Tuesday, March 12, 2013

W11.02 Numbers That Promote Accurate Thinking in Marketing & Sales

I wrote previously that just as accurate information was a hallmark of good teaching, so it is a hallmark of good business practice. Without these numbers, you can easily fool your Self into thinking your business is doing OK.

At BodyChance I watch these numbers continuously, because I know, for example, that if our conversion rates (see below) start to slip, I can safely predict a cash flow crisis in 6 to 12 months time! Accurate numbers help you avoid crises by giving you time to change your behaviour.

Those familiar with the 80/20-5-1 formula I have described previously, can start collecting and interpreting the basic numbers about your own business - or decide the numbers you need to achieve to make your business financially viable.

1. What Are My Most Effective Streams For Gathering New Students?
If you are already a teacher, find out the percentages of where your pupils come from. Tomorrow I will list many different steams that could feed pupils into your Marketing and Sales Funnel. For now, try making your own list.

Having a list leads you to setting up a system to easily gather this information, so think through a way to do that too! Make a table of them all, and put zero to any that you do not utilize at present. From this you will gain a clearer understanding of the structure of your Marketing and Sales Funnel, and how well you are going at filling that funnel.

2. How Do You Convert Along Your Marketing and Sales Funnel?
What are your different conversion rates? This is the number who come - divided by  - the number of people who go to the next step. Here are some simple steps at BodyChance that our new CRM software will be tracking:

1. First contact with you (google search, flyer, referral, call, email etc)
2. Join Your Mail List
4. Downloading a Article/Filling out a survey
5. Coming to a Trial Lesson
6. Joining your front-end
7. Joining your back-end

Between each of these steps you can calculate conversion rates. You can also track time by noting the dates of each step. Once you collect this information, you can start building a financial model of your business. You can see what you need to achieve to make your business work financially. These days at BodyChance – this is how we view our activity. It getting closer and closer to accurate thinking.

For example: say in a day 1000 come to your website / 3 join your mail list = .03% conversion rate fopr that day – do the days differ? Can you discern a pattern?; or 100 join your mail list / 5 come to a first lesson = 5% conversion rate. What makes it improve? What reduces it?; during one week 10 come to a first lesson/ 8 decide to join BC Basic = 80% conversion rate. What happened that month?! What was special? Who did the lessons?

And so on. Now all of this will depend upon…

3. How Many First Time Students Come To You?
How many new students come to you on average every month? What are the high months and the low months? (this lets you know when to put more energy into marketing and selling). If you are a trainee – what do you need to accomplish to support your Self in teaching?

It will depend upon…

4. Once They Start, How Long Do Your Students Stay?
To predict cash flow, you need to predict how long your students stay with you. So dates need to be collected along with numbers. What do you achieve now? What do you need to achieve to make your business work? If you convert 80% of your first lessons to a second lesson that’s great. But what if half of those never show up again? Then your real conversion rate is still quite low. So as well as conversion, you need to know how long do they stay? This makes the information more accurate and meaningful.

Of course, this will be an average number between those that take 10 lessons and leave, to those who stay with you for years and years. There is an average, and the longer you have been collecting numbers, the more predictive your average becomes. You can truly measure the effect on your business if you

-       get more people in the front end
-       improve your conversation rate on any of the steps of your funnel
-       increase the cost of your product

Do you see how it works? This is the beginning a truly profession business practise, and it is not a difficult or complex thing to achieve. It takes just a little of what Alexander called Conscious Constructive Thinking, or the term I have adopted from Napoleon Hill:  “Accurate Thinking.”

TOMORROW: Filling Up Your Marketing and Sales Top Open Funnel

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