Discover how to increase profit quickly and easily by adopting a variation of Jay Abraham's three ways to grow a business model.
Marketing guru Jay Abraham is famous for many ideas and innovations but one of the most powerful is his concept of stripping down the complexities of business growth and profitability into three components:
- Increase the number of customers
- Increase the value of each transaction
- Increase the number of times an average customer buys per year
An Example
If sales turnover equals £840,000 per annum, the three ways to grow formula can be broken down into:
- 200 customers
- who spend on average £700 per transaction
- and buy six times per year.
200 x 700 x 6 = £840,000
Jay Abraham's three ways to grow a business model is a simple but so powerful and effective way to increase profit because it::
a) breaks the focus on increasing sales by attracting new customers.
The idea of selling more to existing customers is opened up and the success of Jay Abraham and his followers has shown that most companies do not maximise their opportunities for profit with existing customers. So this is often a great source of hidden profits. The potential is already in your business, it's just a question of whether you will take the action to capture them.
b) the model creates exponential, geometric growth.
Increasing each factor by 10% generates 33% total growth. Increasing the three drivers of growth by 20% each creates 72.8% growth. Others try to grow the hard way by focusing on increasing the number of customers. Jay Abraham students know that profit can be increased more quickly and easily by focusing attention on your existing and past customers.
Adapting The Model To Increase Profit
Usually higher turnover translates directly into higher profit but because times are tough I want to adapt Jay Abraham's model away from turnover growth to show you how you can increase profits quickly and easily.
My revised model to increase profit is:
- Increase the number of customers
- Increase the average profit of each transaction (this was sales value in Jay's model)
- Increase the number of times the customers buy on average in the year
- Reduce the overhead costs (this is the addition from Jay Abraham's model)
So the first three when multiplied together create Total Margin which becomes Profit when Overhead costs are deducted.
Increase Profit By Reducing Overhead Costs
The quickest wins and boost to profit can be to cut your overhead costs.
If your average margin is 25%, then to increase profit by £1,000 you can either increase your sales by £4,000 (to create an extra £1,000 margin) or reduce overheads directly by £1,000.
I discussed the mechanics of cost cutting in another blog - see cost cutting in your business turnaround for more information.
The essence is that to increase profits by reducing costs you need to:
- Cut any costs which exceed the value/benefit they create. Costs have a nasty habit of creeping up in good times and becoming the norm so you need to develop the habit of reviewing cost schedules and challenging whether they should be incurred at all.
- Review your other costs to make sure that you are getting as much "bank for your buck" as you should or could. This includes reviewing the profit effectiveness of employees. The roles may be necessary but you may have some people who are under-performing in their roles, incurring the costs but not giving you the benefit of higher profit. See Difficult Decisions Made Easier for details of Brian Tracy's technique called zero based thinking.
Increase Profits By Increasing Your Profit Margin
The Jay Abraham three ways to grow a business formula is simple and its implications for increasing profits quickly and easily is clear.
Focus on your existing customers and clients and implement techniques to persuade them to buy more and to buy more often. Then when your clients are receiving great benefits and an outstanding service from you, tap them for referrals to new profitable customers.
This development of the hidden profit potential in your existing customer base is the method that Jay Abraham has used to devastating success throughout his stellar career.
The problem is that Jay's techniques are deceptively simple in concept but not so easy to apply. This has caused many of his followers to struggle with turning his ideas into big increases in profit.
This is why I want to introduce you to Scott Hallman's Small Business Growth Club and in particular the Increase Profits work stream.
Increase Profits With Scott Hallman & the Small Business Growth Club
Scott Hallman has been a keen student of Jay Abraham since 1992 when he attended a three day $5,000 course. Since then Scott has become a very successful entrepreneur and is probably the leading business coach in the world who still works with clients charging $1,250 per hour.
Scott has also presented on stage to Jay Abraham's clients and he is recognised as the master of implementation.
What Scott Hallman has done is take the Jay Abraham profit improvement ideas and turn them into an easy-to-implement system.
The Small Business Growth Club is a step-by-step guide to increasing profits. The six modules I have worked through so far (when writing this review) are brilliant in the way Scott explains the concepts, reveals the profit opportunities with a host of examples across a wide range of industries and then leads you through the implementation process.
I just do not understand why the Small Business Growth Club is not more famous throughout the world. I am sure that in time it will be as it becomes the high value business development program for anyone who wants to learn how to increase profits quickly and easily.
Increase Profit Margins With Scott Hallman
Here is a brief description of the first six modules in the Small Business Growth Club - Increase Profit workstream:
- How to Effortlessly Get Your Customers to Dramatically Increase their Average Purchase (Step 2 in the increase profit model)
In this workshop Scott gives you the detailed systems to increase the amount of up-selling and cross-selling you can do in your business which will increase the amount that customers spend.
- Condition Your Customers to Purchase More Often (Step 3 in the increase profits model)
Did you know that your customers may not buy as often as they want to from you?
They recognise that they benefit from buying but their busy lives and other distractions get in the way. As Scott Hallman explains, there are simple techniques to help your customers buy your products and services at their optimal purchase frequency and that means happier clients and more money in your bank account.
- 10 Ways to Increase Customers Retention by 50% or More (Step 1 of the increase profits model)
There are two ways to increase the number of customers. The first is to attract more new customers and the second, which is often overlooked, is to reduce the number of customers who stop buying from you.
