I want to talk to you here about one of my favorite topics, and that is profit. But there's got to come a time in the business where we are driving bottom line profits up.
Remember, the purpose of profits, right, is so that you can pay tax and be a good corporate citizen.But better than that, it's so that you can invest in for the future or use that money to scale up the business, right?
I'm assuming that your wage has come out before profit.That's the proper way to run a business.So your profit is left after tax to store some and then to put some money back into them.
business right so that you can scale but how do you drive profitability well there's a thousand little levers right there are a thousand little decisions that you can use to drive profitability in your business but there are four
primary drivers, they make a significant difference on the profitability of your business.
So we're gonna drive those through here, we're gonna run through them, I'm gonna explain a little bit about them, and then you'll be able to go home from here and go, right, I need to implement those four in this particular order, right?
Remembering that these things are so that when you look at your profit and loss statement, you've probably driven your top line revenue up, but all things being equal, your profitability should be going up at a higher rate than your revenue.
So let's get into them.The first one we're going to look at is lead.You know, essentially lead flow.Out of these four, the most expensive lever out of all four.
However, it is the one that ensures a stable business, a predictable business, a de-risked business in many respects. A lot of people do not know where their next customer is coming from.And so it's kind of left a little bit to luck and chance.
And that is a very stressful way to run a business, right?You are better off to build a predictable lead flow engine so that you've got a predictable amount of leads coming in your business every day, every week, every month.
And then, of course, the goal is to increase the amount of leads. And the way that you increase the amount of leads is you increase the number of marketing pillars that underpin your marketing department, right?
The sad reality for me after dealing with 20,000 different businesses, 13,000 one-on-one coaching sessions, right?The number one mistake that businesses make is they build their business off
Predominantly one marketing pillar being word of mouth, which is a massively risky strategy, right?No large business ever does that.They start to build out their marketing department.
So if you're listening to this and you're a small business in that zero to $25 million mark,
The biggest mistake you're going to make is you don't have enough marketing pillars, and I want you to build that width in your marketing department so that you've got enough marketing pillars producing leads every day, every week, every month.
Ultimately, you want to get to the point where you have 10 marketing pillars.That's not the end game, right?That's like the first big hurdle to get to. and then you're gonna have to build it out from there.
There are about 45 different ways to market a business before you get to all the really weird ones like skywriting or something like that, right?But there's 45 marketing strategies, right?But we wanna get to the point where there are 10.
10 marketing pillars producing leads every day, every week, every month, right?Let me just give you some that every single one of you should be using right now.First and foremost, Google Ads.Then we should be running Facebook Ads.
Then we should be running SEO campaigns.Then we should be running networking events.We should be doing strategic alliances.We should be doing wow boxes, right?We should be doing cold calling.
I mean, there's seven for you to race off and go and implement immediately. Right.And then, of course, what this comes down to is you can't just start the marketing pillars, start the strategies and get to work.
You've then got to be able to test and measure each one effectively.Otherwise, you never know where to deploy the next round of capital.So you need an internal mechanism. for being able to see dollars out and dollars in.
Obviously with Google, Facebook and a digital landscape some of the heavy lifting is done for you because the platforms report back to you some of the metrics.But they don't report what happens inside your business of course.
So we basically need to have a mechanism that says I spent this much money on networking, it brought me in this many leads, out of those leads I converted this many customers and those customers brought me this much money.
We need to be able to draw a line between the money spent on the campaign and the money brought in on the campaign.
Sometimes that can't happen within one month because you've got a longer sales cycle so you've got to take a longer term view of your test and measure.
But every one of your lead campaigns we need to be able to see money out and money back in and trace that journey so that you know to repeat the pillar or to put more money into the pillar if you can see that there's upside.
We're talking here about having a test and measured machine that is predictable, that you deploy capital into based on data that's driving your business, right?So that's number one.You got to get to that point.
And you may have to go and get some external money or use some of the savings or sell some dumb toys to be able to get more capital.Because once you see what works, you can scale it increasingly fast, right.
