Improving your business’ revenues and profitability does not require giant leaps in productivity. Many business owners waste too much time trying to find the magic bullet that will transform their businesses overnight. Do these exist? Yes. Is it a good idea to chase them? In my experience there answer is no.
A better use of your time is to focus on the tweaks that will enhance your financial performance over the long-term. Through this process you may discover changes that will have a tremendous impact on your business. If you spend all of your time chasing these magic bullets you will neglect the day to day operations of your business and miss more realistic opportunities for growth. Below are three techniques to improve performance over time.
1. Analyze your asking vs. closing prices.
Comparing your asking prices to your closing prices provides valuable insight into your sales process. If there is a large, consistent discrepancy between the two, this could mean that your initial asking prices are too high or that your ability to negotiate effectively needs to improve. If there is great variability from sale to sale in these differences, look for common links. Maybe there is a specific sales person that is very effective (or ineffective) at price negotiations. Or perhaps the pattern is found in a specific product. A simple 5 column table can be a great first step in preparing this analysis:
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2. Prepare a revenue and profitability table for your customers.
It’s easy to get caught up in the day to day details of selling to your customers. Selling is great, but it’s important to identify patterns in your sales process. Most likely there are some customers that are taking up too much effort given the amount of profitability they deliver to your company. These are the types of customers for which you need to raise prices. Other customers may not consume much in terms of resources and provide nice levels of sales. You need to increase your efforts to sell more to these customers. Preparing a simple table is also a great first step for conducting this analysis:
3. Track your sales per hour.
If your company is in the retail sector, foot traffic is a key driver of revenues. Track your sales per hour across different days of the week. A pattern should emerge which will reveal your most profitable hours. Identify the dead zones in this pattern and use that term for other non-sales oriented tasks. If your company is not in the retail sector, this type of tracking can also be valuable if you run inbound or outbound call centers for sales, identifying the dead zones provide great opportunities for team building exercises, training and other non-sales activities. If your sales cycle isn’t conducive to hourly patterns, track productivity per sales team member across each hour of the day. These dead zones are the times to execute non-sales activities. You may also find that adjusting your standard work hours to comply with customer demand may boost sales.