Do you obsess over the number of customers going through your business’ doors, the revenue you’re generating and whether your profits are increasing?
Well, you’re not the only one. A lot of business owners put so much of their focus on these things, believing that they are the keys to achieving business success. As a Business Coach, I see this all the time.
Unfortunately, this mindset can actually be limiting your control, not helping it.
Customers, revenue and profit, while all important for a business, are actually just outcomes of other actions, which means you can’t easily change them unless you work on the variables behind these metrics – such as marketing and sales.
To foster customer loyalty, grow your earnings and broaden your bottom line, you must look beyond your desired results to the underlying factors beneath them. This way, you can regain control and prioritise improving the areas of your business that you can adjust.
Let’s take a deeper dive into this.
5 levers of business success behind customers, revenue and profit
Business profitability can be observed as a linear process.
You employ marketing to attract leads, while your sales team converts them into paying customers.
Leads X Conversions = Customers
How many customers you successfully convert, how much you charge them and how often generate revenue.
Customers X Number of Transactions X Average Sale = Revenue
Finally, how much you spend on costs affects your final profits.
Revenue X Margin = Profits
Overall, your business’ earned income is what will supercharge your growth and fund ongoing operations.
See how customers, revenue and profit are outcomes?
The amount of customers, revenue and profit are all dependent on the variables behind them. So, while business owners can fixate on these, if you aren’t happy with how you’re tracking, you can’t just say “I want more customers”. Instead, you have to say: “I need better marketing leads and sales conversions to increase customers.”
See the difference?
It’s the variables that give you control over better outcomes and not the other way around. I call these “levers”, and are what you need to “pull” to initiate action to improve your business.
Let’s discuss what these levers are all about and how adjusting one can have a compounding effect on your bottom line.
Levers that affect your number of customers:
Leads
Leads pertain to the number of potential customers that have had initial interactions or engagements with your business. They also refer to your prospects or potential clients who are already showing interest in your products and services – thanks to all your marketing activities both online and offline.
How can you pull this lever to your advantage?
In capturing your target audience, you must evaluate your lead generation activities and check which ones are producing the highest quality leads at a cost-effective expense. You can also benchmark marketing strategies off competitors or build partnerships with other businesses to raise awareness and generate more leads.
Conversions
Conversions, frequently expressed as a percentage (called a conversion rate), are the leads that have been transformed into actual paying customers. Businesses like yours can also utilise conversion rates to measure the effectiveness of your sales team in acquiring more paying customers.
How can you pull this lever to your advantage?
Identify the salespeople with the highest conversion rate, then share their best practices with the rest of the team. You can also brainstorm how to improve your value proposition together.
Levers that affect your revenue:
Transactions
The number of transactions your business has is the average number of times each customer buys from you.
How can you pull this lever to your advantage?
How can you ensure your customers will buy again? Look for opportunities where you can offer subscriptions, loyalty programs or other incentives that will entice them to keep purchasing from you.
Average sale value
Average sale refers to the average ticket price of each sale or invoice. This lever affects your revenue, so it’s important to set the right pricing.
How can you pull this lever to your advantage?
Conduct research to find out whether or not your customers are price sensitive and what value they see. You can also try bundling some products and services or provide various options for payment terms.
The lever that affects your profit level:
Margin
Profit divided by revenue results in the margin. Margin is also the percentage that measures your business’ profitability after all expenses have been removed from revenue.
How can you pull this lever to your advantage?
One thing you can do is eliminate redundancies and inefficiencies from your business. It’s also helpful to know if you can systematise or outsource some functions of your business to minimise costs.
These business levers deserve most of your attention
Lasting relationships with customers, increased revenue levels and higher profits are the end goals of your business. But in order to get there, it’s essential to shift your focus towards the levers that actually drive these outcomes instead.
The exciting part about this approach is that you don’t have to make massive adjustments in your lead generation, conversions, transactions, average sales and profit margins to achieve overall business improvement.
Even small and gradual changes can cause an incremental domino effect across the entire line, all of which make your business more competitive, efficient and valuable to clients.
At Growth Workshop, we have a whole suite of viable techniques and strategies that can help you enhance each area of your business. By boosting your business’ levers, we can steer you towards measurable success.
I can help you optimise these levers to improve your customer, revenue and profit levels.
As a Business Coach and Mentor, I work with business owners like you to shift your focus onto the aspects that really matter. This involves providing clarity around goals and guiding you on the right path towards achieving them.
Whether you want to know more about the 5 levers of your business, would like some guidance on how to shift them or need a fresh perspective about driving customers, sales and profits – I’m here to help!
Simply schedule an initial discovery call today with me.
Stephen O’Sullivan
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