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.
So what are these key drivers?
- Conversion of these Leads
- Frequency of Sales per Customer
- Average Sales Value per Customer
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?