profits_origEarlier this week, I held an Open House of The Action Suite to anyone who wanted to observe what we do during one of the sessions.  The subject of the session was: ‘The Five Components to Higher Profitability.’  This in itself may not be earth-shattering to you; however, when I asked how many managers and/or owners of companies that some of the audience worked for if they felt that their owners/managers knew of these components and how they all fit together.  That answer was earth-shattering.  Not a single person said that their managers and/or owners had a clue.


This time of year, there is a proliferation of courses, seminars and workshops in how to be better at lead generation.  These coaches and trainers expound on the theory that the more people you talk to and the more you fill your funnel, the more chance you have to increase your profitability.  However, even though lead generation is part of the five components, it is fifth and it is the costliest with the least return on investment.Listen to Joe da Silva's Podcast Episode on iTunes

When one analyzes what their Customer Aquisition Cost (CAC) actually is then it becomes quite clear that the return on investment may not be what one originally thought.  Some, but by no means all of the cost accrued during this process are:

  • Advertising
  • Travel
  • Entertainment
  • Promotions
  • Time

All of these expenses affect your Gross Margin (GM) which in turn has a direct effect on your Profits.

Time seems to be one that very few take into consideration.  However, think about it. Is that really the best way to utilize your time, or, do you think you will be better served by getting existing clients to buy more, or, look at the pool of people that you have recently contacted and have yet to make a decision?  Would you not be better served to go and see them and have one more conversation towards a decision?

Research has found that the vast majority of people that come in because of a special or coupon will only come in that one time.  Yes, you did get them in the door, but at what cost for a single transaction?  Your GM went down and as a direct result so did your profit.

I am not suggesting that you NEVER run a special or obviously go after more leads, but I am suggesting that there are at least four other components that can be used to increase your profitability more effectively, efficiently and quickly.  However, that may take some hard work in the beginning, but as someone said during the presentation: “Once we do the hard work, this is stupidly easy.”  “Yes, it is.”  was my reply.

When you are ready to do the hard work, we will go through it together in The Action Suite where the talking stops and the doing gets done.

Entrepreneur, Prospects & Selling , , , ,

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