So first and foremost, the number one driver for you to drive more profitability is to actually go and drive more leads. The second primary driver of the four is conversion rate.Now, this one's interesting.This is the opposite in a way.
It's the cheapest one to do.It really won't cost you much capital outlay at all.But we're talking here about turning more of your leads into customers. Right now, as you watch this, you would have a certain conversion rate.
It could be 5%, it could be 11%, maybe it's really, really good, and it's 20%, okay?What you don't want to do is trick yourself into thinking that your conversion rate is that you win 80% of the jobs you quote.
You know, that's not your conversion rate.That's your conversion rate from very warm leads.
to sold right but you need to look at the whole group of leads the ones that call your office and don't book a meeting the ones that you go to a networking event you grab five business cards you follow them up and they don't go anywhere you've got to look at all of your leads and divide it by the number of customers you get to get your conversion rate you actually want
You actually want this to be the lowest number right now, because the lowest number means you've got more room for upside.You know, if your conversion rate is currently 6%, that's really good news.You can double 6% a bunch of times.
If your conversion rate is currently 50%, you can't even double it once, because you're never going to get everybody. Alright, so celebrate the true conversion rate being low because it gives you a lot of upside.
So the way that we're going to improve our conversion rate, of course, is it's going to come down to our salesmanship, right?
Whether that's you or whether you've got a sales team, it's going to come down to very well crafted questions that you're asking your prospect, it's going to come down to rapport building skills, handling objections, it's going to come down to the scripts
And of course, it's gonna come down to your sales process.Do you have a sales process that just looks like everybody else in your industry, in which case it's vanilla and doesn't work?
Or are you gonna be intentional about your sales process being that that stacks value that gets your prospect wanting to buy from you before you even get to close the sale?
I reckon this would be a great opportunity for me to slide in here some information about my upcoming sales workshop.Check this out. Hey, I want to invite you to my upcoming closes workshop on November 20.
This is a one day sales training designed for you to get more yeses and close more deals.You know, the economy is a little bit funky right now.
All that means is you're going to have to contend and fight for the sales more now than you might have done 12 or 18 months ago.It's going to come down to your salesmanship and your ability to continually drive that revenue in this current market.
You know, we're going to cover a lot.It's going to be a very intense day.The first thing we're going to look at is your identity.
So if you've got bias around sales or you've got head trash around money, we're going to have to do away with those things for you to be able to push through and become the salesperson you can become.
You know, where does your confidence come from in sales?It comes from your preparation. When I walk into a sales meeting now, I know exactly what I'm going to say.
I know what my prospects are likely to say, and I know what my responses are to my prospects.That's how I can walk in and be present in a sales meeting because I know how it's going to go. We're going to be looking at my five sales techniques.
These are not like some sleazy sales techniques from the 80s.These are leadership techniques.
It is your role as a leader, as a salesperson, to lead your prospect from the issue and the problem and the need they've got right the way through to your product.
We're going to be looking at your sales process, getting out of the words now and looking at your company.
What are all of the little steps along the journey and how can we engineer these steps so that your prospects are hungry to buy from you before you've ever closed the deal?
We're going to be looking at your scripts, not only what to say, but how to say it. So much of our communication these days is not the words.It's the pacing.It's the pitch.It's the timber.It's the tone.
And how you deliver your scripts will be the differentiator between having good rapport with your prospects and possibly poor rapport with your prospects. we're going to spend a bit of time looking at personality profiles.
You need to know what profile you are.But more important than that, you need to know what are the cues that let you know what the profile is of your prospect so that you can shift your communication style and lead them better.
We're also going to be looking at follow up.See, it's not sales just to produce a price or produce a quote. Sales starts after the quote, right?We've got to follow up diligently our prospects.
And I've got an intense follow up process that's going to make sure that you get more yeses after you've done all of the hard work of putting out the price.I'm also going to be looking at objections.
That's a natural part of every sales process is when your prospect says, I need to think about it.I'm not sure.You know, I'm not ready, whatever.
