Trying to improve your sales strategy but unsure where to begin?
Start by identifying your key revenue drivers. These are the areas and channels that are the best at attracting and converting potential sales leads. Here's how to find them.
The easiest method to understand what your revenue drivers are is to think about what your small business's variables are so that you can calculate the revenue. Identifying and keeping track of the key drivers of your business is critical to improving sales strategies and optimizing your profits. The kind of business drivers you might use depend on what sort of small business you own. You need to ask yourself what affects your sales figures, costs and your cash flow. For example it could consist of your sales leads in an insurance business, or it could be the sales per square meter in a clothing company, or even 'first time fix' in a repair business. Competing businesses may opt to use different drivers to enhance their sales strategies. For example, quote levels is not a relevant revenue driver for an internet-based firm offering beauty products, but it is very pertinent for a roofing company that depends on client interest to drive its profits. Here are some drivers that might be pertinent to your small business.
Lead and Quote levels
To ensure you optimize your sales strategy you should examine these lead and/or quote levels regularly as they can alert you to any falls in your sales, or conversely highlight any peaks. In turn, you can then work out why these changes occurred. You can ascertain whether, for example, a marketing scheme translated into more leads or not, or which members of staff are supplying the most quotes, thus contributing to exceptional or poor profits. People are one of the most important aspects of driving revenue and often forgotten. You must have the right people in the right roles or your small business will suffer. Furthermore, keeping track of these figures will allow you to assess: which categories of product are selling better than others and what your conversion rates (the ratio of leads to sales) is at different times. This in turn will allow you to improve your sales strategy.
Referrals and Recurring Revenue
For small businesses, referrals and recurring revenue are a key revenue driver which can make or break the business depending on the figures. As part of your sales strategy you should keep track of these figures. If clients are not coming back to your small business why is that? What can you do to improve that? If you are getting referrals where do they come from and how can you ensure you keep getting them?
Price is one of if not the most important of all the drivers. This is simply because price has a direct impact on profit, every extra dollar you make goes straight to profit. However if sales go up, your sales-associated costs may also increase. You may then decide to increase price but that would be a mistake as you may drive customers away if you are not competitive. This is why evaluating pricing is a key part of any sales strategy.