Over a series of articles, I have explained the Five Profit Drivers for any business. Now it’s time to put them together to create a complete marketing system for your business.
Just to reprise, the Five Profit Drivers are:
- Increasing Enquiries
- Increasing Conversion to Sales
- Increasing the Average Value per Sale
- Increasing the number of times a customer buys
- Increasing your Margins
The first article shows how you can double your profits by just making small increases from each profit driver, and the subsequent articles provide specific examples for each profit driver.
The Five Steps to Your Marketing Plan
The next step is to put the five profit drivers together into a marketing plan for your business.
#1. For each profit driver, list your current strategies and results for the last month/quarter, depending on your business cycle time.
#2. Using the multiplicative leverage, as demonstrated in the first article of this series, determine the impact of these strategies on you profitability for that period. For example, you may have an Adwords campaign that produces 100 enquiries a month of which you convert 60 per cent into sales, and using an upsizing strategy, boost the average value per sale by 15 per cent, and with a loyalty program have 25 per cent of people returning every month and you increase your margins by 10 per cent with incremental pricing. The combined result is your current gross profit for that period.
#3. For each profit driver, create a ‘Profit Driver Improvement Plan’ for the next period based on suggestions for each driver in the profit driver series of articles. Start with the strategies provided in each profit driver article and then come up with your own. Identify gaps in each profit driver in your current plan. It’s important to ensure that you are using strategies from each of the profit driver as some of your biggest gains could be from the areas you are currently neglecting.
#4. Forecast the profit impact of these changes. Remember, the changes from each profit driver are multiplicative, not additive. For example, a plan to increase enquiries by 15 per cent and to increase your sales conversion rate by 12 per cent and an increase in the average value per sale by 17 per cent results in an increase in the value of sales of 51 per cent, not 44 per cent.
#5. Monitor the results as you implement the ‘Profit Driver Improvement Plan’. This is essential feedback to your plan. Too often, businesses implement new marketing but don’t set out from the start to measure the results and ending up wasting money on fruitless campaigns.
A simple tool you can use to build your own ‘Profit Driver Marketing System’ can be downloaded here. Creating your own ‘Profit Driver Tool’ allows you to see the impact of your marketing on your gross profit, and the opportunities to increase it. It also shows which parts of your marketing are working well, and where to find the gaps. The result is a quantified plan for you to improve your marketing putting you in control. This is your marketing dashboard.
So don’t be like most businesses in your sector who market with their eyes closed, open yours and take control to produce the results that you deserve from all your hard work.
Dr Greg Chapman is the author of the best selling book “The Five Pillars of Guaranteed Business Success”. Download your own free copy of the Profit Driver Marketing System Tool from this link.
Want more? Get our daily wrap delivered straight to your inbox! Follow Kochie’s Business Builders on Facebook, Twitter, Instagram, and LinkedIn.