Mark Wickersham breaks down business growth into three levers: customer count, purchase frequency, and average transaction value. A business with 100 customers buying four times yearly at £100 each makes £40,000. Most focus only on acquiring new customers, but accountants can drive more growth by increasing how often people buy and what they spend.
If you want to help your clients to grow their business, then you need to understand the three core primary ways of growing any business. In this video, I'm going to take you through those three ways.
If you want to help your clients build more successful, more profitable businesses, perhaps you're offering a business advisory service. Then what you'll find. What I found in my accounting firm when I was helping clients and doing advisory and consulting is businesses very often want to grow.
And so how can we help them with that? Because we're just accountants or bookkeepers, we're not marketers. But actually, what I found over the years is that growing a business is not that difficult when we understand the numbers that underline any business and some of the core strategies. And essentially in any business, there are three main ways to grow a business. And it all really bases itself on the numbers, the model behind a business. You see, if you want to grow your business, you want to grow sales. That's top line in the set of financial statements, sales. But sales is. You can't manage sales. It's the end result of a series of processes. And if we think about it, sales is made up of three core elements. The first of those is sales is made up of the number of customers that a business has in a year.
And then it's based upon how many times in a year, on average, do those customers buy.
And then the third element is how much do they spend on average. So, for example, if you have a business, a client that has 100 clients, 100 customers, and those customers come and buy from the business, on average, let's say, four times a year, then 100 customers buying four times a year is 400 transactions in the year. And if each time they spend, on average 100100 pounds, $100, then that 400 transactions at 100 is 40,000. So if the sales are 40,000, that would be the 100 customers buying four times a year and each time, on average, spending. Now, when we understand that, when we understand the math, which we will do, because we are accounting professionals, we understand the numbers better than our clients. When you understand the math and break it down that way, it then becomes much easier to help a client grow their business. Because what we want to do is help the client to understand that and also to work simultaneously on all three of of those. Unfortunately, the mistake that most people make, most business owners make, and most accounting firms is all the focus is on the first one, winning more customers. Accountants are obsessed with winning more clients. And yet, one of the things you will Find is that winning new customers is the hardest of those three drivers of sales, it's the hardest. We should focus on the other two. So what can we do? How can we help the clients in those three areas? Well, let's take number of customers for a minute.
When you ask a client what's the best way of growing their business, very often you will get one particular answer. The same answer as if I asked you, what is the best way of growing your accounting firm? For most people the answer is referrals. So if referrals or word of mouth advertising is such a great way of growing a business, the question I would then ask a business owner is this. So tell me, how many systems do you have in place in your business right now for getting referrals? And most people look blank, they don't have systems, which is crazy because if referrals are so powerful, why are we relying on luck? Why are we relying on chance, hoping that our clients, our customers, are saying nice things about us? We need to take control of the process with some systems. So sometimes marketing, growing a business doesn't have to be complicated stuff. Marketing campaigns. It could be something as simple as referral systems. What about getting people to spend more frequently? Well, one powerful strategy is what's called a next sales script. So let's imagine we have 100 customers and they buy four times a year. If we could get those customers to buy five times a year instead, then mathematically we increase that from 4 to 5. That's an increase of 25%. And when we work out the numbers, that's an increase of 25% on top line sales, which can have an extraordinary impact on bottom line profits, potentially doubling profits. So how can we do that? One option is a next sales script. And what that means is that every time a customer buys, we have a script, a process to encourage them to buy a little bit earlier than they normally would. What about the third method, getting people to spend more money each time? There are many strategies there. For example, one that you will have seen if you've ever been to McDonald's or any of those fast food restaurants. They often have what's called the meal deal. Now that's extremely powerful. In the case of McDonald's, the meal deal has made them millions of dollars. Because what happens is some people go in because they want to buy a burger, but when they get there, they look at the menu and they think, you know, I'm quite hungry and that's a really good deal. I can have a burger and the fries and the drink as well. So most people buy the meal deal, not the burger they went in for in the first place. And therefore that might take the transaction from a $3 transaction to a $4 transaction. That extra dollar might not sound much, but if that happens consistently across the business, that means that's a 33% increase to go from $3 to $4. And if you do the math, that translates to increasing top line by 33%. So if you want to help your clients grow their business, you need to understand the math. You need to understand the model, the formula that sits behind every business. Because sales is made up of a number of different drivers and those are the three primary ones. There are others, but they're the three main ones. And when we focus on each of them individually and we help the client to understand the numbers and what's happening, we can deliver extraordinary value and help our clients to grow their business. If you found this valuable, please give it the thumbs up. Please subscribe to the channel. Please feel free to share this video, put comments below and I'll also put some details below of how else you can get access to some of my free content. Thank you for watching the video. Goodbye for now.
Effective Pricing Training: Mastering Software Settings for Optimised Pricing
Can Pricing Be Done in Writing? How to Handle Value Conversations Without Calls
