The amount of profit your business will make over the next 12 months is dependant upon FOUR key factors. These are:

1. The average sale value which you achieve
2. The number of leads you collect each week
3. The conversion rate of leads into sales
4. The margin you make on each sales

Increasing any of the above by even a small percentage will make a small difference, increasing two will make a big difference, and increasing 3 or more will make a HUGE difference. To show you what we mean, we've put together a small profit calculator. By changing any of these factors you can see the difference it will make to your profitability. Have a go! Then we'll move on and show you HOW you can affect each of these.

Dealing with these one at a time:-

Average Sale Value

The value of the room you are selling depends on a number of factors:

• Your reputation (from referrals and ALWAYS leaving the customer to retain a good memory of you)
• The fact you are punctual - if you can't turn up on time, how are you ever going to complete the job on time?
• Proof that you can do a decent job (Testimonials, videos, photographs, press releases all help)
• The way you present yourself and your company
• The material you leave with the customer
• The way you interact with the customer
• The level of product knowledge the customer sees in you
• The specification of the conservatory (this is a great way of addressing the issue of price - provide two (or more) specifications, one with a lower specification and price point and one with a higher specification and price point - you might be surprised which one is more popular!)

There are other factors too - however, note that price (although important) is generally not the deciding factor (if this were true, there would only be one make of car on the market!)

Weekly Leads

Again, there are more ways of gathering leads than it is possible to mention here. However, one question that is worth asking is what incentives do your existing customers have for making recommendations? If they do make a serious referral, do you send them chocolates, flowers or wine? Over time they could end up being one of your best lead sources!

One useful tip is to identify if there is a particular profile of person you are selling a lot to, and target your lead collection at these people.

Do you know what the cost of each lead is? 

Conversion Rate

Put simply, for every 100 leads, how many become sales? The conversion rate tells you several things:

The quality of the leads you are getting. before expending large amounts of effort on a sales visit, can you qualify that they can afford to buy (at the very least, is it their own home!). There is a compelling argument for excluding non-starters as early in the sales process as possible - it will save you hours later.

The quality of your sales process. This is where it gets really interesting. Do you have a sales system, or do you just turn up and "wing it?". A sales system is a series of documented steps, starting with lead generation, lead qualification, visit preparation, the visit itself and follow-up steps. In the US there is a vast amount of evidence that having a sales system is one the most important tools in the selling process. Setting up a sales system is a LOT of work, but having one can dramatically improve your conversion rate.

Margin

Your margin is the difference between your price and your costs. It's what you're doing all the work for. Do you know what the actual margin is on any job? I'm sure you're aware of the inconvenience of running out of material on site, but have you ever costed it? (time, fuel, delays to your schedule all have a cost). This is a far bigger area than we can cover today, but if you don't know your margin, you don't know whether it's worth doing the job (or even if you're going to lose money).

How do I act on this?

In business, action is the key to success. Now you've finished reading this, have another play with the calculator, try increasing you margin, leads or conversion rate by 1% and see what it means to you in terms of income. I hope this article has inspired you!.

Dave Blakeman

Managing Director

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