For most of us who are familiar with a conventional “Revenue – Expenses = Profits” model, this may seem puzzling, or even paradoxical.

After all, it seems you can only increase revenues, or decrease expenses (or a combination of both) to mathematically boost your profits … right?

Actually, there are a few other factors involved in a unique formula called the “5 Ways” of maxing profits.

So what are these “5 Ways”?

To multiply profits, you simply need to increase your leads, increase the conversion rate of your leads into buying customers, increase the average dollar amount of what they buy, increase the number of times (transactions) they buy and increase your profit margins.

Note the key word is “simple” … and sometimes simple isn’t easy.

But it can become “easier” when you realize there are literally HUNDREDS of strategies to boost these factors individually or collectively, and if you can just increase each factor a measly 10% (while keeping your costs in check – and you can – if you are smart about it), you’ll see a 61% increase on the bottom line.

Don’t believe it?

Take a look:

First, multiply your Leads by your Conversion Rate for your total number of Customers
Then, multiply your Customers by your Avg. Value/Dollar Sale AND multiply again by your Number of Transactions to get your Revenue
Finally, multiply your Revenue by your Profit Margins for your Profit

In your company, let’s say you have either estimated or fully determined the following numbers:

4,000 leads X 25% conversion rate = 1000 Customers
1000 customers X $100 average sale X 2 sales per customer = $200,000 Revenue
$200,000 revenue X 25% profit margin = $50,000 Profit

What does all of this mean?

Simply put, it means you are running a business that converts 1 in 4 prospects into paying customers, and those customers average two purchases at $100 per purchase each year – and your company enjoys a 25% profit margin on revenues of $200,000.

It also means your total profit for the year is $50,000.

So what would happen if, over the course of the next year, you could increase results by just 10% in each of the 5 areas?

Let’s do it, and then let’s take a look at what happens to your bottom line:

4,400 X 27.5% = 1210 Customers
1210 X $110 X 2.2 = $292,820 Revenue
$292,820 X 27.5% = $80,525.50 Profit

Examine the numbers closely and you’ll see the 10% increase is incremental (for example a 10% increase of 25% means a 2.2% increase to 27.5%, not 35%) – which means you could easily nudge numbers up by that amount over a period of months – or even weeks.

The bottom-line … is that the new bottom-line looks very interesting, doesn’t it?

Even though we’ve increased each factor by just 10% (including top line revenue), we were able to boost bottom-line profit by 61% – or a total of $30,525.50.

What could you do with an extra $30,000 in your business this year?

Think 10% is impressive?

Do some math on your own and see what the numbers look like if you increase 30%, 50% or even 100% down the line.

And what’s an easy way to do the math?

Just follow this link to our simple “5 Ways” calculator …

http://www.actioncoach.com/free-business-calculator-profit.php

… or you can download a complimentary “5 Ways” iPhone app, which also allows you to do calculations and gives you some specific strategies on how to boost each factor.

Hope you got some new insight on an old and seemingly paradoxical question … and hopefully the “5 Ways” will help you get your most profitable year in business ever!

P.S.
One other note … you may be tempted to start working all the factors at once, but the two “lowest hanging fruits” are your price points and profit margins.

It’s VERY easy to raise your prices 10%. Most of your customers won’t even know the difference, and (to borrow a phrase from that “dead science” called economics) all other things being equal, any increase will go straight to your bottom-line.

Biography
Brad is the World’s #1 Business Coach. As Founder and Chairman of ActionCOACH, he leads the world’s largest and best business coaching Team. Entrepreneur magazine has for 6 years running voted ActionCOACH #1 and with more than 1,000 offices in 47 countries, helping business people and business owners create more success every day, you can understand why.

“Life is about experiences … usually with family and friends … I try to squeeze the most out of life I can … I love great times, great food, great wines, great shows and movies, great travel, great rums, great cigars, and great sporting events … Most of all I love my kids, my work and my friends …”

Brad Sugars is an entrepreneur, business coach, educator, seminar presenter and business advice expert. Brad Sugars is author of the Instant Success series and CEO of ActionCOACH Business Coaching.

