Today I wanted to share with you six simple questions to ask each quarter to help you scale your company.
We developed these questions as a standard methodology by working with several hundred business coaching clients and helping them to scale. Considering that their average annual growth rate is 32.4 percent it's clear that these questions work.
Question #1: How can we increase our leads in the front end?
The most powerful strategy to do this is to "feed your winners; starve your losers." Of course this assumes you're tracking your lead generation and sales activity and know which ones are your winners, and which aren't.
When we do this with a business coaching client, it's common to find that 75 percent of more of their business comes from their top two or three lead generation activities. Once we make that clear, the next step is obvious -- stop wasting resources on the other lower performers and use those freed up resources to feed their best ones.
Question #2: How can we increase our conversion rate?
In Chapter 8 of, Scale: 7 Proven Principles to Grow Your Business and Get Your Life Back, my coauthor Jeff Hoffman (co-founder Priceline.com) and I shared a methodology of systematically optimizing your sales conversion process.
At the heart of this approach was to diagram out your sales process, identifying each key conversion point in the total sales process, then focusing on improving conversion a piece at a time.
I've seen this approach work wonders for clients. For example, one of the financial services companies we work with was able to increase their overall conversion by over 30 percent in one quarter by picking one part of their conversion process that was performing subpar and fixing that.
Question #3: How can we increase the average unit of sale?
Can we bundle our products or services into a bigger package? Can we raise pricing? Can we cross sell? Up sell? Or even increase the package size of our baseline product or service.
Anything you do that increases the average unit of sale a customer buys from you will help you scale. For example, one service business we work with was able to do an across the board price increase of 11% with no customer push back.
Question #4: How can we increase the frequency of repurchase from our customers?
Have you helped strategically map out the best buying practices for your clients to help them get optimal results from your product or service?
One chain of hair salons we coach uses this strategy with the clients who come into their locations for beauty treatments. They've been able to push the average frequency of visits from once every 8 weeks to once every 3-4 weeks. This has helped them increase sales by hundreds of thousands of dollars annually.
Question #5: How can we increase our gross profit margin?
This means either increasing pricing, or reducing the "cost of goods sold."
Question #6: How can we decrease operating expenses (or at the very least, lower our operating expenses relative to our gross sales volume)?
Is your staffing level right? Can you do more with less? How about your other overhead items, can you lower any of them without hurting sales or production? What expenses do you have that contribute very little to the real value your business creates? Cut, cut, cut.
The real power of these questions comes when you layer one on top of another and ask them on a regular basis -- each quarter.
One of the manufacturers we work with (aerospace) tripled its operating profit margin over a 24 month period.
If you would like to access several free video trainings Jeff and I created on how to strategically scale your company and get your life back, click here and access our free Scale Tool Kit. Enjoy.