The most important thing to succeed in business is to increase profits, so how to increase profits? Let's learn from the author~
Many people do business, do not know how to improve profits, business is very tired, but in fact, it is not so difficult to improve profits, earn 20,000 a month and earn 100,000 a month, the biggest difference is the difference in operational thinking, and earning 20,000 a month may be very hard, but as long as the mind is open, there is a way, in fact, earning 100,000 a month may be easier than earning 20,000 a month.
We all know five universal formulas:
Sales = Traffic × Conversion Rate
Revenue = sales volume × average order value
Profit = Revenue - Cost - Expenditure
Customer lifetime value = customer unit value (consumption amount) × repurchase rate (number of consumptions) × sharing rate (new customers brought by sharing communication× payment amount × number of consumption)
Private domain sales = traffic x conversion rate x customer unit price x purchase frequency x fission rate
Input-output ratio = (input + output) ÷ input × 100%
Input-output ratio: The higher the input-output ratio, the better, which is also operational efficiency.
In the case of a fixed (identical) input, the higher the output, the better.
In the case of a fixed (identical) output, the smaller the input, the better.
It is very important to increase traffic, conversion rate, average customer value, repurchase rate and fission rate.
In the above formula we can see:
Ultimately, increasing profits, increasing traffic, conversions, average order value, and improving operational efficiency. Then reduce operating costs and churn rates.
In the end, if you want to increase user value, you need to increase the customer unit value, repurchase rate and sharing rate.
In the end, if you want to improve performance and profits, you have to start with the following points:
- Increase traffic
- Increase conversion rates
- Increase order value (transaction value)
- Increase repurchase rates
- Increase share rates (referrals, customer referrals, shares)
- Reduce operating costs
- Reduce churn rates
Essentially, the way to grow your business is to start with these 7 areas, and if you want to increase your profits, you must think about it according to your business.
From the above formula we can also see:
Ultimately, to increase profits, increase traffic, conversions, average order value, and improve operational efficiency. Then reduce operating costs and churn rates. In the end, if you want to increase user value, you need to increase the customer unit value, repurchase rate and sharing rate.
How?
Four points in a nutshell.
1. Reduce the company's costs
Costs are divided into fixed costs and variable costs. The fixed cost is then turned into a variable cost.
1. What are fixed costs?
Fixed costs are the costs that you have to spend each month in order to keep your business running.
Such as rent, employee salaries, product purchase costs, and so on.
2. What is variable cost?
It is a cost that is directly proportional to the volume of your business, and the larger the volume, the higher the variable cost will be. Such as transaction costs, sales commissions, and so on.
If a company's fixed costs are too high, then it is at great risk.
For example, like the previous epidemic, if there is a sudden loss of income, if the company's fixed costs are particularly high, it will be difficult to support it for too long.
Therefore, in order to enhance the company's ability to resist risks, fixed costs can be turned into variable costs.
That is, some business can be outsourced to reduce costs and increase profits.
This is also what we often say, only do what is most professional for yourself.
The most important thing to reduce costs is asset-light operation, you can look at your own cost structure, which can be throttled, which can be outsourced, and do light.
We must cut all unnecessary expenses, but some expenses cannot be saved, such as sales, and we must try to control expenses if we must spend.
2. Increase income
While reducing costs, it is also necessary to improve performance, so that profits will also increase.
If you want to make your performance skyrocket and make more money, you need to create a performance growth model
And performance growth is inseparable from three elements:
The number of customers, the amount of transactions, and the number of transactions.
If you want to increase your performance, you need to increase the number of customers, the amount of transactions, or the number of transactions.
If you want to increase the number of closed customers, you should also pay attention to: the number of leads, the closing rate, and the lifetime value of the customer.
1. The number of leads
The number of potential customers is the premise of the transaction, if there are no customers in hand, no customers enter the store, where will the transaction come from.
Therefore, it is necessary to continue to increase the number of potential customers and continuously expand customer acquisition channels.
And know how to make profits at the front end and make money through the back end.
Only when the front end gives profits to others, will more people come to your side, and you will have more opportunities to make deals, otherwise there will be no customers, where will the deal come from.
2. Closing rate
If you want to make money and have sales, you can't do without a deal.
Transactions are the basis for making money, so it is necessary to list the elements of transactions, and then continuously improve the transaction rate and optimize the transaction process.
3. Customer lifetime value
Customers spend with you, don't think about doing one-time business, continue to let customers repurchase, continue to provide customers with value, continue to provide customers with higher profit products, continue to let customers come to you to consume, and bring you new customers.
You must clearly understand that the greater the lifetime value of the customer, the more money you can make, so sometimes you can sacrifice all the front-end profits (although others will think you are crazy), but as long as you grasp the opportunity of chasing sales, upgrading orders, locking customers, and fission, you can still make money.
You can continue to let customers spend, continue to lock this customer, and let this customer bring you new customers, although the front-end does not make money, but as long as the back-end can be designed well, you can still make money, and it is easier to earn.
3. Reduce the cost of trial and error
Before making any decision, you should reduce the cost of trial and error, and don't spread it all at once.
4. Build a private domain user pool
To put it simply, the private domain is a personal WeChat + WeChat group + public account + circle of friends.
Why are more and more companies and entrepreneurs building their own private domains?
Because there is a cost to obtain traffic, and traffic will become more and more expensive in the future.
What is the private domain user pool?
Private domain user pool = funnel model + user pool, the traditional funnel model has only one funnel, although a large number of users can be obtained through the entrance of the funnel, but users at the other end of the funnel will slowly churn.
The private domain user pool is to add a user pool under the traditional funnel, and the users who flow out slowly through the funnel will be put into the user pool, in which we can do deeper user operations and establish relationships and trust with users.
User connection, user screening, user management, user transaction, and user propagation are the complete processes of building a private domain traffic pool.
So why build a private domain user pool?
In fact, it is to increase revenue and profits, and increase the lifetime value of users.
Columnist
Lao Chen, public account: Lao Chen's deep thinking, everyone is a product manager columnist. Post-90s Internet entrepreneur, with many years of experience in Internet operation and entrepreneurship, good at traffic trading, private domain realization, and personal brand IP building.
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