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Season 2, Episode 5 (25)

Understanding Profitability

“True profitability comes when you learn to serve  better.” Lyle Leads

Join Lyle Leads as they discuss Part 5 of our series, “The Only Four Ways To Increase Profitability in Business.”

In this episode we will cover:

– Know what profitability means and how to sustain it.

– How to put all the levers of profitability into practice.

– How to implement each of the strategies in an ongoing basis.

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Transcript Of The Main Podcast

Hi and welcome to optimize profitability. You got me by myself today, I’m doing this because I want to do a recap of our last four sessions. We started season two and we kicked off season two talking about profits. I mean, our podcast is called Optimize Profitability. So today we’re going to talk about not just those four categories, but how and when you would implement the different ones. So the other four were introductions on how to use them and specific tools you can use. Now, let’s talk about how you might want to use those in your business. So let’s recap real quick to the last four. Podcast we’ve done have talked about four different ways that you can grow profits, and ultimately these are the only four ways to grow profitability. One, you’re going to get more customers, more customers. Hopefully you sell more people and you make more money. Right. Simple process. The other one is to get those customers to come back more often. So the more often they come back, the more they spend that increases the lifetime value of that customer. They may come back once every six months of income to come back once every three months. That’s going to be a better return for you. Sorry, I’ve got allergies, but was it just then you get customers not only to come back, but you get customers to buy more when they come. So when you get customer to come in, you now get them give them something else to purchase that aligns with the ideal product that you have in place for them. And the last one, of course, is to increase your price. These are the only four ways to increase profitability. Everything’s going to fall under those four buckets, those four categories of growing your business profitability. OK, so let’s talk about when we use them. So get more customers. Here’s where I see a lot of people messing up and they want to get more customers when they don’t have a lot of customers. I talked to a guy yesterday. He’s literally flooded with customers we’re working with for some search engine optimization, helping him with the social media and everything. And the work we’ve done over the years is just built up to where he’s got a very solid base of customers. Now, these customers come in. He’s really busy right now. But two weeks ago he said, hey, I don’t even want to do any more advertising. I just want to stop it all. But when I met with him, we went over all it’s going on. He’s like, you know, I probably should continue this because he realized you’re always, always, always in the business of getting more customers. Everything you’re doing is marketing. Everything you do is marketing. When you pick up your phone, you’re marketing. You’re trying to get those customers to come in when you post something on social media, good or bad against something or for something, you’re trying to get customers to get more customers come into your business. Hopefully everything you’re doing is aligning yourself in a way to spread a larger net to bring more customers into your business. So when should you do that? All the time. Simple. Every day. All the time. You want to make sure you bring these customers in even when you’re super busy, because what happens is you get super busy, you slack off on marketing, and then all of a sudden you have a lull and nobody’s coming in. No one’s calling. And you pick up your marketing campaign, it’s too late. Then your business is having to pay bills. And so always, always, always be working on leads and marketing. That’s something that’s a no brainer. If you don’t have a good system of bringing in more customers, you need to develop that system of bringing more customers. You may need to talk to a marketing strategist or you may need to talk with a branding brand or you can visit a challenge. We’re going to have some challenges come up. I don’t want to get ahead of myself there. As a matter of fact, I do want to say, if you’re watching this, this is April, March, the recording this March 30th. Actually, today we’re releasing it. But in May, we’re going to have a summit. Make sure you go to DFW.com/events and you’ll see some information there and our upcoming events, we’re going have a summit coming up this summer. It’s called Make Profits Again. And one of the categories is getting more customers that may be helpful for you. So the second way of getting more customers is to get customers to come back more often. Now, here’s where it gets really finicky. What kind of customer is going to come back more often? Let’s say that I sell books. How do I get a customer to come back more often if I’m selling a book? How often are they going to read a book? How often are they going to buy a new book? You know, you’ve got to develop those concepts or shirts we have. Queensborough is an online thing. They do Polo’s and embroidery in this kind of stuff. We get emails from them constantly saying, hey, did you know we have this special coming up? Hey, did you know we have a special on this? Oh, we have free shipping this week only. And they’re always sending emails. They’re always in the communication. When do you get customers come back? More often after they have bought something from you? It’s another simple process. When someone purchases something from you, you should be adding them to a customer database. You should be collecting an email or maybe