Okay, I want to take you through something that we've gone over with the mastermind group, and I think it's very powerful. It probably warrants a bigger training than one video, but I'm going to put this in one video. This is not part of the original six training sessions; it's something I've decided to add because I think it's powerful and useful.
The beauty is that the whole thing is going to be on one sheet, and I would suggest printing it out and putting it on the wall so that you see it regularly. Here’s the concept and the theory.
The number of leads times your conversion rate, if you're selling an LCC, will give you the number of LCCs. So far, so good. Now, your LCC times your conversion rate—how many of them out of ten you convert into clients—gives you your number of clients.
So far, so good. Now, your clients, if we take your clients times your average fee, equals your revenue. That's the total money you've got, not your profits or anything else. Your revenue times your margin gives you your profit.
What’s your margin? Well, if your fee is $10,000 for a project, not counting the whole construction, just your fee for that project, and let's say you have a home office and some basic expenses like stationery and petrol, maybe your margin is 80%. So, out of every $10 that comes in for your fee, you end up keeping $8, and that’s your profit. It’s a reasonably simplistic formula. How would that look in real life?
Let's say you had 50 leads and your conversion rate is 50%, meaning 50% of the people who contacted you wanted an LCC. That would give you 25 LCCs. Let's say your conversion rate for turning an LCC into a client is 60%. That means you get 15 clients over the year. Let's say your average fee is $10,000, and you have a few expenses and overheads. Your revenue would be $150,000 (15 clients times $10,000), and with an 80% margin, you’d have $120,000 left in your pocket at the end of the year.
Here’s where this little formula becomes quite powerful. That’s a summary of where you were last year. There are certain things you can influence in this formula and some you can't. You can influence the number of leads and your conversion rate by making changes and doing things differently. Hopefully, being in this program will give you more leads and a better conversion rate.
The number of LCCs is a function of the two things above. Let’s say we tweak and improve some of these things by just 10%. So, if we improve these by 10%, our leads would go to 55. That’s 5 more leads, not a lot more, but let’s say we did some promotional stuff and used the tools in the promotional toolbox. Only 5 extra leads should be achievable if you follow the program. Improving your conversion rate by 10% means your LCCs go up to 30.25. Let’s round these numbers off for simplicity.
If we improve our conversion rate from LCC to client by 10%, we now have 20 clients instead of 15. Small hinges swing large doors. Let’s also increase our average fee by 10%, from $10,000 to $11,000. That increases our revenue to $220,000. If we improve our margins by reducing costs, say by 10%, our profit jumps to $193,000.
$193,000 is better than $120,000, right? And all you’ve done is tweak your marketing system by 10% in a few different areas. Leads increased from 50 to 55—that’s not a big jump. None of them are big jumps, but the impact tends to be compounding. Small tweaks here and there can result in a 60% increase in profit, and you haven't really done a lot other than making some small adjustments.
Would you like a one-page sheet with a list of things you can do to make these tweaks? Here’s a fairy godmother-like gift. I’ll go through some of these to guide you through the process. I won’t cover everything, as it’s a long sheet and would be an incredibly boring video, but I'll highlight some key points.
For lead generation, networking, and your core message, we’ll have training on coming up with an opening hook, explaining your method, and telling your story. Being positioned as an expert will help generate leads. Consider creating a publication or newsletter related to your niche, such as historic renovation, where you are the sponsor. This is the "Mini Murdoch" strategy—own the distribution channel.
Blogging on other people’s sites, press releases, article writing, improving your SEO, adding a monkey's fist to your email signature, getting listed on Google Maps, YouTube, Facebook, LinkedIn—all these can generate leads.
To improve conversion rates, target better prospects, choreograph a remarkable client experience, explain your value in detail, and provide written guarantees. Testimonials, frequently asked questions, team member profiles, before-and-after photos, and a compelling background story can all help. Promote any proprietary processes as unique and special.
To increase your average project value, position yourself as a niche specialist to justify higher fees. Create an upmarket image, set price expectations early, and take on only A and B clients. Educate clients on your superior value, have a minimum project value, and measure and set goals for your average project value. Train your team, use sales scripts, and ensure clients know your full list of services.
To improve margins, reduce costs, increase fees, and eliminate unnecessary overheads. Use referral strategies, and always ask for referrals.
The point is, there are countless strategies to tweak each area by 10%. If you improve several areas by 10%, you can achieve a 60% increase in profit. Imagine improving everything by 20%—the numbers go nuts.
Use these strategies as a checklist and continually work on improving your percentages. If you have questions about any of these, ask them during the Q&A calls. This is a bonus from our mastermind group, and I hope you find it useful for tweaking your numbers and achieving growth. |
