Most business coaches will tell you that there are three key areas of your business that you should monitor in order to measure success.
- How many customers you have
- How much they spend with you, on average
- How often they order each year
The coaches will also tell you that, if you increase any one of these measures by just 10%, it will have a positive impact on your bottom line.
For example, if you have 100 customers each year, placing 2 orders and spending £100 each time, your turnover will be £20,000. If you gain 10 extra customers, your turnover will be £22,000. If you also increase the average order value (AOV) to £110, your turnover will be £24,200. And if you can increase your order frequency to 2.2, your turnover will be £26,620!
What the coaches don’t always tell you, is how to achieve those 10% increases. So here are some ideas (let me know if you have more):
· To increase the number of customers – referral scheme, newsletter, website, networking
· To increase your AOV – increase prices, cross-sell services, up-sell extras
· To increase order frequency – newsletter, thank you cards, reminder service, survey
Meanwhile, you should also monitor your expenses. If you usually spend £2,000p.a. on £20,000 turnover, your profit will be £18,000. But if you reduce expenses by 10% to £1,800 at the same time as increasing those three key metrics by 10%, your profit will be £24,820.
· To reduce expenses – cut costs, negotiate barter deals / joint ventures, networking
If you want to take up any of these suggestions, of course, I can help! My work is not just about making your marketing communications read well and look pretty. It’s about making your business more profitable. Please ask if you’d like more information.