How to Turn Uncertainty into Opportunity

How to Turn Uncertainty
Into Opportunity

JOHN CARROLL
Tres Coaching Services™
Copyright © 2009 Tres Coaching Services

Agenda Topics

• (3) Ways to Grow Your Business
• Fun Facts You Need to Know
• Apply 10% Rule to Everything
• Impact of Price + Sales Increases
• Sales Pipeline Example
• Lifetime Value of a Customer
• The “Whole Enchilada”

2

(3) Ways to Grow
Your Business?

Only (3) ways to grow your business …

1. Raise your prices.
2. Sell more to existing customers.
3. Sell to new customers.

**Your primary goal as an entrepreneur or business owner
should be to get more profitable customers to buy more
from you and more often.

3

Fun Facts

Pareto’s Law ...
• 20% of customers = 80% of profits

- It’s 6-7 times more expensive to acquire new customers
than retain existing ones.
- 60% - 80% of lost customers reported to be Satisfied or
Very Satisfied prior to defecting.
- 2/3 of customers leave because they feel neglected.
- A 5% improvement in customer retention rates will yield a
25% to 100% increase in profits.

4

Apply 10% Rule
to Everything

• Grow Top-Line Revenues
A. Raise Prices
B. Increase Sales Volume
C. Increase Average Sale Value
D. Increase Customer Additions
E. Reduce Sales Cycles
F. Extend LTV of a Client

• Reduce Operating Expenses

• Improve Employee Productivity

• Enhance Customer Satisfaction
5

Impact of Price
Increases

Current 10% Increase 30% Increase
Price $100.00 $110.00 $130.00
# of Sales 1,000 1,000 1,000
Gross Revenue $100,000 $110,000 (10%) $130,000 (30%)
COGS $50,000 $50,000 $50,000
Gross Margin $50,000 (50%) $60,000 (55%) $80,000 (62%)
SG & A $20,000 $20,000 $20,000
Net Profit $30,000 $40,000 (+33%) $60,000 (+100%)

CAUTION: Be sure that price increases do not result in excessive customer
losses that would impact net profits.

6

Impact of Price +
Sales Increases

Current 10% Increase 30% Increase
Price $100.00 $110.00 $130.00
# of Sales 1,000 1,100 1,300
Gross Revenue $100,000 $121,000 (21%) $169,000 (69%)
COGS $50,000 $55,000 $65,000
Gross Margin $50,000 (50%) $66,000 (55%) $104,000 (62%)
SG & A $20,000 $22,000 $26,000
Net Profit $30,000 $44,000 (+47%) $78,000 (+160%)

CAUTION: Be sure that price increases do not result in excessive customer
losses that would impact net profits.

7

Keys to
Successful Selling

Know the competition. Learn all you can about their
products and services, who they are selling to, and how
they price, advertise, promote and market their offers.
Know your customers. Why are your customers buying
from you, and what do they like and dislike about your
business?
Have a game plan. Be prepared, make a good first
impression, and continue to build consensus at each
check point during the selling process.
Call on decision makers. 60% of a salesperson’s time is
spent in front of people who either can’t buy or will never
buy their products or services.
8

Keys to
Successful Selling

Find an internal champion. To help you navigate the
customer’s business environment, and endorse your
recommendations at proposal time.
Be a problem solver. Focus on the known areas
where your product or service can deliver the
greatest value in solving a current problem or need.
Stay the course. On average, 48% of sales people
never follow-up; however, 80% of sales are made on
the 5-12 contact.
Ask for the order. “We miss 100% of the sales we
don’t ask for.” – Zig Ziglar quote.

9

Sales Pipeline
Example
Leads + Referrals
from all sources

• First Meeting, Interest
FIRST CALL – 10% • Determine Next Steps
• Need Determined
• Identify Requirements
QUALIFIED – 25% • Decision in 60 Days
• Solution Developed
• Submit Proposal
DEVELOPED – 50% • Decision in 30 Days
• Received Verbal OK
• Approved Contract
CLOSED – 75% • Credit Review OK
• Signed Contract
IN PROGRESS – 90% • Paperwork Complete
• Revenue This Month

FALLBACK • Project Stalled
• In or Out in 30 Days

CA- • Service Installed
• Payment Received
100%


Sell More & Improve
Close Ratios

Understand the customer’s buying center. Who are the players,
what are their buying criteria – ROI and IRR considerations, etc.
Sell with and through partners. JVs and strategic partnerships will
help you accelerate growth, extend your products and services
portfolio, and expand your market reach.
Increase the average transaction size. Up sell, cross sell and back-
end product sales, offer upgrades, additional services, value
bundles.
Offer incentives, discounts and promotions. Pull through sales and
multiple product sales to help increase the frequency of purchase,
average transaction size, and shorten the sales cycle.
Customer reactivation program. Gift or special offer to “win-back”
former or dormant customers.

11

Lifetime Value of
Customer

TODAY 10% 30%
IMPROVEMENT IMPROVEMENT
Average $100.00 $110.00 $130.00
Purchase Amount
Frequency of Every 90 Days Every 81 Days Every 63 Days
Purchases
Average 10 Years 11 Years 13 Years
Customer
Relationship
$100 (3,650/90) = $110 (4,015/81) = $130 (4,745/63) =
Total $4,055.56 $5,452.47 $9,791.27

Total % Change = 34.4% 141.4%

12

Profitable
Customers

$250

$200

Price Premium
$150
Referrals
Cost Savings
$100
Revenue Growth
Base Revenue
$50
Acquistion Cost

$0
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
-$50
13

The “Whole
Enchilada”

Current Year 1 Year 15
Price $100.00 $110.00 $161.00
# of Sales 1,000 1,100 4,177
Gross Revenue $100,000 $121,000 $672,537
COGS $50,000 $55,000 $208,862
Gross Margin $50,000 $66,000 $463,675
SG & A $20,000 $22,000 $83,545
Net Profit $30,000 $44,000 $380,130

LTV of Customer $4,055.56 $5,452.47 $14,940.25

14

Thank You

Contact Me When Results
Matter Most!!!
JOHN CARROLL
TRES COACHING SERVICES™
Phone: 817.562.4240
Email: john@trescoach.com
Web: www.trescoach.com
Twitter: https://twitter.com/#!/trescoach
Facebook: https://www.facebook/trescoach
LinkedIn: http://www.linkedin.com/in/trescoach


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