how to turn uncertainty into opportunity

Copyright © 2009 Tres Coaching Services

How to Turn Uncertainty

Into Opportunity

JOHN CARROLL

Tres Coaching Services™

2


Agenda Topics

• (3) Ways to Grow Your Business

• Fun Facts You Need to Know

• Apply 10% Rule to Everything

• Impact of Price + Sales Increases

• Sales Pipeline Example

• Lifetime Value of a Customer

• The “Whole Enchilada”

3


(3) Ways to Grow

Your Business?

Only (3) ways to grow your business …

1. Raise your prices.

2. Sell more to existing customers.

3. Sell to new customers.

**Your primary goal as an entrepreneur or business owner

should be to get more profitable customers to buy more

from you and more often.

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Fun Facts

Pareto’s Law ...

• 20% of customers = 80% of profits



- It’s 6-7 times more expensive to acquire new customers than retain existing ones.

- 60% - 80% of lost customers reported to be Satisfied or Very Satisfied prior to defecting.

- 2/3 of customers leave because they feel neglected.

- A 5% improvement in customer retention rates will yield a 25% to 100% increase in profits.

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Apply 10% Rule

to Everything

• Grow Top-Line Revenues

A. Raise Prices

B. Increase Sales Volume

C. Increase Average Sale Value

D. Increase Customer Additions

E. Reduce Sales Cycles

F. Extend LTV of a Client

• Reduce Operating Expenses

• Improve Employee Productivity

• Enhance Customer Satisfaction

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Impact of Price

Increases

Current 10% Increase 30% Increase

Price $100.00 $110.00 $130.00

# of Sales 1,000 1,000 1,000

Gross Revenue $100,000 $110,000 (10%) $130,000 (30%)

COGS $50,000 $50,000 $50,000

Gross Margin $50,000 (50%) $60,000 (55%) $80,000 (62%)

SG & A $20,000 $20,000 $20,000

Net Profit $30,000 $40,000 (+33%) $60,000 (+100%)

CAUTION: Be sure that price increases do not result in excessive customer

losses that would impact net profits.

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Impact of Price +

Sales Increases

Current 10% Increase 30% Increase

Price $100.00 $110.00 $130.00

# of Sales 1,000 1,100 1,300

Gross Revenue $100,000 $121,000 (21%) $169,000 (69%)

COGS $50,000 $55,000 $65,000

Gross Margin $50,000 (50%) $66,000 (55%) $104,000 (62%)

SG & A $20,000 $22,000 $26,000

Net Profit $30,000 $44,000 (+47%) $78,000 (+160%)

CAUTION: Be sure that price increases do not result in excessive customer

losses that would impact net profits.

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Keys to

Successful Selling

Know the competition. Learn all you can about their

products and services, who they are selling to, and how

they price, advertise, promote and market their offers.

Know your customers. Why are your customers buying

from you, and what do they like and dislike about your

business?

Have a game plan. Be prepared, make a good first

impression, and continue to build consensus at each

check point during the selling process.

Call on decision makers. 60% of a salesperson’s time is

spent in front of people who either can’t buy or will never

buy their products or services.

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Keys to

Successful Selling

Find an internal champion. To help you navigate the customer’s business environment, and endorse your recommendations at proposal time.

Be a problem solver. Focus on the known areas where your product or service can deliver the greatest value in solving a current problem or need.

Stay the course. On average, 48% of sales people never follow-up; however, 80% of sales are made on the 5-12 contact.

Ask for the order. “We miss 100% of the sales we don’t ask for.” – Zig Ziglar quote.


Leads + Referrals from all sources

FIRST CALL – 10%

QUALIFIED – 25%

DEVELOPED – 50%

CLOSED – 75%

IN PROGRESS – 90%

FALLBACK

CA- 100%

• First Meeting, Interest • Determine Next Steps

• Need Determined • Identify Requirements • Decision in 60 Days

• Solution Developed • Submit Proposal • Decision in 30 Days • Received Verbal OK • Approved Contract • Credit Review OK

• Signed Contract • Paperwork Complete • Revenue This Month

• Project Stalled • In or Out in 30 Days

• Service Installed • Payment Received

Sales Pipeline

Example

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Sell More & Improve

Close Ratios

Understand the customer’s buying center. Who are the players, what are their buying criteria – ROI and IRR considerations, etc.

Sell with and through partners. JVs and strategic partnerships will help you accelerate growth, extend your products and services portfolio, and expand your market reach.

Increase the average transaction size. Up sell, cross sell and back-end product sales, offer upgrades, additional services, value bundles.

Offer incentives, discounts and promotions. Pull through sales and multiple product sales to help increase the frequency of purchase, average transaction size, and shorten the sales cycle.

Customer reactivation program. Gift or special offer to “win-back” former or dormant customers.

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Lifetime Value of

Customer

TODAY 10%

IMPROVEMENT

30%

IMPROVEMENT

Average

Purchase Amount

$100.00 $110.00 $130.00

Frequency of

Purchases

Every 90 Days Every 81 Days Every 63 Days

Average

Customer

Relationship

10 Years 11 Years 13 Years

Total

$100 (3,650/90) =

$4,055.56

$110 (4,015/81) =

$5,452.47

$130 (4,745/63) =

$9,791.27

Total % Change =

34.4%

141.4%

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Profitable

Customers

-$50

$0

$50

$100

$150

$200

$250

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Price Premium

Referrals

Cost Savings

Revenue Growth

Base Revenue

Acquistion Cost

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The “Whole

Enchilada”

Current Year 1 Year 15

Price $100.00 $110.00 $161.00

# of Sales 1,000 1,100 4,177

Gross Revenue $100,000 $121,000 $672,537

COGS $50,000 $55,000 $208,862

Gross Margin $50,000 $66,000 $463,675

SG & A $20,000 $22,000 $83,545

Net Profit $30,000 $44,000 $380,130

LTV of Customer $4,055.56 $5,452.47 $14,940.25


Contact Me When Results

Matter Most!!!

JOHN CARROLL

TRES COACHING SERVICES™

Phone: 817.562.4240

Email: [email protected]

Web: www.trescoach.com

Twitter: https://twitter.com/#!/trescoach

Facebook: https://www.facebook/trescoach

LinkedIn: http://www.linkedin.com/in/trescoach

Thank You

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