Business' Money Generator Demystified

By having great products or services does not mean that your business will automatically bring in more customers. It will not automatically give you continuous profits for your business. Efforts have to be done to bring in customers to buy and use your products and services. However many entrepreneurs fail to realize the importance of these efforts. They just wait to see nothing really happen to their products or services. In the end the business fails because nobody ever heard about their products or services or were not convinced that their products or services were the best.

There are six variables that will influence directly the profit in your business. Influencing these variables will significantly influence the amount of profit that you will get for your business.

1. Leads

Leads (also known as prospects) are the potential customers that your business is able to attract and come in contact with. They maybe someone who contacts you, your staffs or your office or those who walk into your shops, visit your websites or introduced by someone to you. All of these persons are capable to become your potential customers. The more the number of the leads you have the higher will be the chances that some of them will actually buy some of your products or use your services and possibly refer you to other potential customers.

2. Conversion Rate

Conversion Rate is the rate on how many of the leads is really converted to become customers. Businesses which are making profit are those who are capable to use various strategies and methods to enable them to have the highest possible conversion rate.

Leads x Conversion Rate = Number of Customers

This means that if you want to have more customers to buy your products or to subscribe to your services, then you must either increase your Leads, increase your Conversion Rate or both.

3. Average Dollar Purchase

"Average Dollar Purchase" is the average amount of money that each customer spends in realted your business. How much money they spend to buy your products or to use your services. Normally in any business, there are a lot of products with different prices attached to each of them. Encouraging the customers to purchase the higher prices products or utilizing higher prices services will directly increase further your profit.

4. Number of referrals

Referral to your products and services can be from existing customers, existing leads or from any other resources. Satisfied and delightful customers usually feel happy to inform about your products and services to their colleagues.

5. Number of Repeat Purchase

The mistake that many businesses do is to assume that all customers will come back to make repeat purchasing because they are satisfied with their purchased products or services. Usually this is not the real things that happen. Efforts have to be done to bring strong loyalty to your customers.

6. Net Profit Margin

The variables 1 to 5 will influence the amount of sales revenue that you will get. However this variable will directly influence your final net profit.

Sales Revenue x Net Profit Margin = Net Profits


Regards,

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