5 Easy and Effective Ways to Maximize Profits
(Episode 1 of 2 with Kenny Harper)
Kenny Harper works with small business owners to achieve more freedom and fulfillment by increasing business profitability through implementing proven systems and effective strategies. He is also the author of Amplified Business Breakthroughs.
We will cover the following key takeaways:
- Everyone has the opportunity to amplify and improve their business strategies.
- We have to pay attention to our leads so we can take care of our potential customers.
- We should provide free value before we try to sell anything.
- We can implement new strategies and take new actions to influence and improve our conversion rate.
- We want to measure and optimize the average price per transaction and the average number of transactions per customer to improve our customer lifetime value.
- Our profit isn’t just about how much money we make; it’s how much money we get to keep.
- A 1% improvement can make a huge difference in profitability.
5 Ways to Maximize Profits
Kenny walked us through five ways we can maximize the profits of our businesses.
“If you don’t have the money to fund your cause, then you’re going to run into challenges,” Kenny said. “[This list] is simple and you may even have heard of these things before, but simple can be very powerful. If you’re thinking, ‘I already know this,’ [remember] everyone has the opportunity to amplify.”
The number of leads we generate in our business is a huge driver of profit. We have to pay attention to the leads coming into our business so we can take care of our potential customers.
“One thing that a lot of people drop the ball on is they promote their service, but they don’t provide some sort of light offer, a micro commitment that would get people to raise their hand and provide their contact information to follow up and continue the conversation,” Kenny said.
In order to gain leads, we should provide free value to our customers. We shouldn’t try to sell them something right away. Instead, we can give them a free ebook, webinar, blog, etc. to first grab their attention. Then, once they trust us, they will be more likely to make a purchase. The key with getting a lead is to provide free value in exchange for contact information so we can keep track of interested clients.
“When you’re connecting with people online, building relationships, if you come across too quickly to sell your product or service, . . . it pushes people away,” Kenny said. “What can you provide that’s valuable that gets people to show little interest in what you have to offer in exchange for their contact information? If you don’t get the phone number, you can’t go out on the date.”
We can gain leads in three ways: advertising, organic marketing, or direct response.
Improve Sales Conversion Rate
The next major thing we need to pay attention to is our sales conversion rate. What is the percentage of leads that convert into customers? If we don’t know our sales conversion rate, we won’t know if our sales strategies are working or not.
“You can implement new strategies and take new actions to influence and improve your conversion rate,” Kenny said. “Small hinges swing big doors. A few small adjustments in a few key areas can have a big impact again on your bottom line.”
If we want to grow our business, we should focus on our leads and sales conversion strategies. If our sales conversion rate is low, we know we must be doing something wrong. As soon as we see a low rate, we can begin changing our tactics and find new ways to help our customers make a purchase. If our rates are high, we know we are doing something right.
Monitor Customer Lifetime Value: Average Price Per Sale and Average Number of Buys Per Customer
If we already have customers, the next best thing we can track is our customer lifetime value. This principle encompases both number 3 and 4 of today’s tips. The data we want to look at is the average price per transaction and the average number of transactions per customer.
If we track these metrics and determine our goals, we can test different methods of improving our rates. Basically, we want to get people to buy from us more often and spend more each time.
Kenny once worked with a professional accountant who was trying to increase their income without having to put in much more time and effort. They essentially wanted to increase their average dollar per sale. Kenny asked, “Is there any other way you can help your clients?” They said yes, they could help their clients with budgeting and revenue forecasting.
So, they elevated their offer. Because they did this, they could increase the dollar per transaction and enroll a portion of their client base in a monthly recurring revenue program, thus increasing the number of “buys” per customer.
As we track and improve our customer lifetime value, we will increase the success of our business.
Watch Our Profit Margin
At the end of the day, our profit isn’t just about how much money we make; it’s how much money we get to keep. How much money are we spending? We should track our expenses and our income to make sure we aren’t spending more than we have.
If we don’t monitor the flow of money, we might end up selling a product that actually costs us more to make. If our products aren’t priced well, we could lose money every time we sell. Watching our profit margin not only helps us save money, but it also helps us find the best prices for our products and services.
“It’s important to know where your profits are coming from in your business,” Kenny said. “As soon as you know where you’re at, you can [find ways to] improve it even by a small percentage.”
To improve our profit margin we might find a way to systemize our businesses. We might find a way to automate a process. We might even stop selling a certain product if it’s simply not profitable enough. Even a 1% improvement can make a huge difference.
As we look at our lead generation, sales conversion rate, the average number of transactions per customer, the average price per transaction, and the profit margin, and take actions to improve them, we will maximize our business profits.
“If you focus on improving these, it will have a dramatic impact on your bottom line,” Kenny said. “[Set] goals to improve each of these even by a small percentage . . . that will have a big impact.”
Connect with Kenny
Thank you so much Kenny for sharing your stories and insights with us today. To learn more about or connect with Kenny:
- Get a free ebook about passion marketing, and learn how to become a top priority of your ideal customers at PassionMarketing.com.
- Subscribe to Monetization Nation on YouTube, Instagram, Twitter, our Facebook Group, and on your favorite podcast platform.