In my last blog, we talked about 3 sure-fire ways to make more profit.

Today, I’m going to share with you 3 ways to boost profit without having to make any more sales.

There are many different ways you can go about making more profit in your business, whether you are in a growing market when profits are rolling in, or in a shrinking market when you’re a little worried. Regardless, now is the time to take control and make a solid plan to ensure your business is surviving and thriving.

Here are 3 easy ways business owners can make more profit by being just a little more strategic. You just have to know what to look for.

1.     Key Suppliers 

Every business needs to keep a close eye on costs. Suppliers are your biggest cost and a key area to look at. Use my 3-step system for success: First, look at your largest suppliers and write down the most significant products or services you buy from them. What does it cost you? Now, get in touch with other suppliers that sell similar products and get a comparison. You will find other suppliers will be cheaper in some areas.

Finally, negotiate with your current suppliers, quoting the better prices you have discovered from the others. Don’t just use the other suppliers pricing for leverage. Look at their offer genuinely and see if they are a better fit. If you were quoting for new business, you would want to be treated this way also.

When talking with your suppliers you might even discover you are still at old rates. If your business has grown, old pricing based on smaller volumes may not apply anymore. You should be able to get a much better deal. In most cases, just asking the question and pointing out your value as a customer and/or letting them know you can get a better deal elsewhere, will shake out improved prices and significant savings on your costs.

This will increase your margins and a little bit of attention here ultimately equals a lot more profit for you. Yay!

2.     Stop Discounting 

Another thing to look at: How often are you or your staff discounting when you don’t need to? Every business should have a clear policy on discounting. Without a policy, it is too easy for you and your staff to cut prices unnecessarily. It doesn’t seem like a big deal at the time, but discounting randomly means margins blow out and destroy profits. 

I find that some business owners are naturally generous and discount far too often which has a big effect on their profits. You can still be generous to customers when the conditions are right, but you need to be in control. Ultimately, making good profit puts you in a much better position to give back to those around you including your customers, your staff, your family and your community.

3.     Hold Your Advertising Accountable

Advertising is one area where costs can get wildly out of control. I have seen businesses waste thousands each year (sometimes up to $100k!) on advertising campaigns that are simply not working. They’re unhappy, but don't know what else to do, so continue burning cash month after month. 

Don’t get me wrong: Advertising is vital, and everyone should be spending money on getting more customers into their business. But marketing and advertising must be tested.

How do you know? You must measure every dollar you spend on promoting your business. John Wanamaker famously said, “Half the money I spend on advertising is wasted, the trouble is I don’t know which half”. Always ask new customers “How did you hear about us?”. Do this for a little while and the results will be obvious. Stop what is consistently not working and you’ll spend less, in most cases resulting in significant savings on your advertising budget. And yes - do more of what is working! (which should pay for itself and then some!).
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For more practical ways to increase profit, come to my "Rocket Your Profit" workshop - Tuesday 4 April 2017 - Otago Chamber of Commerce, Dunedin
Find out more here: https://goo.gl/3ZxbGL

Do you find it hard to compete against the large marketing budgets of your competition?
Does it seem like their “name” just seems more credible to your market? 

Are you not converting as many quotes or inquiries as you could? 

Often “price” is quoted as the main reason why reps say they lost the sale - but is this true?

Research shows that in only 15% of cases, price is the sole factor. A staggering 85% of customers say that factors other than price influence the decision. 

Credibility or Trust (in the sales rep or company) is a major factor in the decision.

Here is why...Have you ever paid for a product or service and it turned out to be a disaster? 

Once I brought a pair of gumboots from a large chain. They were cheap, and at the time it seemed like a good deal. But after using them 3-4 times they split, so I took them back and exchanged them for another pair. Same thing happened - I didn't bother taking them back again. I had such a small amount of use out of them and if I look at the time I spent going back and forth, these were actually a very expensive pair of gumboots compared to a higher priced longer lasting pair.

For you it could be a shoddy tradesman, a faulty tablet, or a bad car. Whatever it is, we have all had an experience like this at some time.

