Pillar 5 Lead Conversion And How To Increase The Number Of Orders You Receive

When putting together a marketing campaign, you need to be clear on how many steps you expect to take to create a customer.

In the Seven Step Guerrilla Marketing Plan, I emphasis the importance of knowing what you want customers to do so that you can make your marketing more intentional.

>>> The Guerrilla Marketing Plan – 7 Sentences To Marketing Clarity

There are three main lead generation and conversion techniques:

1. One step lead generation – sell at the first contact
2. Two step lead generation – offer something free to get interested people to raise their hands and admit their interest and then convert them into paying customers.
3. Three step lead generation – use the two step process but with a low price purchase to weed out the buyers from the browsers.

One Step Systems To Create Sales

Here your aim is to create a lead (a person interested in buying) and convert that person into a customer in one go.

This is classic mail order territory although the marketing message can be delivered by direct mail, space advertising in newsletters and magazines or TV commercials. [continue reading…]

Marketing and sales can be split into two activities:

• Generating leads
• Converting the leads into sales orders and customers

Is this where marketing and sales divide with the marketing staff responsible for generating leads and the sales department responsible for turning the leads into money?

Sometimes it is but often a lot of conversion can be done in the marketing.

This article will focus on the conversion side of the process but if you want to first look at lead generation, I recommend the following:

>>> Understand The Customers In Your Market And Find Unexploited Opportunities

>>> How To Help Prospective Customers Find Your Business

>>> Where To Promote Your Business To Your Target Customers

>>> Reach Out To Your Target Customers

The Basic Principles Of Lead Conversion [continue reading…]

You Can’t Teach A Kid To Ride A Bike
At A Seminar by David Sandler

Book Review Rating – 5 Stars

In 1995 when I started my self employed adventure, a former boss of mine who had ploughed the same path told me to read a book about sales training every year.

Since then, I’ve read plenty of sales books and listened to sales training CDs and watched sales DVDs.

You Can’t Teach A Kid To Ride A Bike At A Seminar by David Sandler with John Hayes PhD is the most different and the most memorable but it might not be the best.

As far as I am concerned, this is a must read book for you to establish how far you are prepared to go to manipulate a customer to get the money. There’s something here that makes me feel very queasy because it’s asking me to be someone I’m not.

At the same time, this is a “no manipulation” manipulative selling system. It’s dressed up in a way to appear as if you’re not really that interested in selling to the potential customer and he or she must convince you that the deal is right. [continue reading…]

The Ultimate Sales Machine by Chet Holmes

Book Review Rating – 5 Stars

This is the long-awaited book from Chet Holmes. The full title is “The Ultimate Sales Machine: Turbocharge Your Business With Relentless Focus on 12 Key Strategies.”

The Big Idea in The Ultimate Sales Machine

People over-complicate what is needed for business success.

Chet Holmes believes you just have to:

Focus on 12 key strategies rather than trying to master hundreds of different ideas and techniques.

You implement these 12 strategies with pigheaded discipline and determination.

I fully commend the last point. Too often people try something that looks a great idea in a half-hearted way. They are then disappointed with the results, decide that the idea wasn’t so good after all and move on to the next big thing. [continue reading…]

Competing On Value by Mack Hanan and Peter Karp

Book Review – 5 Stars

“Competing on Value” by Mack Hanan and Peter Karp is a terrific book that was published in 1991.

Please don’t let its age put you off because the advice it gives is timeless. Some of the examples are dated but the message comes through very clearly.

Competing On Value is a sales book, pricing book and marketing book all rolled into one.

The concept of economic customer value is well established in the more specialised sectors of marketing and pricing. When “Competing On Value” was published, I believe that the concept of fixing your price on the value (or gain) your customer made from buying was very new. [continue reading…]

When a business owner wants to grow the business, the main question is “how do we get more customers?”

I’ll look at that below but I should also point out that, if you want to grow, you stay focused on thine one theme.