connecting with them on Facebook Messenger. However, that works for your business and keep yourself at top of their mind awareness. It’s top of mind awareness. Think about that top of mind. Awareness means you’re putting your business in front of them frequently so that they’ll be remembering you when they think of that specific topic. So if they bought a book, let’s say it’s a Harry Potter book, a six hundred page book or whatever that is, it’s going to take them a few weeks to read that book. They’re not going be ready for a book tomorrow. But if you have an email campaign set up that when they purchase a book. A week later, they get an email saying, hey, how’s the book going? Do you need a new book? Here’s a 10 percent discount. That would be a simple way of doing those, getting those customers come back. So when should you do that? You should do that on a regular basis. This is a customer follow up system. Everyone should be getting customers and everyone should be following up those customers. That is the basic bare minimum of any business guy. So if you’re listening to this, your best way to increase profits is to get more customers and get them to come back more often. That’s a simple process. The next one gets a little bit more finicky. It’s get customers to buy more. The man I was talking about yesterday, he sells generators when you can’t get somebody to buy a generator again, because once they have a generator, that maybe another one buys a car, then not to come back and buy another car. Right. However, what can you add to that? What can you make as an aligned product? So if I sell a car, I will put in maybe a oil change place next door and I will allow them to come get all changes and allow them to come get tires rotated and those kind of things. That gets them to buy more of my product and also get them to come back more. So they’re going to think about that. So what can you do? What can you a line in your business with your current offering that allows you to communicate in a way that helps people get more value out of your services or your products. So let me talk about this just real quickly. If you have a product, it is very easy to find another line product. If I’m selling dog food, it’s easy to find dog bowls, dog collars, dog supplements, whatever that is, whatever that is you sell, it’s really think about. But when you sell a different category where it’s a very specific niche category, then you may want to say, well, how do I line up with that? Maybe you partner with someone else, maybe somebody else brings along. So we offer training at DFW Top Dotcom. However, we partner with larger companies that do a larger, deeper analysis type training. So if you’re going to become a real estate investor, sure, I could teach you some things, but I don’t have the time to teach a thousand people how to be a real estate investor. Therefore, we’ve aligned ourselves with a company. So to go at DFW Top Dotcom, you’ll see a little button that says become a real estate investor and I’ll take you through a process of helping you understand how to get involved with this company that’ll educate you for life time. You see how that fits. And so getting customers to buy more doesn’t mean they’re always buying from you. You may align yourself with a company that allows you to have a small profit on the back end. As you do something on the front end, you could do something as simple as Amazon. You could set up an Amazon. Store a line that’s your website so that they’re buying small stuff on it, or you can find another company that works with you and increase your price. This is the last thing you should do. And I know there’s a lot of people I know take your prices 10 times them and get charged people more because you’re worth it. Be careful about that. These people who are saying that have already built a following and they can do that. You may not be ready to do that. You start going from a thousand dollars to ten thousand dollars. Just because you want to is not validated. You’re going to have people very mad at you. As a matter of fact, I was on the call, very big, high powered mastermind. And a guy says, yes, I’m going to do this for five thousand dollars. And the guy looked at me like, hey, you charged me seven thousand five hundred dollars for that. Now, that’s backwards, right? But that’s what people do. If you’ve charged one price, that’s what they’re going to expect if you just change your prices. So when should you change your price is the question. When your cost of goods go up, when you have a valid reason, you can’t just say, well, my I hire new employees, I’ve got to charge you more. That’s not a valid reason for the customer. We’ve hired more support to help support you. So we need to charge you more that doesn’t communicate value to the customer. Now, sometimes you have to do that. Let’s just be honest. Sometimes in business, you have to just raise your prices because you have to fit with what’s going on in the market. So you should have done a market analysis. You should have a business plan where you’ve analyze what are the current prices in your market. And you should have associated your prices properly because, I mean, if you go out there and let’s say you’re doing a maid service, I can get a maid service for ninety nine dollars or I can get a maid service for a thousand dollars. Both of them do the exact same thing. So what’s the difference? The difference is the price point, the difference is the branding. So if you’re going to increase your brand, then you can increase your price based on your brand, but don’t increase your price and then increase your brand the other time. You can increase your prices when your cost of goods go up. We talked about this. If I’m a restaurant and I serve hamburgers and all of a sudden the meat market starts charging more, then I have to charge my customers more eventually