How to make the math work in your favor
Reuben Swartz
Fun "Anti-CRM" for Solo Consultants Who Hate "Selling" but Love Serving Clients. Put the "relationship" back in CRM: conversations, referrals, follow-up, lead magnets, proposals. Host of the Sales for Nerds Podcast ????
Here's a simple equation for your revenue in a given time period:
The number of opportunities you have, multiplied by your close rate, multiplied by your (average) price is your revenue.
Divide that by time, and you have revenue per time period.
Note that this works wether we talk about the overall calendar time or just the sales time.
So if you want to get more revenue per time, most folks' initial reaction is to increase the first variable, the number of opportunities.
You might increase marketing spend, attend more networking events, and relax your ideal client parameters.
The problem is that even if you're successful, you have downstream effects on the other variables. Your close rate goes down, because you're talking to people who meet your Possible Client Profile, rather than your Ideal Client Profile. (Remember, folks, PCP is dangerous.)
Your average price goes down because people don't perceive as much value in your offer.
And your time (to close, and to deliver) goes up.
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And this often leads to a vicious cycle, where you try to get more people in the front of your funnel.
Instead, consider an ideal state where you get to picky about which clients are lucky enough to work with you. Your delivery time is spent where you can make the biggest impact.
Your price points are higher because you are working with people who value your contribution (and often want to know how they can do more work with you).
Your close rate is much higher, because you are typically the one saying "no" when you don't see the right fit.
Plus, you spend less time in conversations, overcoming objections, etc.
And, perhaps most surprisingly, when you are focused on your ICP, your opportunities actually increase. You're more referable. You can own your niche. Your best clients tell their friends and colleagues.
If you have more opportunities, you close a higher percentage of them, and a higher price point, all in less time, your revenue per time period has to go up. You can't fight the math. ;-)
Revenue Producing Leaders ?? your impact & income | You’re in the room where it happens ?? | Be Invaluable | GSD | You know there's more | ?? Bender | Marathon Runner/Triathlete ????♀? ??♀???♀?
1 年Reuben Swartz we can't argue with math for sure. Math wins every time. I love your equation and feel like you're reading my mind once again as I have been reviewing my pricing and value proposition now. Why are consultants so hesitant to increase prices? Is it due to Imposter Syndrome?
??Streamline processes, free yourself from chaos, double your revenue. Ask me how.?? Systems Expert | Operations Consultant | Data Nerd | Trainer
1 年This was so on time for me and my clients. I'll be borrowing it! ??
Marketing System to Accelerate Value Creation | Marketing Solutions for Succession Planning from Three Months to Three Years || Add a Fractional CMO to your Exit Planning Team to Drive More Value Faster
1 年Great insights Reuben Swartz. I love the opportunity to "consider an ideal state where you get to be picky about which clients are lucky enough to work with you. Your delivery time is spent where you can make the biggest impact." Do you find that most consultants avoid this because of fear? Or is there another reason?
Leadership Coach | Keynote Speaker | Entrepreneur | I help successful executives & owners bridge the gap between achievement and fulfillment | Happiness Expert | Faith-driven Leadership Strategist
1 年This is great!! Focus on Ideal Client Profile and grow your business with less effort. ??