Key Points:
1. Choice depends solely on consumer perception not actual quality
2. Perception depends on how an object is described
3. People don’t consider objective reality, only perceived value
4. Lower reference points (or relative values) increase the perceived value
5. Immediate benefits are more highly valued than future rewards
6. Loss-aversion is a powerful motivator
7. Always present definite rather than possible loss-avoidance or gains
8. Discover the “herd mentality” to avoid rejection
9. Simplicity increases conversion rates

Perception

When a consumer is presented with information comparing your brand with the competition, the choice depends on how that decision-maker describes the brand, product or service to himself. We are vulnerable to how choices are described, so if you can invest in an approach and presentation (this could be advertising, your website, brochures, your elevator pitch etc) that frames the choice in a way that is perceived as having “more immediate value”, that frame will skew the buyer’s decision.

Decision Making

It has been shown that in situations with increased pressure or ambiguities, experts use intuitive decision-making rather than structured approaches — arriving at a satisfactory course of action without weighing alternatives. How this relates to your business is that people, in general, also take an intuitive approach when it comes to purchase decisions… and there are ways to present your benefits in such a way that prospects don’t even consider the alternatives.

Framing With Relative Values

A powerful way to increase the perceived value of your product or service is to “frame” the information by setting a reference point (often through “formal data”/statistics). For example, “the average sales conversion rate in your industry is 3-5%, but our proven methods offer conversion rates of well over 10%”. There might be cheaper and better options out there, but because of the use of an acceptable reference point, your option is perceived as the best.

Loss Aversion

Sometimes it is better to present benefits as a means to avoid losing something rather than a means to gain something, as loss-aversion is a powerful motivator, as well as framing information in a way that highlights “no-risk” outcomes (as opposed to “probable gain” outcomes). Some studies suggest that losses are twice as powerful, psychologically, as gains. For example, swap “get a $5 discount” (simple gain) with “avoid a $5 surcharge” (loss-aversion).

The Old School VS The New School

The traditional view would advise things like making a product that people like more, or charging less for it perhaps. Whereas, behavioral economics teaches us the importance of ideas such as convincing retail stores to display your product at eye level so people will see your brand first and grab it. There needs to be as much (or more) consideration regarding how people will perceive your product, service or brand as there is thought about how to actually make that product, service or brand better that it’s competition.

Herd Mentality

Because successful sales and marketing messages match up with existing majority views, it is important to understand that “re-educating” a person won’t work. You can’t tell people, ‘You’re wrong, and here is what to think,’ as people tune out or forget things that are inconsistent with their beliefs. This is why a “niche” approach is such a great one, because you’re heavily focussed on a specific targeted group of consumers who already agree that what you’ve got is important, useful or worthwhile.

“Now” Versus “Later”

Where ever possible, benefits should be presented as an immediate gain to the consumer due to “intertemporal choice” where people tend to value immediate rewards higher than future rewards. There’s a fundamental tension in people between seizing available benefits in the present, and being patient for benefits in the future. People definitely want instant gratification, but also desire future outcomes. If you ask people, ‘Which do you want right now, fruit or chocolate?’ they say, ‘Chocolate!’ But if you ask, ‘Which one a week from now?’ they will say, ‘Fruit’.

Equal Energies Produce Real Results

So you can see (I hope) that there should be as much intellectual energy devoted to these design and phrasing choices as to the choice of the product/price details in the first place. Behavioral economics can help us design these choices in much more effective ways, which lead to genuine top-line improvement.

For more information about how Behavioral Economics can vastly improve your sales and advertising efforts, please refer to “Future-Proof Brands”.

Biography
Matt Cumming is a passionate brand consultant, graphic designer, web developer and author of “Future-Proof Brands”, with over 10 years experience helping businesses maximise their top-line potential through an effective, humanised approach to design and branding. For more information, take a look at www.makeithuman.com

Email Marketing has a number of benefits that make it the most important marketing mechanism available to small businesses today:

Benefits of email marketing

Builds customer relationships
Re-enforces campaign strategies
Allows for targeted marketing strategies
Attracts more consumers via promoted offers
Provides a platform for the promotion of special events & promotions
Allows you to showcase new products and services
Provides Brand awareness
Email Campaigns cost less to produce and distribute than traditional marketing.
They can be produced and distributed extremely quickly.
Response rates for email campaigns are higher than traditional direct marketing.
Recipients have the ability to respond immediately.
Email allows businesses to create an ongoing dialogue with customers.
Results are immediately measurable.
Allows for testing to be done at a fraction of the cost.
Adds value to products and services.
Email Campaigns provide the ability to focus on target markets and to personalize with a name.

