≡ Menu

How Small Changes Can Mean Big Profits

In the article, 80% of marketing that most businesses overlook, I talked about the “The 5 Steps of the Sales/Marketing Process”. These are:

1. External Lead Generation
2. Converting leads to clients
3. Up-selling
4. Re-selling
5. Referrals

Now I’m going to show you how making small improvements in each area will make a huge difference to your profits.

I want you to imagine a business that brings in 10,000 leads a year, converts 20% of those leads into paying clients, makes an average of 10 sales per client at an average profit of £50 per sale. That’s:

10,000 * 20% * £50 * 10 = £1,000,000

That’s £1,000,000 in net sales (we’ll ignore referrals for the moment). Let’s assume fixed costs and marketing costs total £600,000. That means profit of £400,000.

Now, imagine the company gets just a little bit more serious about their marketing. And let’s say they only manage to improve their marketing by a miserly 5%.

That’s: 10,500 leads a year, converting at 21%, with an average of 10.5 sales per client at an average profit of £52.50 per sale.

Hardly spectacular increases are they?

But here’s what happens to the sales and profits:

Net Sales: 10,050 * 21% * £52.5 * 10.5 = £1,215,506.20, an increase of 21.5%.

But Look What Happens To Profits!

Profits =  £1,215,506.20 – fixed/marketing costs (still £600,000) = £615,506.20, an increase of 53.8%!

And these are from just tiny incremental improvements in their marketing.

Now, Let’s talk about referrals

Referrals work like compound interest.

Let me explain: if you have a 20% referral rate then, for every 1,000 clients you bring in, you’ll get 200 new clients via referral.

But that’s just the first step, because, from these 200 referred clients, you’ll also get 20%. That’s another 40 clients. And, from those 40, you can expect to get another 8 clients … and so on …

Adding these 20%s up: 200 + 40 + 8 + 1.6 + 0.32 … = 250 new clients by referral (25%)

So, with a 20% referral rate, you increase your business by 25%.

Have a look at some other referral rates:

  • 25% referral rate: 333 referrals per 1,000 clients
  • 30% referral rate: 428 referrals per 1,000 clients
  • 40% referral rate: 666 referrals per 1,000 clients

You can see that, as with with compound interest, small increases compound to produce big results.

The easiest way to make this happen in your business

You’ve seen how just little changes in your marketing can create huge increases in the profitability of your business.

With my Marketing Manager service, I do all this work for you:

* I start by identifying, optimising and expanding on what’s already working for you. This is the easiest way to get a low-risk boost in profits.

* I identify untapped marketing opportunities. And we test these – using some of the additional profits we’ve already generated. We repeat and expand on what works. And we drop what doesn’t.

If you’d like know more, check out my Part-Time Marketing Manager service. It comes with a risk-free guarantee, so there’s nothing to lose.

Best Wishes

Steve Gibson

PS It’s usually possible to take this a step further and break down these processes into sub-processes … and then make small improvements in each sub-process, which multiplies results even more!