Before investing more money into your marketing dollars, you must first evaluate your business to understand its strengths and opportunities for improvements.
By Kedma Ough, MBA
Jump onto any social media platform today, and you will have an array of advertisers showcasing the next sensational program to improve your customer sales flow. Almost all options require a hefty investment that promises an increase in profit and doesn’t necessarily solve some of the reasons companies are not as profitable. Often, small businesses ask if they should invest more and more in marketing so they can produce even more sales conversion. Before recommending they turn the dial to invest more marketing dollars, consider why prospective customers are saying no to your offer.
Making a profit in business is intentional, strategic and calculated. While we have all heard of the viral video that hits millions of followers, this is not a strategy I would follow to build an extended-lasting business model. Lasting results that lead to solid profits are achieved by ongoing tests and measurements that can give necessary feedback and data for continuous profit improvements.
Before investing more money into your marketing dollars, you must first evaluate your business to understand its strengths and opportunities for improvements. To scale your small business income, here are three operational changes that you can make to double returns on investments (ROI) and secure your small business’s future without spending a ton of money.
1. Focus on zero-based budgeting (ZBB)
Create a habit of assessing the expenses on your profit and loss statement and its justification every quarter. It is alarming that so many small businesses do not actively analyze each expense category periodically. In one small business audit, a company with ten employees spent $ 3,000 a month on business meals. When I interviewed the owner, I learned that a few staff members enjoyed one too many lunches on the company’s credit card. With an average of $ 15.00 per meal, more than 200 meals were expensed within 30 days among ten employees. Our team introduced a change in the meal expenses that limited meals to $ 100 per staff member per month or the option to receive a $ 100.00 bonus on their paycheck. This saved the company more than 60% monthly on meals without reducing employee morale.
2. Improving your average sales closing ratio
This is one of the easiest ways to solve a profit problem. The first area to consider when assessing a small business is its closing conversion. In other words, how many customers had the opportunity to be exposed to their product and service and decided to buy from them. Simply put, the closing ratio is dependent on how effective your sales team or sales funnel is in converting new leads into new customers. Every industry has benchmarks to determine the ideal closing ratio. Therefore, if we could analyze why potential customers said no to the offer, we could improve the closing ratio.
Recently, I was coaching a company in the home services industry that had a closing ratio of 29% when the average benchmark for closing was closer to 50%. Instead of investing in more marketing dollars, we developed a simple tracking system on Google Sheets to understand why someone rejected the offer each time. In doing so, we were able to see patterns across promotional offers being considered, variance in ticket prices and even differences in specific zip codes. Once we had a firm understanding of why customers were rejecting the offers, the company set out to build a robust internal training program to address all the reasons a prospect may not sign up with the company and offer better responses and more personalized incentives. Within six weeks of introducing the process, the company saw a 9% increase in its overall closing ratio.
3. Investing in your employees’ wellbeing
It’s one of the easiest ways to improve your bottom line. According to the Department of Labor’s most recent statistics, more than 11 million jobs are open in the United States, and the workforce is desperately seeking more employees to hire. Yet, many companies are not putting enough effort into the personal well-being of their employees and asking them what they need to feel happy, secure and more invested in their role. One of the most affordable ways to reduce company turnover is to invest time and energy into your staff. While staffing often is the most expensive aspect of a business, reducing the cost of employee turnover is equally essential. Considering your employees as the most valuable customers may be the first step in changing your company’s culture. The best marketing tool that a business can have is a satisfied employee because they are on the front line every day with your external prospects and customers. Here are simple and affordable ways to invest in your employees and support your bottom line:
- You can have each staff member complete a personality assessment to get to know them better, especially regarding their interests, motivation, style of communication and things that would reduce stress.
- Create a safe open-door policy for employees to share their thoughts without repercussion.
- Discuss a company’s ongoing support openly to improve one’s mental health.
- Encourage short health breaks throughout the day so they can be more productive.
- Surprise your team with little thank-you cards or small appreciation gifts.
With social media, there are many ways to distract our efforts and look for a magic pill to fix our profitability. Still, more often than not, the answer is within, and we have to put our attention back on the internal frameworks of the business. attention back on the internal frameworks of the business.