MAY 2019 NEWSLETTER – PROFIT:

ARTICLE

What are your most profitable revenue streams?  How can you get more from the best ones?

Depending on the business you are in, your revenue can come from various sources.  Do you make money from ads and clicks?  Do you have a subscription model?  Is it from straight sales?  Commissions?  Upgrades or bundling?  Leasing?  Licensing?

Typically, there are 4 ways to increase revenue:                   

1. Increase the number of customers.

If you need more people coming through your door or visiting your website, you may consider a push in marketing or advertising.  If you are a restaurant, for example, you want that traffic – so you may offer a special or give out coupons.

2. Increase the average transaction size.

If you are a car wash, you might want to “upsell” with waxes, detailing, etc, to increase the transaction size.

3. Increase the frequency of transactions per customer.

Maybe you have a product to which a subscription might apply.  A landscaper might want to offer a discount for 6 months paid in advance, for example.  This keeps them as a customer with recurring revenue for a period of time.

4. Raise your prices.

Say you are a consultant and you know the value you offer is worth more, you know the market can bear an increase…go for it. 

What is your most profitable revenue stream?  How can you increase it (and others that may be neglected)?  Read the Coach's Challenge for specific steps.

COACH APPROACH (welcome to our newest feature!)

COACHAPPROACH

The Coach Approach to revenue streams and improving your profits…

 

Of course what we really want more of is profit, but let’s follow the process, and that starts with revenue first.  Every business has a revenue stream and hopefully multiple revenue streams.  Those revenue streams are filled by what I refer to as revenue funnels, or client funnels.

 

Whenever I think about improving profits the first thing that I want to know about are the client funnels.  A client funnel is basically a process by which we create visibility of our product or service, present an offer, and convert those who have received the offer into clients or customers. 

 

There is a basic 4 step process to each funnel.

 

For each revenue stream you will likely have multiple funnels that are working to convert prospects into clients.

 

By looking at your business engine from the perspective of client funnels it provides a great advantage.  First off, if you want to increase your revenues, you really have only two options…build a new funnel or optimize a current funnel.  This eliminates a lot of confusion and uncertainty that usually clouds our perspective as to what to do to increase revenue.  Secondly, it gives you specific check points from which to base adjustments.  Every funnel has the same elements.  By recognizing the particular failure point, we can easily trace it back to the part of the funnel system that is not performing properly and make adjustments to that element.

One thing many entrepreneurs have in common is their panache for trial and error.  I call it “squirrel chasing.”  We try something, see how it works, and if it doesn’t work, we tweak it or move on to something else.  The challenge is that too much trial and too much error can lead to too little revenue.    We need a system we can follow that allows us to make strategic adjustments and not haphazardly jump at every cute fuzzy squirrel that crosses our path.

So what are some concrete steps you can take to identify and measure your client funnels?

1. What are the client funnels that are currently at work in your business? In other words…where are your clients coming from? Make a list.
2. Next look at volume. Which client funnels are generating the most volume? I would guess…even bet, that you have one, or maybe two that are producing 80-90% of your new client revenue volume.
3. Finally, how productive is each funnel? Give each of your funnels a productivity rank on a scale of 1-10, with 10 being the highest. A lot of times I see funnel that are the top producers, being 80-90% of the total new client revenue, but when we rank them on a productivity scale they might only be productive at a level 3 or a 4.