And you need to have the process of how to get back in rapport, fix all of those issues and lead them to a yes. You know, statistically, there is a shocking number.Eighty two percent of salespeople never close the sale.
I want to help you engineer your confidence and your processes and your words to lead your prospect and ask for the sale.That's going to be the thing that is the differentiator in this market.
You know, I think this day could be the best return on investment you ever make.It's a one day workshop that's super intense.There'll be time in there to get your individual questions answered.But it's a one day event and you pay once.
But the return from this day is going to be every single time you and your team sell to a customer for the rest of time.
You know, what's it going to mean for your business and your wealth creation if you can sell 10% more customers, 20% more customers, 30% more customers?That's how this day is engineered to create that outcome for you.
Now, I want to put this on your radar.This event is going to sell out. Last time we did a workshop, we sold out four weeks before the event and people could not get in.
That's going to happen again this time because we only have a finite amount of people that we can put in the room.So I'm asking you to take action.
And I look forward to spending an entire day invested in you and your sales process so that we can increase your closing rate.Well, if you can make it to that event, it would be incredible.
The third primary driver is getting your customers to return, right?All of your customers, some shop with you once in their life, some are shopping with you on a regular basis.
But we want to take your customers and as an average, get them shopping with you more Frequently, you know, this is actually quite a simple concept to grasp, but a bit harder to roll out in reality.
If you're watching this and you're in retail, that's going to be a very different strategy to if you're in a trades-based service business, to if you're in a professional services firm, right?
But the concept is this, you've got a certain amount of customers, how do we get them to shop more frequently on average, get them to return and buy from you?
That might be one more transaction, or it could be turning somebody that, you know, typically they'd buy from you six times, and we're going to go to 12, right? depending on your business.
Ultimately, the way that we get the customer to return and spend more money more often is to build community, right?Think about your customers and then think about community.How can you build community around your customers, right?
Which is essentially giving them more value than just the products or service you sold them. How can you build community around them?Once you build that kind of community, then you can invite them to shop more frequently, and they will.
I'll give an example.In a trades-based business, right, specifically a plumbing business, Many years ago, we rolled out what we called the Royalty Club, like a loyalty club, but with a twist.
And all we did was we offered this for free to every brand new customer.The plumber went out to the house.They did the work for Mrs. Smith.And at the end, they said, Mrs. Smith, I've got this offer for you.Would you like to join our Royalty Club?
It's completely free.And this is what it includes.And we would run through the value proposition. From memory, it was a small discount on all future work.
And we did that because, of course, we don't have the marketing cost of refinding that customer, because we've already got them, so we could give them that.
The second thing we gave them was we gave them the ability to jump the queue, and then a bunch of other things around some emails and value and some hints and tips and things like that, packaged up.
Now, they were running at about an 80 to 85% success rate.People said, yeah, if it's free, I'll take it.And then they got a sticker and we put it under the sink.
And so we trained that customer that every time they had a problem, they called this particular number, and the person answered the phone saying, hey, are you part of our royalty club?
So if the customer wasn't, they were really intrigued, what is it?Well, you'll find out about it if you book a job with us.Yes, I am.Great.You get to jump the queue, right?It was going to be Thursday.We'll be there tomorrow afternoon.
So we've built that kind of loyalty.Now, of course, because of the royalty club, because of the value, because of the sticker under the sink, we trained them.
And so what it meant was that next time they needed a plumber, that could be 12, 18 months later.Instead of them forgetting about the company they used, we were top of mind.So we got all of the repeat business.
In a different environment, you've probably been to a retail shop and they've said to you, would you like to join our online scam?Which I feel like most of them are absolutely woeful in a retail environment.
They say to you, do you want to join this club?It's like, what do you get?Nothing.We'll just alert you.I don't want to be part of an email list, which is all that is.
And yet some retail stores will say, yeah, when you spend money with us, you'll get discounts.You get, you know, a voucher on your birthday.OK, great.Now I'm in.Right.
Because now I'm actually getting something for my loyalty instead of just being on your list.So different environments will create different ways of doing this.
