How difficult is it to increase one’s turnover by 33%? If you consider this a daunting task, you are in the right place!
You probably don’t know, however, that there is a simple, Data Driven way to accomplish this. The whole thing, in fact, comes down to a formula. Warning it is not magic!
However, thanks to this tool and the analysis and monitoring of data inside and outside your business you can get amazing results! In other words, in order to succeed in climbing Mount Everest, which you think you have in front of you, you “only” have to be in control of your business!
What does it mean to “increase turnover”?
If you are an entrepreneur determined to expand your business, you have certainly wondered how you can increase your sales.
The answer many people give is, “I definitely need to sell more.” It is not entirely wrong but not entirely accurate either. Then again, what does it mean to “sell more”?
It is at the precise moment when entrepreneurs ask themselves this question that they get lost and no longer know what to do.
“Should I lower prices and sell more? Do I need to bid more? No, I need to do sponsorships to make myself better known!”
This is precisely the mental dialogue that every entrepreneur has when faced with this huge issue.
The result? So much confusion, inability to act effectively, waste of time (known to be precious) and resources.
In the long run, even, you get the opposite effect: you sell less! Not to mention the sense of frustration and stress you may feel by not getting the desired result. In short, the situation can become dramatic.
However, there is a solution that has saved many entrepreneurs. The secret lies in knowing how to apply a formula!
The mathematical formula you need to increase your turnover
Let’s get right down to business! Here is what you need to increase your turnover:
TURNOVER= number of customers * average cart/price * number of reorders same customer
Let’s debunk a first point right away, however: this is not a magic formula! Far from it! It is a Data Driven tool that you can apply right away.
In fact, as we have already said, if you are not in control of your business data, knowing this equation is useless.
Then again, if you don’t measure these variables, you can’t control what happens inside and outside your business, and you’ll never know where to intervene.
Practical tip for continuing reading:
If you haven’t already done so, stop and try to answer these questions:
- With how many customers do you make 80 percent of your sales?
- How much is your average client worth?
- How many customers are below this average value?
- What is the average value of a purchase?
- How many times on average in a year does the same customer repurchase one of your products/services?
If you can already answer all these questions, great! Continue reading. Instead, collect this information. Only then will you optimize the time you are spending on this article!
Then acquire your company’s internal data (you can usually do this by analyzing management software statements or financial reports, or by creating ad hoc databases to be updated continuously and analyzed periodically).
But don’t forget the external ones related to the market, trends, volumes, and strategies of your competitors as well!
Good! If you have come this far, it means you are ready to analyze and then apply the formula! So let’s see how to take advantage of it to increase turnover.
The trick is to isolate each individual variable to more easily intervene with specific actions.
If you can, for example, grow the number of customers by 10%, the average receipt by 10%, and the repurchase frequency by +10%, you have leverage on all sales of over 33%!
Then if, instead of 10 percent, you were able to increase the individual variables by 20 percent, you would have a revenue increase of almost 73 percent. And that would be real exponential growth!
What actions to put in place concretely as early as tomorrow?
As you could see, by focusing on one variable at a time you can have full control of resources and optimize, thus, the results.
But what can you also do concretely to increase every single lever of turnover right away? Let’s see some examples!
To increase the number of your customers you must first do an analysis of your target audience, understanding with market research what actions may be most effective in your case.
For example, you could launch lead generation campaigns via social media that are most appropriate for your target customers by proposing content for them to download that is of interest to them. At this point you will have created a list of potential customers to whom you can send promotions and campaigns.
Instead, to increase the average revenue from each purchase, you could create bundles, that is, sell two or more complementary products at a higher price as if they were one package.
Finally, to increase frequency, you can always send email campaigns to people who have already placed an order with you to offer them promotions on further orders or products related to their purchases.
Now what?
These we have listed above are just a few of the actions you can ground.
Now all you have to do is put it into practice! Collect and monitor internal and external data, gain control of your business, and identify what action is right for you to increase these levers!
As you can see, it’s nothing complex; you just need a Data Driven method and you, too, will be able to overcome the Mount Everest of increased turnover!
ALT!
Don’t know how to collect, analyze, and monitor data? Don’t freeze! We can help you collect the data you need! Talk to one of our experts to learn more!