Guess what? Potential customers who come across your business have had these experiences too. You can bet they will be asking themselves: 

• Is this a good company to deal with?
• Are they going to give me good advice, or just try to get my money?
• If there is a problem with my purchase, will they make it right?
• Can I trust them?

So, how can your customer know if you are good or not?

You can say how good you are all day long, but the problem is that every company says they are good - especially the bad ones. So how do you separate yourself from the pack? One way is by providing "social proof" in the form of recommendations from others that have already dealt with you. 

If your potential customer can see that others have dealt with your company and had a good experience, they feel the chances are, they will be looked after too.

As Mark Zuckerberg says: "People influence people."

Social proof/Customer testimonials is usually found in the form of favourable quotes from your happy customers aka "What our customers say about us".

If you want better conversion rates and more customers, then you should be using these whenever you can including:

• On your quotes or tenders
• In advertising
• On business cards and thank you cards
• On your website
• Online – on LinkedIn, Facebook, Trip Advisor etc (depending on your industry)
  
  

You want lots of testimonials, and the more detail the better. Here are some of mine and you will see they are quite detailed and specific. If a company is looking for similar results to these, it helps them decide knowing that others have had similar problems and achieved results.

"With Daniel’s continued support we were also able to increase our profit by a massive 86% in just nine months, and have over doubled our sales and staff at the same time, which has been awesome."
Stewart Contracting 

"With Daniel's help, we now have some great systems in place in all aspects of the business which has meant that we have most nights and weekends free again, staff are now much more manageable, quality of work is better, and we have clear direction for the business."
Hurunui Drainage and Plumbing

"The increase in the first year was 8% in sales, increase in margin 34%, increase in our net profit of 92%. We’ve been struggling with our margin and always thought it could be better but didn’t know how to put that together – and with Daniel’s help we’ve got there."
Woodend Nurseries

To get good testimonials, ask your best customers for a written testimonial when you have done a great job and they are really happy.

When writing a testimonial some customers will be very happy to oblige, but struggle to write it down. So you can make it easy for them by asking them some questions like:

• What problems did you have or want to avoid when seeking our product/service?
• What concerns did you initially have about using our product or services?
• What benefits did you have from using us?
• How did you find us to deal with?
  ​
  

Then put the answers together into a testimonial. Very important to let your customer see the final version and encourage them to change anything that is not accurate.

A good testimonial tells a story and addresses the problems or concerns your prospect might have when deciding about your product or service.  

Many companies don't ask for testimonials or are not sure how to use them effectively, so put yourself ahead of your competition and attract more customers, convert more sales and have fun hearing how happy all your customers are.

Action Points for you:
1) Start collecting testimonials from current and previous customers
2) Use testimonials when quoting new jobs, on your website, and in your advertising

If you've been watching the news lately, you'll know that parts of the economy are starting to struggle and the mood is changing. The latest ANZ business survey headline reads "Business confidence remains on the ropes, hitting a new six-year low in August". The dairy industry is struggling and construction in some sectors is starting to be affected by the oversupply of houses.

A number of businesses I talk to are concerned about the current climate and if sales will be affected over the next 6-12 months. It's important to be aware of the climate and adapt accordingly, but also remember that all these things are in cycles, so this is nothing new (some suggest every seven years, but this will vary depending on the market).

As these cycles change, what can you do to make sure any impact is minimal to sales and profits for your business?

Smart businesses who recognise the downward trends will be looking for strategies to minimise effects on their business.

Here are six strategies that will help to ensure your profits stay intact even when your market is in a downturn:

1) Be in more than one market 

Every market and customer group has highs and lows every few years, so it's important to make sure that you have customers in more than one market. Often when one market is at the bottom of a cycle, another is growing. By selling to more than one market you will still have growth in at least one area of your business.

Look at your existing customers in segments or groups. Some groups will be growing - spending more each sale or more new customers coming to your business. Other customer groups will be shrinking - they are spending less, buying less frequently or not at all. Identify the customer groups that are growing and target them individually in your marketing.

Note: there may be some customer groups that might be growing - but are not attracted to your company - and you don't recognise them. Check out what areas might be growing in the market or your competition is promoting to that you are not.