In fact there are…

>>> Three Ways To Grow A Business (click to read another article).

How To Get More Customers

Let’s delve into this question a little deeper?

What Is A Customer?

Is a customer someone who has bought from you at some time from when your business began to now?

Or is a customer someone who has bought from you within the last three months?

I think the answer is: [continue reading…]

I introduced the idea of the Ideal Profit Formula in How To Target Your Ideal Profit based on the formula for calculating break even points.

This calculates a sales revenue value or volume that, based on the accuracy of the underlying assumptions, gives you an idea of what’s needed to give you the profit you want.

In this article, we’ll dig deeper into what the sales revenue value means in practical terms.

The Three Ways To Grow A Business

One of the best known ways to look at business growth is the Three Ways To Grow A Business Model.

This gave us the insight that sales revenue is made of three factors that multiply together:

1. The number of customers
2. The number of times they buy in a period
3. The average spend each time they buy

The big revelation is that when most business owners think about increasing sales revenue, they think about ways to attract and convert more customers (factor 1) and ignore the other two, often much easier to improve, factors.

Targeting Your Ideal Sales Value

The Ideal Profit Formula gave us an idea of the value of sales revenue, this next stage breaks down that total across the three elements of the ways to grow a business model.

Comparing what’s happening in your current business with how you’d like to reach your ideal sales revenue identifies the gap in each factor and lets you focus on how the gap can be closed.

What’s Happening In Your Current Business

The easiest number to calculate is often the average sales value per transaction.

This is

total sales revenue
total sales transactions

Obviously you use the same period of time for both.

The next easiest number to get to is the number of different customers who bought in a period.

If you’re good with a spreadsheet, you can download the sales transactions into a worksheet and then use pivot tables to count the number of different customers.

Otherwise, you may have to go through and count up who has been buying. If you have a lot of customers, this can be time-consuming. Try to find a quick way to do this because I’m going to want you to do this regularly.

Try not to use the number of open accounts on your sales ledger / accounts receivable computer program.

This is because you’ll realise that you have many customers registered who have not bought. They are lapsed customers and are useful names to know if you want to try to reactivate them.

If you get into the habit of looking at active customer numbers, you’ll realise that there is valuable information looking from period to period.

The number of customers in the last period

Plus new customers acquired

Minus customers who have stopped buying

Equals number of customers in the current period.

The length of the time period used for this customer reconciliation should be based around the number of times customers buy. If your customers buy on average every two months, then you can use a period of two to three months. If you use too short a period, you will have many lapsed customers but it won’t be valuable information because it’s part of your customers’ natural cycles.

You can calculate the average number of times customers by with this formula:

Total number of sales transactions
Number of customers who bought

You will now have the three numbers for the period:

1. The number of customers
2. The number of times they buy in a period
3. The average spend each time they buy

Because these numbers are important, check that they are right by multiplying them together.

You should finish up with the total sales revenue or close to it if you have rounded some numbers.

Using The Three Ways To Look At Your Ideal Sales Revenue

You can look at the sales revenue you want to give you your ideal profit in terms of what’s happening in your business.

In the future, you can:

• Look to reach the sales growth by increasing one of these three numbers while holding the others constant. This will give you a very focused strategy.
• Think about improving all three measures by similar proportions
• Think about all three measures changing by different proportions (including decreasing some to make it easier to increase others).

If you focus on one measure, your growth is linear and it’s easy to calculate how much your targeted factor needs to improve.

E.g. Current sales revenue

• Customers 1,000
• Transaction value £250
• Number of transactions 3
• Total sales revenue = 1,000*250*3 = £750,000

Ideal Sales Revenue based on your Ideal Profit Formula calculation is £1,400,000

Then if you target new customers with the others staying the same, the number of customers you need is 1400000/(250*3) = 1,866.7

This is an increase of 86.67% which is the same increase as jumping from £750,000 to £1,400,000.

