and a conversion improvement from 20% to 22% we now have 242 customers!
  • Customer sales value and frequency of sale has also increased by 10% meaning each customer is now worth $15,125 up from $12,500!
  • Total sales are up from $2,500,000 to $3,660,250 and profit jumps from $500,000 to a huge $805,255!!!

All from a 10% increase to 5 key metrics…

With a 10% improvement in their 5 Key Profit Drivers they will increase their bottom line by $305,255!

That’s an increase of 61% on their bottom line all by focusing on a 10% improvement.

What sort of improvements do you think can be achieved in your own business?
Even a 5% improvement of each of the drivers would deliver great results.
As you complete your own analysis and subsequent feedback to your team, consider implementing a similar focus for the coming year.

Set targets, get buy-in & measure the results. Be S.M.A.R.T. that is the targets must be Specific, Measurable, Achievable,Realistic & Time based.
With clear direction and the regular use of metrics, you’ll be surprised at what is possible.And what better time than the lead in to the Christmas break for a Strategic Planning Workshop to make it happen?

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