Another article from PersuasionTheory.com. You can find the original article here: Exponential Growth Calculator

The Exponential Growth Calculator is a spreadsheet to calculate the impact to your bottom line from small changes in your business. A few days ago I posted an article on the 3 Ways To Increase Revenue In Your Business. If you like, you can go read that first so you better understand the details behind the spreadsheet.

To summarize, there are only 3 ways to increase revenue in your business. They are:

1. Sell to more new customers.
2. Sell more to each customer.
3. Get more repeat sales from existing customers.

This spreadsheet calculates the changes you want to make in each area. You can use it to plan next year and achieve the income growth you want in your business.

You can download the calculator here as a Google Doc and below is a walkthrough with the example so you can see how easily it works.

You won’t be able to edit any variables on the attached spreadsheet.

If you use Google Docs choose “Make a copy” from the File menu and then make your changes on your copy.

If you use Excel or OpenOffice, choose “Download As” from the File menu and save it to your computer.

What You Can Edit And The Incredible Impact On Your Business

First, only change the data in the yellow cells. If you change other cells it will screw up the formulas for the rest of the sheet. So, don’t cause trouble and stick to the yellow cells.

Section 1: Your Current Information

You can choose the time frame of this data if you want. I have it set to annual. You can change it to monthly, weekly, or daily. It doesn’t make any difference on the results. The time frame is only for your information.

Fill out your current traffic. If it’s your website, how many page views of your sales letter? If it’s store traffic or sales, how many people are you sitting in front of or walk through your store during this time frame?

Next, how many of those become New Customers? These are new transactions. In the example above we have 100,000 people visiting a site that turn into 500 new customers (sales).

After that, fill out your Average Sale Per Transaction. If you don’t already know this, take your total income from these sales ($50,000 for example) and divide it by the total number of sales transactions/new customers (500) and you’ll get your average ($50,000/500=$100 average).

Once you’ve filled out these three cells it will automatically calculate your conversion rate and your total income.

Section 2: Increase New Customer Sales

In this section you’ll be able to see what happens if you were to either Increase Your Conversion Rate or Increase Your Traffic (the amount of people that get your sales message). It also computes what happens when you increase both of these.

In this image, the first line is the results from increasing conversion rate. You become better at selling and you sell more. In the example it’s a 40% increase.

The second line is what happens when you get more people to your sales message. You become better at marketing. In the example it’s a 20% increase.

The third line is the result of improving your conversion rate AND your traffic. The increase is 68%. As you’ll continue to see, a small increase in each piece leads to large changes in your business income.

Section 2: Increase Average Sale Per Customer

In this section you can find out what happens when you Increase Your Average Sale Per Transaction. This is the average amount a person buys from you when they checkout. It’s what happens if you can make that extra upsell every now and then. It’s the results of always asking, “Would you like fries with that?”

In the example we went from an average sale of $100 to an average sale of $110. It’s a 10% increase in income. Adjust this to what you think would be reasonable to upsell in your business.

Section 4: Increase Frequency of Customer Purchase

This is where you can find out what would happen when you get some of your existing customers to buy more. Selling your existing customers is the easiest marketing you’ll ever do. Don’t neglect them.

What happens if you can get 10% of them to buy an additional $50 worth of goodies from you?

In this example it’s a 5% increase in income. That may not seem like much but if they’ve bought from you once, and you have quality products or services, chances are you’ll be able to sell more frequently than you think.

If you’re running a monthly service or membership program, this would by your customer retention. How much more would you earn if your customers stayed with you an extra month or two (or five)? When you see these results it will give you even more reasons to spend a few extra bucks to make sure they’re really happy.

Section 5: Total Increase in Income and Total % Change

This section gives you the results when you make a small change in all three areas.

With the examples already in the spreadsheet, the income went from $50,000 per year to $96,600 by making small changes. That’s a $46,600 increase in income.

Or, a 93.2% increase in income from several small changes.

If you were to add up the changes for each individual section they would only add up to a 75% increase (conversion rate 40% + increase traffic 20% + average sale 10% + increase frequency 5% = 75%). However, each improvement compounds the other results. So, instead of a 75% increase you have a 93% increase in this example.

Would you rather try and improve 93% in only your conversion rate (or traffic, or upsells, or repeat buyers) or would you rather make small improvements among all channels?

In this case, I’d say it would be at least 18% less work for you to improve this much, would you agree? 

Enjoy the spreadsheet. If you didn’t download it above, you can download it here.

You can also read The 3 Ways To Increase Revenue In Your Business for some more examples on growth in each area.

Another article from PersuasionTheory.com. You can find the original article here: Testing Your Marketing: When Is As Important As What

I was talking with a client about a current mailing they were running. They told me that letter B was converting at a better rates than letter C. When I asked how they ran the test I was baffled at the response. I thought this was common knowledge. Ultimately, it became a lesson in market testing factors.

