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Everything Measured Improves

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Over the past few posts we’ve seen how important it is to ‘track your numbers’. What this means in practice is that there is certain information that you really must know if you want your business to improve. Remember, “everything measured improves.”

Now here’s three numbers that you really should be tracking:

  1. No of enquiries
  2. No of enquiries that become jobs (conversion rate)
  3. Average value of each client

Improving just these three numbers can result in dramatic exponential growth for a business. These numbers have to be seen to be believed.

Let’s say you have 500 enquiries each year and 300 of them become paying clients. That’s a conversion rate of 60% or six in ten. Not bad!

Now if the average job is say £200, that means gross sales for the year of 300 clients x £200 job average = £60,000.

Now, let’s see how we can increase all three of these numbers and the difference it will make on gross sales.

How can we increase enquiries? Perhaps by improving the effectiveness of our adverts or flyers or even by setting up referral systems so that our existing happy clients tell their friends. If we get enquiries up from 500 to 600 per year (20% increase) and conversion rate and job average remain the same, that means that number of jobs now becomes 360 (600 enquiries x 60%). At the same average job value of £200 our sales now increase to £72,000. An increase of £12,000, most of it clear profit.

What about if we increase our conversion rate only? Perhaps we can do this by not giving quotes over the phone and having a systemised structured selling process so that more prospects say ‘Yes’. If we increase our conversion rate by 20%, now we have 500 prospects but now a conversion rate of 72% resulting in 360 paying clients (500 clients x 72%). If the job average remains the same at £200, this will give us gross sales of £72,000 also (360 clients x £200).

Now what if we increase our average job ticket only? This could be achieved by offering protector on every job or offering clients the opportunity to add a room of cleaning on once we’re on the job. Let’s say that the average client now spends 20% more with us. Now the average job value is £240 instead of £200. If our number of enquiries stays the same at 500 per year and the conversion rate stays the same at 60% our gross sales will be 500 enquiries x 60% conversion = 300 paying clients at a job average of £240 which comes to £72,000 (300 clients x £240).

So there’s three ways to increase gross sales.

But what happens if we increase all three by 20% by doing all of the above? Here’s where it gets really interesting.

Now we have 600 enquiries per year and convert 72% of them to paying clients. If our new job average is £240 our new gross sales will be 600 enquiries x 72% converted to paying clients, giving us 432 new clients at a job average of £240 giving us gross sales of £103,680! That’s an increase of 72.8%!

Can you see the effect of ‘knowing your numbers’ now?