In every business there are a number of different customers and markets. Let's look at two examples of companies with different markets in a downturn:

IT Company: This IT company might have four main customer groups: residential, commercial, new installs, and maintenance.
Opportunities: Commercial might be slow but there could be plenty of home based businesses starting up and commercial requiring help scaling down; there could be opportunities to decrease costs for these businesses with current telephone technology and cloud based solutions for both existing and new customers.

Water Pump Installation and Servicing: This company may have three main customer groups: farmers, new subdivisions and servicing.
Opportunities: Dairy farming might be quiet; but beef and sheep farmers could still be good. While new subdivisions, and pump servicing will still have growth.

Every small business should have a number of different customer groups, to avoid being too exposed when these cycles come and go.


2) Look after existing customers

Make sure you keep looking after your existing customers and go the extra mile. Put more focus into building good relationships. It’s much easier to keep old customers happy, than find new ones. This is also a good long term strategy, for when the cycle comes back around.


3) Look for more of the type of customers you already deal with

This seems obvious, but are you doing it?

If a trades business currently gets work from two large building companies, they should seek out others. Relying on a small number of customers is dangerous anyway because if one is lost, the business is very exposed.


4) Diversify

Think about what else you can offer your existing customers.You might be able to re-package or sell them something different, introduce new lines. 

For example, a shoe shop in a recession, could expand their range to include kids school shoes, workboots, and add on's like laces, protective sprays, polishes, etc.


5) Keep things tight

It's important to make sure that any losses you incur in a downturn are kept to a minimum. So work on:

• Reducing unnecessary expenses 
• Becoming more efficient with your production or service
• Non-performing staff need to come up to speed or leave/be reassigned (this may seem harsh, but staff that are not producing results will reduce the effectiveness of the whole team)
• If price is an issue, offer more economic options for customers (without the bells and whistles)
• Protect your margins (be careful as selling two times as much for half the margin will not help)

6) Keep investing in the right areas

There are some areas of your business that you should spend more on like:

• Sales related activities (keep marketing to your customers - but always measure what leads and sales these are generating) 
• Staff training (make sure your sales team keep learning and improving as this will improve sales)
• Your training (as a business owner, the better you are at business, the better your business will be - so don't stop investing time and money in your own training, and seek quality advice when you need to)

Action Points
1) Profile your customers and list what markets and opportunities there are for growth.
2) Go through your expenses to see what you can reduce.
3) Decide on one area you need to improve on personally that will help the business (this might be marketing, selling, negotiation, dealing with staff, etc), and commit to improving with some formal training.

If you want to make your business successful and get rid of the problems and frustrations that keep you from getting the result that you want, then it is time to identify exactly what the problem is. And it is TIME TO GO TO WAR.

I was listening recently to this motivation guy Brendon Burchard who was talking about going to war on the area of life that is causing you the most difficulties. It got me thinking about how this concept is very relevant to business.

Imagine you are a general in an army. There is key territory that, if you can take it, will be a prime position for you for all communication and a base where you will be able to launch future attacks on your enemy. It will be the difference between whether you win the war or not. This is valuable territory and it is a must-win - get this and you have made some serious ground - lose this and things are going to be much harder and you will be at a major disadvantage. Basically this is the tipping point for success or failure.

So what do you do? Try one attack and hope for the best? No, it's way too important to stop there, so you throw everything at it until you win. You send in spies to get the lie of the land, planes and missiles to disrupt the enemy, place ground troops in key locations, you have back up troops in case the first layer are overcome, you have boats waiting with more men in case they are also over-run. You have bulk supplies of weapons and food in case it takes longer than you expect. You send in your best most highly trained soldiers at key times. Basically you do whatever it takes for as long as it takes. 

What about if you just did one thing? You send in your troops, and if they don't succeed then at least you have tried. What would the result be? You might get lucky and catch the enemy off guard, but most likely you would fail the first time. Would your peers be happy with this approach? I very much doubt it. Yet often I see this approach in business; all too often, even when the key territory will make or break the business.

Let's look at how this approach relates to business:

A local restaurant is struggling. It's the middle of winter and sales are down - our humble business owner is losing money. The bank account is in overdraft. Basically his problem is that these lean months are eating away at the hard earned profits he has made during the year. If this keeps going he will have nothing to show for his hard work for the whole year.

