7 Levers You Can Pull to Make More Money in Your Business
Many of my business owner clients come to me and ask: “John, how can I increase my revenue?”
There are variations on that question. They might ask:
“How can I make more sales?”
“How can I become more profitable?”
Or cut right to the chase with: “How can I make more money?”
The key to doing this effectively is to understand that there are seven key levers you can pull in various combinations to increase your business’ revenue.
Here they are:
- Number of leads
- Conversion percentage
- Retention percentage
- Average order value
- Number of transactions
- Gross margin percentage
- Fixed expenses
Pulling just one lever can make a positive difference in your revenues – but pulling all of them consistently can make a huge impact over time.
Let’s take a closer look at how each of these levers can impact your revenue.
Lever 1: Increase your number of leads
This one should be a no-brainer: getting high quality leads and guiding them through the sales funnel is the best way to increase conversion rates and drive revenue.
Making sure your sales team has a consistent stream of warm leads to work with helps them close more deals and makes sure your business thrives.
Lever 2: Improve your conversion percentage
Your conversion percentage is key to driving revenue – how many deals is your team actually closing?
In other words: how good are you at selling?
Leading with a unique value proposition is key here.
What makes the product or service you’re offering the best option for your clients?
If you can answer that question clearly and consistently – and if your whole sales team can answer clearly and consistently – your conversion percentage can only increase.
Which increases your total revenue.
Lever 3: Increase your retention percentage
We all know that it costs less money to retain a customer than it does to recruit a new one.
So make sure you have a plan or system in place to support customer retention.
The less money you’re spending on getting new customers, the more revenue your business is generating.
In fact, Harvard Business Review has reported that increasing retention percentage by just five percent can drive a 25 to 95 percent increase in revenue.
That’s a ridiculously large range, but it underscores the point that a small increase in retention rate has the potential to drive a big change in your revenue.
Lever 4: Increase your average order value
Increasing the average value of your orders can be a game changer for your revenue outcomes.
You’ve seen it before.
McDonald’s is the all-time champion of increasing order value.
Over time, McDonald’s increased revenue by $30 million with six simple words. And I know you’ve heard them: “would you like fries with that?”
The success of this script has led the company to other variations, too – like, “would you like to Super-Size that?”
Making suggestions to customers that increase the value of their individual orders is fairly easy – and it’s effective.
Lever 5: Increase transactions from existing customers
A cost-effective way to increase your revenue is to increase the number of transactions from your existing customers.
Make this easy for them.
Think about it like your dentist’s office, your hair salon, or even your dog groomer.
You usually don’t leave those places without booking your next appointment.
They make it easy – you’re already there, so they give you the chance to get the next transaction on your schedule.
Think of ways you can do this with your existing clients – let them auto renew your service, schedule their next shipment, whatever makes sense.
Use each transaction as an opportunity to spur the next one.
Lever 6: Improve your gross margin percentage
Your gross margin percentage represents the cost of doing business relative to your production costs.
It’s an important metric of financial health, showing how much revenue you have left after subtracting your cost of goods sold.
It’s the percentage of your revenue that’s actually profit.
So, of course, as your gross margin percentage rises, your total revenue rises as well.
That means that figuring out ways to minimize production costs is a huge benefit.
It might mean finding lower-priced raw materials and/or suppliers, outsourcing some parts of the process or using labour-saving technologies.
The whole point is to maintain your selling price while lowering what it costs you to deliver your product or service.
Lever 7: Reduce your fixed expenses
Your fixed expenses – costs you incur at the same level no matter your production – are a final lever you can pull to affect your total revenue.
These types of expenses, ranging from rent and utilities to insurance payments, payroll and employee benefits, aren’t set in stone, even though we describe them as “fixed.”
You can often negotiate things like benefits and insurance, and you can always switch utility companies or insurance and benefits providers if you can get a better deal.
Doing this reduces your overall costs, which means more revenue for your business.
Maximizing your revenue allows your business to support your life in the way you originally envisioned.
Tired of working too hard for too little?
If you want to learn more about any of these ways to maximize your business’ revenue, set up a call with me today.
Sometimes getting an outside perspective can show you options and opportunities you’ve overlooked.
I’ve helped hundreds of clients implement these levers – in some cases helping them grow their businesses by as much as 10x.
I can help you too.
If you’re ready for a business that truly supports the life you want to live, book a 15-minute call with me today: Book a call with John
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