Another retail store that I worked with, we implemented these evenings where we would bring the top customers that were part of the community to private door showings of the next season's clothing.
So it was a free thing, but we built community around their best customers who would be the ones that would most often buy again.So you've got to think about your customer, think about community,
I personally have quite a few communities inside Facebook.Some of them are just messenger groups with certain groups.
Sometimes we have closed Facebook groups with our communities and that's where we build that community where people can lean on each other and so forth.You do that and you will have people come back and spend more money more regularly.
And then the fourth primary driver is to drive up the average dollar sale.So if you were to look at your whole business, you were to look at all of your transactions, you would see a broad spectrum of spend.
You might have one person that shopped once and they bought the smallest thing.And you might have people that have bought everything that you've ever done.And so across that, there is an average. Our job is to drive up the average.
I'll give an example.I worked with a big box outdoor clothing store and their average was $67 as a transaction that came through the till.Now this business had products that were less than $1.
And then they had products that were in the thousands, but the average was $67.Okay.So we sat down and said, what are we going to do to drive that number up?We set a target of 10% more.
We wanted an extra $6.70 on top of the $67 that they already had as their average dollar sale.And so here's the key to driving up your average dollar sale. Sure, you might be able to put your price up.That's an easy one.
You may or may not be able to do that.The way that I would suggest doing it is bundling products.Just start making bigger offers to every single customer that inquires, right?Almost presenting to your prospect better and best, right?
So you go to them and you say, hey, listen, yeah, of course, I can quote that for you. Are you okay if I actually quote another level up and it might be right for you and it may not be?All good.
Remember, this is not about getting everybody to spend more.This is getting some people to spend more.But you've got to put the bundle or the option or the upsell in front of them to let some people take it.
For example, you go to Mrs. Smith's house as an electrician.Mrs. Smith has called you in to install three fans.You go there, you spend an extra five minutes looking around the house and you see some other things that could be done.
And you say, Mrs. Smith, I've come here, you know, here's the price to do the three fans.Are you okay if I was to also quote you up for some other things I've seen here that could be a potential safety issue?Most will say no, some will say yes.
Over a year, you'll get an uplift in your average dollar sale.Going back to the big box store, what we did there was we started bundling different products.And we actually created
We actually created a system in the business where everybody had to ask a series of questions about what other products the customer might be looking for.And then, because it was almost departments like hiking shoes, tents, sleeping bags, like that.
So they would, once they finished in their area, they would walk the customer to the area of the other one and introduce them to that salesperson.And then that person would try and sell them some other products.That was one initiative.
The other one that we did was we created all these bins in the lead up to the counter, the till, where that gets processed.And we basically started out at like a $40 product, a $20 product, a $10 product, and a $5 product.
And then on the counter, we had $1 product.So we basically had these call outs. And remember, this is not about everybody, but some people would walk up and go, I could grab one of those.It's a bit of a deal.I'll take it.
When they got to the actual counter, then every single person that came through the salesperson had to say, hey, we've got these got these one dollar whatever torches at the moment for $1, I can just slip this into your order.
Would you like to grab one today?Most say no, some say yes.Over the period of time, we actually got a little bit better than the extra $6.70 on the $67.They ended up being about 11.8% up and maybe only two and a half months later.
So you can imagine, right,
You can imagine if you were to be like, right, I'm going to drive my leads plus I'm going to work on my conversion rate, plus I'm going to get my customers to come back more often, plus I'm going to get the average dollar sale up.
The compound effect of working on all four of those in your business means your revenue will skyrocket, but your profit will grow faster. faster.So I've got two questions for you.
One is, in order, all right, one, two, three, four, what's the order that you need to attack these in?Second one is, would you do me a favor?Like, comment, subscribe, and send this video to one of your friends.
Right, you and I, we need to run profitable businesses.Why?Because it's the profit that can build that family legacy.Take some of the money, invest it for your children's children.
It's also going to be the money that you and I can put to kingdom causes to advance the gospel on earth.But I want to hear from you.What order are you going to do them?I'll be back soon.
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