So he puts an ad in the local paper - it doesn't work - not a single customer! Oh well, he did his best, he tried, but it's winter time, what else can he do? Just have to wait until things get a bit better and bleed in the meantime. No! No! No! He can do way better than that!

What if instead, he decided to go to war on the problem? What if boosting profits during winter was the key territory he must take? What if he threw everything at it until the sales and bank account moved in his favour? Let's have a look at some quick strategies he could apply:

He could increase sales by:

• Using his customer database to send his regular patrons a special invitation and free dessert promotion for winter 
• Teaming up with the local jeweler and offering a voucher for a free main meal at the restaurant when customers buy jewelery over $500.00
• Training his staff to give better service and up-sell desserts and drinks 
• Offering the local businesses in the area a takeaway lunch special 
• Encouraging his best customers to put their feedback on dining websites like Dine Out and Trip Advisor
• Launching a Facebook page and advertising to his local market
• Trying Google Adwords with a special offer
• Starting up a happy hour with a live band (where there are good margins on drinks)
• Having a themed party night and promoting the heck out of it (eg if you had an Indian restaurant what about a Bollywood night)
• Initiating loyalty cards with free extras after spending x amount
• Doing a good old mailbox drop of nearby businesses and homes with a special limited time offer
• New signage, or signs advertising specials of the day

He could reduce costs by:

• Negotiating with key suppliers for better deals
• Reducing staff hours in the most quiet times
• Modifying the menu and getting rid of the poor selling meals which take all his chefs time
• Reducing wastage

There are plenty of other things he could do also, but you get the picture.

By just picking one of these strategies each week - it won't take long before the bank account and profits are looking a whole lot better.

So are you ready to go to war in your business?

What "key territory" do you need to capture for your business?

What will make all the difference?

What is the biggest frustration or challenge in your business right now?

What is the obstacle stopping you from achieving the results you want and need?

TIME TO GO TO WAR.

Action Point: 
1) Pick that one problem in your business that is causing you the most grief and decide to go to war against it. 
2) Write down at least 8 strategies you will use to beat this problem once and for all.
3) Schedule time to apply one of these strategies each week in the business. 
4) Commit to completing the whole 8 weeks and don't give up if the first few things don't produce results.

IF your marketing and advertising is not getting the results you need, then it will most likely be because it is boring or irrelevant to your potential customers.

And better to know now than waste thousands of dollars every year on advertising and marketing that is simply not working and giving you good results. Honestly, I have seen companies spending $50,000 to $100,000 on their advertising and being very unhappy with their results. Their ads aren't working but they keep on paying - burning cash month after month, year after year - don't let that happen to you!!!

So what makes a good ad, and what should it contain in order to bring a steady stream of new and repeat customers to your door?

Quite simply: A good ad is one that makes you money every time you run it. 

For example:

$1,000  the cost of your ad 

$10,000  sales directly from ad
x 33%  margin
----------
$3,300  gross profit

$2,300  profit 

This ad works - and it's profitable. If you can consistently get this kind of result from your ad, then you are onto a winner. Run this exact ad, and run it regularly!

Now I am sure you have heard the branding argument, which goes along the lines of 'get your name out there and at some time when your potential customer needs your product or service they will think of you and might give you a call'. Baloney. They will have heard of other companies as well, so unless you have something better to offer than the others in the customers mind, the chances are they won't come and see you. If you have millions of dollars spare in the bank and you are happy to roll the dice, then go for it. But most companies are not in that position - they need their ads to produce a result - more sales and more profit. 

Now that we have established what a good ad is, let's look at what need to be included in your ads to get the kind of response you are looking for:

Once you have decided where to use your ad, eg local newspaper, Google adwords, flyer drop, direct marketing mailout, Facebook, in a specific magazine, etc (and this will completely depend on who your target market is), how do you go about writing a killer ad that will get results?

