Lead generation is an expensive affair, and you really need to know what you are doing. If you don’t, you will be burning cash, without sufficient return. Average businesses keep marketing and throwing money without all its other “cheaper” revenue generators. Across many different industries, we have boiled revenue-generating strategies down to 4 parts:
- Lead Generation
- Conversion Rate
- Average Dollar Sale and
- Repeat Business
When I researched successful businesses, they each had at least 1 of the 4 going for them, and they knew how to maximize revenue generation, without throwing all their eggs into the Lead Generation basket.
Conversion Rate is how effectively your business converts leads & inquiries into paying customers. New prospects (who are doing business with you for the first time) are prepared to transact with you if there is sufficient trust and confidence levels to part with their money for what you are selling. The higher the price of what you are selling, the more conversion and confidence are required. Why is conversion an important low-hanging fruit to address?
Simple – you can be turning away many prospects, as we speak.
Start understanding why prospects do not buy, why are they going to your competitors, start understanding where in the sales process did they fall off? Conversion is a process-driven strategy and requires little investment of money, but a lot of INVESTIGATION, hence time is needed. Well, that’s why many entrepreneurs don’t do this, and rather throw money at a social media or Google campaign.
Average Dollar Sale strategies are about identifying your “fries”. That’s McDonald’s popular upsell, every time you ask for a burger. After that, they will ask you if you want the apple pie to go with it. Average dollar sale is calculated from taking Total Sales for the month, divided by the Total Number of Transactions for the month. You will compute how much each customer spent with you. If you increase this by $1.00, that will increase your monthly sales. In increasing your customers’ average spend, you are leveraging on the small transaction, to make a bigger one. The customer was already drawn to your store to try on a blouse a $10, and your storekeeper gives her a special promotion of adding a garment from a special rack, at an attractive bundle of $25. In the spur of the moment, you have made $15 more. You can also upsell, cross-sell, and even down-sell.
Increasing Repeat Business is one of the most significant ways to become profitable. Most businesses do not make money from a new customer on the 1st transaction, due to marketing costs. Once you compute that, along with product cost, you will be left will zero, or likely a negative sign. So, the best way to be profitable is to get that same customer to buy again. Every repeat transaction from there on will be profitable.
So, how do you get customers to come back again? Simple – ask them to come back. Give them a reason to. Our dentist client built a call team to ring up patients every 6 months. The local pet store uses a members discount to keep customers coming back. A recruitment agency uses a monthly newsletter to send articles and videos to HR managers in their database.
The above 3 strategies should be maximized first, before investing heavily in lead generation. You will maximize the efficiency of your business to generate revenue, without leaking resources. Lead generation and marketing can be the easiest go-to without better education. But if you are going to make every dollar work hard in your business, considering these will help you generate more sales, with the least resources.
This is one of many principles, but I talk much in detail on how to overcome the hurdles of an average business, in this article. Check out my article “Are You Tired of Running a Mediocre Business: Seven Success Principles that Differentiate GREAT Businesses from Mediocre Ones”
I cover these in detail accompanied with real examples and give you many examples of how to generate more revenue. Click here to find out more.