In the true style of a customer focused entrepreneur, the more you focus on making their buying experiences exceed their expectations and deliver on the promised benefits, the more customers will want to stay loyal and keep buying from you.
- How to Create "Active" Referral Systems to Double Your Referrals Effortlessly (Step 1 in the increase profit model)
After you have introduced systems to improve customer satisfaction and to reduce the number of customers you lose, the next stage is to introduce active referral systems so that your happy customers are delighted to recommend you to their family, friends and colleagues.
By making referrals to you they protect their friends, they feel good because they have been helpful to you and their friends and you have a source of easily convertible leads which lead to increased profits.
- Turn Your Customers in "Turbo-Customers" (Steps 1 and 2 of the increase profits model)
More advice on how to persuade your current customers to buy more together with re-converting inactive customers and persistent follow up with unconverted prospects.
- How to Double Your Sales Force Without Spending a Dime (Steps 1,2 and 3 on the increase profits model)
This module on strategic alliances and third party endorsements is very relevant to increasing profits quickly from current customers and prospects because it gives you a quick way to increase your high quality product offerings.
Even more powerful is that this module opens up the opportunity for you to be recommended to many of your target prospective customers by people they already know, like and trust.
You can see how well these training modules fit in with my revised increase profits formula based on Jay Abraham's three ways to grow a business model. As a big Jay Abraham fan, I am so impressed with how Scott Hallman has taken these ideas and turned each profit improvement strategy into a step by step guide.
Scott Hallman - The Master Of Implementation
Scott Hallman is known as the master of implementation because he makes actions to improve profit simple to do and he takes away the overwhelm factor.
Let me give you an example.
Have you ever tried to implement a strategy to increase purchase values?
You may have read elsewhere about the important profit improvement ideas of cross-selling and up-selling and hopefully you have paid attention to your own experiences as a buyer.
You will have seen how gently and beneficially people can introduce opportunities to provide more customer benefits in return for an increase in purchase value (and profit on the transaction).
It is estimated that about 30% of customers can be tempted to spend more and this extra revenue can have a huge impact on your profit since much of the initial profit is swallowed up by customer acquisition costs and overheads so it is important to implement.
But when you sat down to work out how to apply the strategy in your business, did you find it difficult to know where to start?
You probably sell so many products and there are so many options that can be up-sells and cross-sells that it becomes confusing.
The "do you want fries with that?" question is easy for the McDonald's checkout kids to ask but what if you don't have the ubiquitous fries? What can you do?
This is where problems set in. The examples quoted in the marketing books are simple to communicate the ideas, real life isn't.
As soon as you hit a doubt or difficulty, your impetus is lost and implementation is delayed.
You may have put the cross-selling and up-selling idea to one side while you "think about it".
A week goes by but there is no easy answer.
Then a month.
Then it's three months since you read about the profit improvement ideas and you've either forgotten about it or you've decided that you don't have cross-selling or up-selling opportunities in your business.
What a Waste! Profit Improvement Doesn't Have To Be Like This
If you allow this to happen when you implement any profit improvement strategy you've wasted your time and effort and even more importantly, you've wasted the opportunity for easy and quick profit increases that a well constructed up-selling and cross-selling strategy can provide.
But it doesn't have to be like that.
Scott Hallman teaches you in the Small Business Growth Club the Power Of One™ which means that you won't make the common mistake of thinking about trying to do too much and failing.
Instead you pick one attractive opportunity and focus your attention on making it work and only then, do you roll out the idea across multiple products, gradually seeing this profit improvement technique work. You gain confidence and try bigger and bolder extras.
How To Increase Profits Quickly
Do you get the impression I like Scott Hallman's Small Business Growth Club as a way to teach you how to increase profit quickly and easily?
If so you are wrong. I love it.
If I was starting from scratch with a small business, membership of the Small Business Growth Club would be the first thing I'd buy.
Manufacturing sector or service sector, distribution or retail trade, the Small Business Growth Club is a great product for increasing profits and it is currently available at a great price.
It is for real businesses with real products and services who want to make more real money and are prepared to put the effort in to learn new techniques and to implement them effectively.
The only downside I have is the website which is messy - see Small Business Growth Club
I believe first time visitors find it difficult to navigate around and they become confused and lost.
I have told Scott this and expect it to improve. Just head over to "Take the tour" and follow it through then join when you have seen enough. Don't become distracted by all the other options. It is better now that he has added audios.
If you do need or want to increase profits quickly and easily I don't believe you can go wrong with the Small Business Growth Club.
It is available for at an extremely competitive price compared to the price of other programs and in particular, how much money you can make.
For a small monthly investment, you can learn the secrets of successful profit improvement AND how to implement them.
Scott's coaches can provide help and assistance if you have any queries for a small fee. If you are in the UK, I would love to help you implement these ideas.
It's your move now, the website is Small Business Growth Club so click over if you are ready to learn how to increase your profit.
Sorry I got carried away talking about the Small Business Growth Club.
When I started writing this article I was intending to recommend it to you but the words just kept on flowing. Scott Hallman has taken Jay Abraham's simple but deceptively difficult profit improvement ideas and created a program that takes you through, step by step.
Don't miss the opportunity to download a free 35 page Jay Abraham PDF called the Windfall Profits Paradox