If you plan to change all three growth factors by the same amount, things get more complicated because of the exponential growth – a 10% growth in each gives a 33% growth in total sales revenue.

To give you an idea of how this works:

Increasing all three by 10% gives you 33% growth.

Increasing all three by 20% gives you 73% growth.

Increasing all three by 30% gives you 120% growth.

Or to put it another way:

If you want to increase sales revenue by 50%, you need to increase each growth factor by 14.5%

If you want to double sales revenue, each growth factor will need to increase by 26%.

You’ll have to do your own arithmetic if each growth factor is changing by a different number but remember you’ll only have to decide targets for two of them to reach your targeted sales revenue total.

Target 3 = Ideal Sales Total / (Target 1 * Target 2)

Moving Forward Into Your Marketing And Customer Strategies

If you know how many customers you need to reach the sales total you want, you can start looking at:

• How to retain customers for longer (to reduce the number of lost or lapsed customers)
• How to attract more customers.

When you start thinking through your strategies and tactics for new customers, you’ll recognise that again, this breaks down into two numbers.

Number of leads generated * % of leads converted

If you decide that you need to increase your new customer acquisition from 2 customers per week to 8 customers as part of your move towards your ideal sales and profits, you start to see insights into what you can do.

So if you get those 2 customers from 8 enquiries, you have a 25% conversion rate.

If you want to get to eight new customers:

• You can look for ways to improve your conversion rate to 100% but that’s extremely unlikely;
• You could look at increasing the amount of marketing you do or improving your existing marketing to increase your leads by a factor of four (from eight to thirty two each week); or
• You could look at ways to improve both, say double the leads you get from eight to sixteen and double your conversion rate from 25% to 50%

The issue then becomes how do you do it?

Why don’t your leads convert at the moment (see Win Loss Analysis).

This isn’t the article to go into details.

My point is that by drilling into the numbers and understanding what it all means to set a financial goal, you start making the improvements you need to make much more specific and tangible.

It’s terribly vague to think in broad terms like “we want to get our sales revenue up to $1 million” or “we want to double the business”.

It doesn’t move you into action.

Specific numbers linked to action plans (with completion dates and allocated responsibilities) and firm intentions are needed.

This way you start managing your business intentionally as it moves towards set goals and targets.

You get clear feedback.

X is working, congratulations but can it be improved more?

Y isn’t working as well as expected. Why not? What can be done to make it work in the way you expected?

A Different Type Of Business Planning

This is intentional business planning and management.

I’ll talk more about that soon.

A harsh truth that you need to accept is that people who buy what you sell (your customers and clients) are generally selfish and don’t care much about you.

When they think about buying, one main thing is going through their minds.

What’s In It For Me?

In marketing, this is often abbreviated to WIIFM and people will joke about buyers listening to their favourite radio station WII-FM.

They will rarely come out and ask the question directly but it is going through their minds.

Why Are They So Selfish?

They don’t mean to be nasty or unpleasant but buying involves making a sacrifice of something valuable to them.

To buy, they have to sacrifice money and want to be confident that they’ll get something back that’s worth even more.

Some people care about money in itself.

Most see it in terms of other options.

If I buy this smartphone, I can’t buy that laptop.

If I buy this holiday, I can’t go on that holiday.

If I buy this new car, I will put a major dent in my savings and I won’t have as much security in the future.

This makes purchasing decisions complicated, and sometimes, it’s much easier not to make a decision – to leave the bank in the bank – than to buy something and regret it later.

How Do You Answer The WIIFM Question?

OK let’s look at the issue both in the specific and the general.

If you’re talking to the potential buyer in person, you can investigate the problem and its implications and you can find out about the solution the buyer wants and the criteria they might have set to find the right solution.

If you’re wondering how to do this, read

SPIN Selling Questions – Effective Sales Questions

Then when you present your solution, you need to be addressing its features, advantages and benefits.

Strictly speaking, the “What’s in it for me” question is answered by the benefits.

