5 Areas to Improve Your Sales 'Chassis'

"Your Sales Chassis - what is it?

Lets's say you've got a business and want to make more sales and more profit.
Fair enough, right?

OK. So how do we Improve Sales?

Well, let's look at your business as a sales machine to make money.
Like all machines, it has inputs and outputs.
Between the inputs and outputs, it has sales processes.

The inputs we're interested in are business leads and the outputs are sales and customers. If you sell to someone, they become a customer!

Representing this via a couple simple equations helps us identify those areas
that we can improve to give a direct increase to our profit.

So, Firstly, let's accept that
Total Customers = No. Leads x Conversion Rate(%)

Them, when you have a customer, the PROFIT that you make from each one, is represented by

£££ Profit = Average Order Value x Profit Margin(%) x Frequency.

Makes sense really, as the higher the average order value, profit margin or the
amount of times per year you sell to a customer per year all increase the yearly profit!

Let's Look at these 5 points in turn.
Once you know what to improve - you can start to see opportunities all over the place!
I'll be giving you loads of example.

Here's the 'Chassis' ...

• Leads
• Conversion Rate
• Average Order Value
• Profit Margin (%)
• Frequency

As an example,say your business generates 5,000 leads per year and your sales conversion process is 5%. This means you generate 250 Customers per year.

Of those customers, the average order value is £500, the profit margin is 20% and you sell to them with a frequency of 4 times a year (Once a quarter)

So, your gross yearly profit per customer will be £500 x 20% x 4 = £400

Your TOTAL Profit is 250 Customers x £400 profit per customer = £100,000 Profit.

Now, let's say that because we know how the business is put together,
you can increase each component of the business by 10% - not unreasonable?

New Yearly Customers
= (Leads x 110%) x (Conversion Rate x 110%)
= 5500 leads x 5.5% Conversion Rate = 303 Customers

NEW Yearly Profit Per customer =

£550 (New Average Order )x 22%(New Profit Margin ) x 4.4(New frequency ) = £532.40

Thus your TOTAL new PROFIT is 303 customers x £532.40 = £161,000

Which means that increasing these components by 10% each
increases your PROFIT by over 60%

Let's say that you're a hairdresser and that, as in the example above,
you simply increase your frequency...before moving onto the other areas...

So, after each appointment, rather than booking your client in after 12 weeks,
you book them in after 10 weeks. Hardly earth shattering or even noticeable to the client...

...yet you have increased your frequency in a year from about 4 times a year to about 5 times a year.... a 25% increase in PROFIT!!!

This stuff ain't rocket science but it WORKS !!!

We'll look at other ways of boosting different parts of the chassis next time.

- Checkout http://www.mklink.com/training/ to get More Tips & Advice.

'till next time,

Mike Knight.
http://www.mklink.com