There is an old sales and marketing acronym - AIDA - that is known as the secret sauce of advertising. Let's take a look at this in more detail:

ATTENTION
If you don't grab the attention of the reader with you ad, then they just won't see it. The secret to this is all about the "Headline". Imagine you are looking at a newspaper (or better yet go and get one). You look through the headlines to decide which ads are worth your time to read. If it's not relevant or it's boring, you skip it and go onto the next one. Here is a great example from "The 100 Best Headlines Ever Written" - "FOR THE WOMAN WHO IS OLDER THAN SHE LOOKS" - if your target market is women over 30 you have now very successfully grabbed their attention!

INTEREST
Once you have grabbed their attention, you now need to hold their interest. Now they are reading your ad, so make it relevant, interesting, and tell them how you can solve their problem. Focus on the advantages and benefits they will get from buying your product or services. 

DESIRE
Build on their interest and convince the customer that they want and need your product/service. Emotively address the buyers real concerns, the problems they will solve when they buy from you.

ACTION
Tell them what they need to do next to get the deal done - eg Phone Now!

Also remember to tell the reader your "point of difference". See my previous article on "What sets you apart from the competition" for more detail. 

You will notice very few ads you come across take this approach, which is why most don't attract lots of customers.

Action Points:

• Look at your current ads and marketing material to see if AIDA is there.
   
• Test your results. Are you making a profit or loss on your advertising? How?...Ask your new customers religiously 'How did you hear about us?' and write it down.

I ask business owners this question and I often get blank stares. Sometimes they might say that they haven't really thought about it, or they just shrug and say they don't know.

I ask from another angle: What are you, as a business, really good at? What do you do best? Who are your best customers? Then they start to understand and have clarity.

An IT company I use for my own business are really good at making sure their commercial customers have reliable computers that keep on going. They have great system checks to make sure the computer is working at top efficiency without losing data and that all information is secure from hackers. They also fix most problems remotely so their customers don't pay travel costs and incur time out every time something needs fixing.

Another IT company I know has a different set of strengths: they specialise in providing records that alert business owners if employees are spending too much time on social media or other sites rather than working. (By the way, a Kansas State University researcher discovered that between 60-80% of time spent on the internet at work has nothing to do with work.) This business also helps parents with software to control their home computers so that their kids don't come across things they shouldn't while online - big deal these days, if you have kids. 

Notice both these businesses are Christchurch companies in the same industry - but they have very different strengths and distinctly different customers. And doesn't it follow that they should be marketing in completely different ways to reach their target potential customers?

If you are still not sure what your strengths are, the best way to find out is to ask some of your customers why they come to you, or what they think you are good at. If you ask 10 of your best customers these questions, you will have a whole new insight into your business. 

The answer to these questions are your "point of difference" or "unique selling position". 

Once you have some ideas, then you will want to clearly define this into a statement - like these great examples:

When it absolutely, positively, has to be there overnight - FedEx
The best a man can get - Gillette
The best tires in the world have Goodyear written all over them - Goodyear Tires

All very clear statements saying why you should deal with their company or buy their products.

Once you are clear about what you are good at, you need to shout it from the rooftops - why? Because this will bring you a truck load of new customers. And not just any customers, but the most profitable ones that best suit your business. They will be better quality customers because they have responded to and appreciate what you uniquely offer. They see the value in what you do and won't be so concerned about price.  

Here is an example from the customers viewpoint. Imagine you jump in your car and discover your windscreen has a huge crack - it's broken and you have a sinking feeling it will need a whole new windscreen. You need your car for work and you are imagining a worst case scenario where you are without your car for weeks. You need it fixed fast, but you don't know who will be able to get it done quickly. You Google or grab the Yellow Pages. You come across a company who says "We are local; we source and install a replacement windscreen within 48 hours - we are the fastest service in Canterbury." It's a no brainer - you ring them and get the job done; they did it the same day; you are now a loyal customer and you tell your friends how great the service was. 

Just remember, until you get clear about what sets you apart from your competition, you are behind the 8-ball. Also remember, you can't be all things to all people - so don't try to be.

Action Point: Define your point of difference into a clear statement and start including that in your marketing and advertising. Then take note of how many new customers you get and if they are the type of customer you are looking for.

Do this well and you will be amazed at the results.