It almost goes without saying. Increasing turnover is the most 
powerful performance driver in any business. 

And because increasing sales is so important, an understanding 
of just how sales can be increased is very useful indeed.

There is a popular misconception that, if you want to increase 
sales, you must get more customers. But while selling to more 
people will certainly make sales go up, there are several other 
ways to increase turnover. 

Turnover also increases when customers spend more each time they 
buy from you. And when they do it more often.

The easiest way to illustrate the different ways turnover can be 
increased is to look at the sales formula. But first we define 
the parts of that formula. Consider these variables in your 
business over a twelve month period :

Prospects - The number of people who express an interest in 
doing business with you.

Conversion Rate - The percentage of prospects who actually 
decide to buy from you, and become customers.
 
Average Spend - The average amount customers spend when they 
buy from you.

Number of Transactions - The number of times, on average, that 
customers buy from you in a year.

At the end of the year, your sales can be calculated by using 
this formula:

Sales = Prospects X Conversion Rate X Average Spend X Number of 
Transactions

Clearly, sales can be increased by improving any combination of 
the 4 variables. 

You attract more Prospects to your business through advertising, 
cold calling, public relations etc. This is usually the most 
expensive part of the sale process. Spending money on advertising
can become a bottomless pit.

Attracting prospects is also the least productive selling step. 
Because getting more prospects won't do you much good if you 
don't convince them to actually buy your product or service. 

Converting prospects into customers involves spreading the sales 
process out, into a number of different relationship building 
steps. 

Prospects will only buy from you when they are convinced that 
they are getting good value. And creating that perception is 
hard work!

The greater the value of what you are selling, the more 
important this becomes. Developing a robust multi-stage sales 
process, and conscientiously following up leads, becomes 
critical.

Buying decisions are seldom made on the first contact. And, 
according to the National Sales Executive Association in the US, 
you can increase your sales by up to 80% simply by following up! 

Here are statistics from their survey findings:

2% of sales are made on the 1st contact 
3% of sales are made on the 2nd contact 
5% of sales are made on the 3rd contact 
10% of sales are made on the 4th contact 
80% of sales are made on the 5th-12th contact

Increasing your conversion rate can increase sales substantially 
: especially if the conversion rate is low to start with. For 
example, increasing the conversion rate from 5% to 10% doubles 
turnover.

The Average Spend is increased by cross-selling and up-selling. 
Cross selling means selling customers a different but related 
product, in addition to what they asked for. 

McDonalds use this technique when assistants ask customers 
"Would you like fries with that?" Asking this simple question 
increased McDonalds turnover worldwide by $19 million a day!

Car dealers up-sell very effectively when they get customers to 
agree to buy the basic model. But won't let them leave before a 
number of high margin optional extras have been added.

The Number of Transactions is perhaps the most powerful sales 
driver. You have already attracted and converted the prospect. 
And selling to the same customer over and over again, makes 
tremendous sense.

Research shows that it costs six times more to attract a new 
customer than it costs to re-sell to someone who has bought 
from you before.

The more you increase the lifetime value of your customers, 
the more efficient your marketing becomes. You spend less on 
advertising, because you don't need to attract as many new 
prospects.

And there is an added bonus. Because your customer relationships 
become stronger, you get more and more free referral business.

So don't put all your eggs in one basket and rely on attracting 
prospects to create business success. 

Look for opportunities to cross-sell and up-sell. And find ways 
to bring customers back more often, and over a longer period of 
time.

Spread your efforts across all four sales drivers. And watch the 
cumulative effect of even modest improvements in each one make 
a big difference to your bottom line.