When you test your marketing piece is just as important as what you test. Here’s what they did in a nutshell.

They took a list of prospects and cut it in half. They sent sales letters to a group A and measured the results. They sent group B a letter with a different headline and tracked the results. This is not bad. It’s a good way to start testing your marketing however, the second group was sent letters one month after the first group received their letters.

The easiest way to test your marketing is to test one variable at a time and measure the results. If headline X pulls better than headline Y then use headline X as your control and continue testing to see if you can beat those results. This process is called split testing and is nothing new to anyone with direct marketing knowledge.

One factor commonly overlooked when performing split testing is time. The split test has to be run at the same time to be considered an effective test. If you send one mailing this week and another mailing four weeks later then you’ve essentially thrown in another testing variable called “time.”

“So, what’s the big deal it’s only a couple of weeks difference?” he asked. Imagine mailing a mortgage marketing piece right before the recent financial meltdown and a month later after all the headlines hit the news. If you’re selling earthquake insurance you’ll see a difference in response from a mailing before and a mailing after the recent Haiti and Chile earthquakes. As you can imagine, awareness in society changes over time and is another piece of the marketing puzzle you need to put in place.

What About Online Marketing?

The same rules apply online. If you’re marketing through email, most email responders allow you to perform split tests. Run tests changing the subject to test open rates. If your email system allows you to run more than two then test two different offers with each headline to test click-through rates too. Make sure it’s the same mailing and you’re not sending one email blast today and one email blast tomorrow. (that’s time and sending a second mailing to the same list, another variable)

What if you’re testing landing pages or opt-in forms? You want to run split tests as people visit the site. Testing one page for 3 weeks and another page for 3 weeks will not give you accurate results. Time can skew your statistics plus your source of visitors could change.

Most email providers offer a form of split testing your emails but, do you use it? If you have a sales page, opt-in form, squeeze page, etc. are you split testing to see what works or are you going by what the gurus tell you works? (I recommend SendPepper for reliable email and landing page split testing and marketing.)

Marketing Is Not A Science

Marketing is not a science but it does require one to step back, analyze the variables and, look at the results. The only scientific rule I know that works every time is test and measure.

What’s your experience?

Photo by Redstamp

Another article from PersuasionTheory.com. You can find the original article here: Propaganda and Covert Persuasion

If you persuade the masses or individuals, one of the most important people that made what we do possible was Edward Bernays. He wrote one of my favorite books, “Propaganda.”

Edward was the nephew of Sigmund Freud and was the first to bring many of the psychological theories he came up with for marketing and selling.

Here are a couple of videos on Bernays and what he pioneered. I highly recommend spending the 10 minutes for each video and picking up a copy of his book, it’s a quick and easy read.

Part 1

Part 2

Another article from PersuasionTheory.com. You can find the original article here: Persuasive Power Of Price

When you’re selling something have you considered the impact your pricing plays in they buyer’s mind?

Price is a fine line to dance across and it hit me (again) the other day when I was filling up my car with gas. I was a little taken back when I saw the prices for gas. The options were:

• Regular Unleaded – $2.19/gallon
• Plus Unleaded – $2.29/gallon
• Super Unleaded – $2.19/gallon

I normally fill up the car with Plus because it’s generally about $.10 less than Super and, well, it’s the middle option. I don’t simply want the cheap stuff.

On that day however, I filled up with Super (the real good stuff, right?) because it was less expensive than the Plus I normally buy. However, as I was leaning up against my car watching the numbers roll by on the pump, the following thoughts kept playing in my head:

• Why are they pricing the premium stuff so low today?
• What’s wrong with this batch? Is it filled with the crud at the bottom of the storage tank?
• Did they really make a price mistake and I’m getting away with something?
• Should I go inside and ask to make it’s not the crud and I don’t hurt my car?
• Why isn’t this advertised on the sign, what’s wrong here?
• Am I the only one seeing this mistake?

Then I realized what I was doing and stepped back to analyze the situation.

Think about it now. What does pricing play when you’re working to sell something? Does it convey “cheap” or “inferior?” Does it convey there could be a problem compared to the other options available? Does it convey “bargain?” Does a higher price imply “quality?”

As I said, this is a fine line and needs to be handled with care. It’s not so easy as to say, “do you present the low price option first and work to up-sell? Do you present the high price option and down-sell if they don’t buy the first option? Do you present multiple options and let the buyer choose the price?”

Each product and situation is different and careful consideration has to be brought to the table when pricing. Often bringing multiple options will confuse the buyer and put them into a state of indecision.

I wish there was a flat answer to these questions to make it simple. However, I’ll be exploring these more in time.