However, without back up, they can sound too good to buy true.

Buy this product and you’ll be:

• Irresistibly attractive to the person you want.
• Amazingly rich and powerful
• Slim and shapely with the body you’ve always wanted.

Can you see how benefits can sound superficial and even hyped.

It’s enough to put off rather than entice a wary potential buyer who is only too well aware of the sacrifice that has to be made in buying from you.

That’s why I believe you need to be backing it up with features and advantages.

You will hear the phrase

“Features tell, benefits sell.”

That’s true to an extent.

Many features are technical, and we don’t automatically understand the importance of having the new and updated ZB76a widget and why we’d be wasting our money if we bought the old, obsolete product with the ZB75 widget.

These features need to be translated but as we are educated, we begin to understand.

The promised benefits become much more credible and remember, to buy, we need to be confident.

For more information about features, advantages and benefits, please read

Features Advantages Benefits Make Your Selling FAB

Answering WIIFM In Marketing

It’s harder to do all the work in your marketing unless you resort to a 20 page sales letter that lets you spell out your entire sales story.

You have three main options:

1. Hit the most common emotional hot buttons. Cherry pick the benefits and associated features and advantages.
2. Use your marketing to drive people into a sales consultation where you can move to discuss their specific issues and pay-offs.
3. Educate and pre-sell over an extended period. The product launch formula introduced the idea of a sideways sales letter where the sales message is consumed in bite-sized pieces.

What is best? That depends on your particular situation including the nature of the product or service you sell and how open to influence your buyers are. Some products are much easier to sell than others as your own buying experiences will show you.

When you think about why people buy what they buy, you will find that the decision process operates at two very distinct levels.

Why People Buy Is Really Two Questions

1. Why do people buy the generic solution?
2. Why do people buy a specific product or service?

An Example – Why Do You Buy And Own A Car?

The reason probably goes something like this…

You have a need or want for personal transportation that gives you independence from public transport and from other people.

First look at a need for a car.

Perhaps you live in the countryside and you work in the city. There is no public transport that will get you to and from work in a reasonable time.

You don’t know anyone else who lives nearby who makes a similar journey at a similar time so there is no opportunity for you to receive a regular lift.

You could use a taxi service every day but buying and owning a car is cheaper.

Your need for a car might not be that strong and compelling.

Perhaps it’s your want for a car that makes you choose to spend some of your spare money on a car rather than saving it or other forms of expense.

Perhaps you value the freedom and independence that having your own car gives you. While you can accept that other people may decide to spend their money in a different way, owning a car is important to you.

Why buy a new BMW 520 rather than a second hand Mercedes C class?

Once you’ve decided that you will buy a car, why do you buy a particular car?

The issues come down to your purchase criteria for what you want your car to do for you, and in this case, say about you.

There are some functional issues:

• How many people do you want or need to carry?
• Do you need a car to be a certain size so that you can fit in it? I do.
• How many doors do you want?
• How big a boot do you need?
• How important is the fuel consumption and the other running costs per mile?
• Will something stop you from having the car you want? For example sky-high insurance premiums?

These narrow you down to a broad category of car that you want.

Then you have to balance how much you can afford to spend on a car (to buy it or lease it per month) with how you feel about a new car rather than a second hand car.

Then you need to focus on particular brands and models. Is one appealing to you particularly because of its looks, its image or performance?

Can you see how a decision like buying a car is made up of many smaller decisions which gradually narrow down the choice until there are a small number left.

Using These Ideas

There are fundamental questions you need to answer:

Why do your customers buy what you sell at the generic level?

Why do they buy from you rather than your competitors?

Why do they buy that particular product or service from you, rather than something else you sell?

And, just as important…

Why don’t well qualified prospective customers buy from you and either:

• Buy from one of your competitors?
• Don’t buy at all?

Answering these questions will go a long way to showing how you need to improve your lead generation and conversion activities.