Elements of an Effective Email Campaign

There are a number of elements to a successful email marketing campaign:

•Insert your recipient’s first name to personalise the email.

•Attention grabbing subject line of 50 or less characters – it must entice the reader to want to read on.

• Email body that relates to the subject line.

• Content that is valuable in itself, whether or not they purchase from you. Keep it short and succinct and selling the benefits.

• Entertaining as well as informative

• Promotions - From time to time, offer special “subscribers only” promotions and follow through. Don’t have the same offer on the sales page everyone else goes to. Give them a special link for a page you create with the discount just for them. The same holds true for the “customer only” promotions. This should be exclusive offer to your readers

• Link to your Site - Always include a link to your sales page or home page in url form so that they can copy and paste if they prefer, as many do for security reasons. For example, instead of linking “Canvas Marketing Email Solutions”, link “http://www. CanvasMarketingEmailSolutions.com”.

• Contact details - If you’re not selling on your site, then be sure to include a phone number and/or location, as well as a link to your site where they can learn more.

• Call to Action - Include a short call to action, but don’t make every email a pitch. Just include a one-line call to action once or twice in the email. Save your pitches for special promotions, etc. and make them exciting. Show subscribers you care about giving them the valuable newsletter you promised. Email campaigns build relationships, and relationships open the door to sales and referrals.

• Signature – Be sure it includes name, title and website url. If you have a contact number and/or physical address you want them to call or visit, add that too.

• Image – An image can tell a different story to the body text, be sure to use high quality images. Often incorporating an image with a person in it can relate much better to your audience as it personalises the message.

• Distribution Time Counts – Send your emails at the times most people are likely to be online in your main geographical region, Statistic say Tuesday morning at 10am is the best time to distribute an email and second to that is Thursday at 10am.

Streamlining Your Email Campaign

Be sure to respect all anti-spam laws. To check up on these, go to Spam Act 2003 http://www.austlii.edu.au/au/legis/cth/consol_act/sa200366/
Rather than bombard your database with numerous emails you can always create a newsletter whereby people who’ve opted in will expect to receive information and offers.
Avoid the “hard sell”
Collect a good database. It is also a good idea to segment your database and test the response of your email on a small section. You will then be able to predict the overall outcome once it’s fully implemented.
Incorporate into an autoresponder service (many are free) you can handle a much larger subscription base as many email services like Gmail, Yahoo and website hosting based email don’t allow you to send out too many emails at once as this is a red flag for spamming. Keeping track of all those subscriptions can get tricky too.

The autoresponder service’s software will automatically generate delivery of sequenced emails to your subscribers. You set the intervals, such as first email within 24 hours, second email, two days later and so forth. You load the emails you write into the system. And they deliver.

Once in a while you may want to send a “broadcast” to the entire list, such as when you have a special promotion. The autoresponder can also handle this.

If you subscribe to any email newsletters, tips, etc. you most likely have autoresponders in your inbox.

As you can guess, autoresponder services can save you a great deal of time.

By searching Google for “free autoresponder,” you can find decent services. Be sure that the service you choose complies with anti-spam laws. With most of these, the tradeoff for the free service will be that they advertise in your emails. If so, make sure their ad won’t distract from your message.

Some, such as Autoresponders 4 All, don’t place ads but simply require you to link to their site from your home page. Know that some of these free services use the “double opt-in.” This means that the subscriber will receive an email asking them to click (or copy and paste) a url to designate they really meant to subscribe. This cuts down on subscription numbers, although it’s not the end of the list, and the features with some of these free services make it worth it.

If you don’t mind paying for a service that does even more for you, such as tracking subscribers’ interactions with your email and site, AWeber is one of the best and allows you to pay per amount of subscribers while having as many lists as you want. They start out at around $25 a month. And they don’t require double opt-in.

Canvas Marketing provides Marketing Consultancy and Marketing Services such as Email Marketing. If you want improved results and more business from your email marketing campaign or simply want to start to use Email Marketing in your business contact us on:

Tel: 03 9482 5187 or
Email info@canvasmarketing.com.au