because otherwise the hamburgers profitability will decrease. Right. But you’ve got to be very cautious how you do it. So how do you increase your prices? How do you do these steps? How do you get more customers? How to come back more often? How do you get to buy more? How do you increase your profits? All of it is having a holistic program. I don’t want to just randomly plug in these four or five things. So listen carefully. If you don’t listen at any other point in this, hopefully you have been listening. Well, as I rambled on these things, but these are very important to optimizing your profitability. If you want to increase your profitability, you have to optimize your profitability. The whole reason we purpose, the purpose we’ve created this for is to optimize your profitability. You can’t just randomly go in and do these. You need to have a strategic plan. So let’s talk about that for a second. How do I strategically get more profits? Strategically, I’m going to set a marketing plan in place that allows me to get more customers. If I’m going to increase my prices, I’m going to start aligning my prices for the new customers forward, not for my previous customers. I’m going to honor the commitment. I have my previous customers, so I don’t have to increase their profitability or because you’ve got to remember, some of these people have to pay for their own bills. And if you start increasing things, the first thing they do, if you haven’t built a strong relationship with them is they go find somebody else to do the same thing for a cheaper price. You become a commodity. The relationship is key. And the reason I’m talking about a marketing strategy, because the relationship is how you increase prices. If I increase my prices and I have a good relationship with somebody, they understand the work and the effort that I put into it. Other people, when they see the profitability, they’re like, oh, you’re going to charge more. Well, I don’t have any more money. I’m broke. That’s their statement. Well, so they go looks for somebody else. They’re going to hire somebody cheaper. They’re going to have less results because of that, because they don’t understand the value. If you communicate your value in building your relationship with someone, that’s going to help you to offset that profitability factor. OK, so let me just talk about this strategy. I’m going to get more customers. I might have a marketing strategy specific. We live in a digital world. If your website has not been updated in a while, you may need to rebrand your website. Maybe you need to update your social media so it’s becoming more effective if you’re just posting stuff and no one is seeing it. You don’t have a strategy. You have a hope ability, OK? You can’t just hope on a strategy. You have to have a strategy in place, have key performance indicators, KPIs that sets up the the marketing campaign for you, and then make sure you’re following up with that. And that following up is having a customer follow up sequence. You need to have a CRM customer relationship management system and that allows you to communicate with these customers on a regular basis to keep that top of mind awareness. If your communicate with your customers, how can you do these things to increase these profitability? Ask them it’s the relationship. Ask them how you can help them better. What are some things that they’re currently buying? Again, let’s go back to the dog thing. If I’m selling dog collars, then I’m going to find out what my people are doing. So maybe there they need dog leashes. That’s a no brainer. Right. But what about specifically nutrition for a diabetic dog? I guess those exist. I’ve seen it recently, you know, and so maybe find out the ten of your customers have diabetic dogs. Now you have a new category where you start feeding the need of that customer and maybe building a new profitability aspect. So we talk about these profitability, increasing the profitability, but sometimes increasing profitability means serving better. If you want better profitability, serve your customers better, create strong relationships, serve them where they have perceived needs, don’t serve them based on what you think your need is, serve them based on the perceived needs that they have. So if they have a perceived need, meet that perceived need, ask them questions. You can do customer surveys or just call them. Hey, Bob, I noticed you bought something last week. I hope you’re not too busy, but let me ask you a couple of questions and talk to the person. Everybody wants individual conversations. Yes. You don’t want to bug them. You don’t want to be. Scelzi, have a conversation. Don’t just go in there. I would like to ask you three questions. A, is that a one or two or three? Don’t do that. Have a conversation. Be specific about taking those notes. It may take effort. It may take time. But what you’re doing is you’re building a tribe, you’re building an affinity group of people that you can connect with. And ultimately your profitability is going to be based on how well you serve them. So let me just break down everything I’ve said this entire session. You have four ways of increasing your profitability, but it all comes down to your relationship and the strategy you have in place to build that relationship. If you need help in this category, reach out to us. Leave a comment below. What are you currently doing? To increase the profitability for your business by developing relationships, what are you currently doing to develop relationships in your business? I’d love to know more. Please let me know and we will be talking soon as we develop our optimize profitability. By the way, we are looking for some guest posts that are coming soon. Yes, some exciting things coming up. So I will talk to you later on while you guys have an awesome day.

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