If your goal is to grow your business revenue by, say, 30%…
What would you do?
What would you tackle first?
Most people would pick one thing and then work hard to try and drive results up.
You could try to create more customers out of your email subscribers, or you could try to get more traffic to your website, or invest more time in social media…
But for any of those elements to cause 30% growth in your bottom line, that’s a tall order.
After all, any one element you pick to work on is only a smaller part of the total system that is your business.
So here’s another model to consider.
It’s based on the assets that your business has, and how you can improve the usefulness of those assets, in small increments that add up.
Any business will have these three elements:
1: Potential customers
If you manage to get seen and considered by more people, your sales and revenue will go up.
But instead of going for 30% increase of prospects, let’s try to raise the number by just 10%.
That doesn’t sound so crazy, right? 10% is doable.
2: Conversion ratio
This is the number of people who do business with you, divided by the number of people who find out about your product or service.
Example: if you have 200 website visitors a day and 10 people buy from you, that’s 10 divided by 200, which gives you a conversion ratio of 0.05, or 5%.
And getting your numbers up from 10 to 11… that shouldn’t be too hard to do. That’s only 10%.
3: Customer value
We all know that it’s cheaper to acquire a repeat sale from an existing customer, than it is to create a new one.
So, if your average customer currently spends $100, can you find a way to offer something else, and bring the total amount they spend with you up to $110?
Has to be a way to do that, don’t you think?
Maybe even as simple as – hey, novel thought! – raising your prices (I’m making assumptions here, but given the number of people I meet who charge too little, that might be you as well). And raising your rates by 10% shouldn’t be a problem, right?
The logic behind this thinking – that if you raise each of these three by just 10%, your total increase in turnover is 10% times 3, in other words: 30% – you can work on incremental growth across three primary areas, instead of trying to fix and improve one single element.
And further logic:
When we set out to create impressive changes and growth and we want it all to come from one area, we’re essentially hoping for a unicorn to show up.
You know, that magical, fix-it-all solution, the one thing that will make all the difference.
But there is no one thing that will fix everything. Growth comes from persistent improvement across a number of areas – not from some magical solution or miraculous turnaround.
Lust like unicorns don’t exist, neither do magical solutions. You’ll never have a breakthrough just because the universe thinks you’re such a nice guy or gal.
No, breakthroughs and increased results and growth come from strategic action, in the right areas, coupled with grit and the willingness to iterate and optimise until stuff works.
And I promise that will work much better than hoping for magic to fix your economy or business or sales.
Work the three areas mentioned, and try to get a 10% rise in each. There’s growth, guaranteed.
Also published on Medium.