X Marks the Spot
Buried treasure. As kids, we all dreamed of it. Find a tattered map, follow the clues to an empty beach, then dig up oak chests spilling over with gold doubloons, rubies and diamonds. Who cares if you’re beachcombing at Glenelg, half a world away from the Spanish Main? After all, it’s the dream that counts.
Owning a business means keeping the dream alive. You’re hoping for that one stroke of genius that will transform your fortunes. Meanwhile, the treasure is right under your nose. But you need more than a sketchy map to find it.
Whenever I take on new clients, I pull their accounts apart. I’m looking for missed opportunities, flawed decisions, trends that indicate looming problems or likely success. Sounds harsh? Not at all. Unlocking the potential in the business means shining a bright light on the numbers.
Maybe your eyes glaze over when you look at a balance sheet or a profit and loss statement. I get it. Numbers can be terrifying, especially if they’re trending the wrong way. And accounting concepts can be hard to understand.
But every number tells a story. It’s not all depreciation schedules, inventory costings and debt restructures. It’s much more vivid than that. It’s that rush of new clients following a successful marketing campaign. Rising insurance costs. A sales rep who’s consistently underquoting to win jobs. Staff who are exceeding expectations, or staff who are slacking off. These stories are all reflected in your bottom line. The numbers never lie.
The most compelling stories—the most accurate barometers of success or failure—are found in five sets of numbers. These lead indicators are central to Strategy to Cash®.
- What are your customer retention rates?
- How many sales leads does your marketing generate?
- What’s your conversion rate?
- How often does each customer buy?
- What’s the value of the average purchase?
Let’s pause here. If I asked you these questions about your business, could you give me an accurate answer? My clients can—because I make them collect these numbers. And I work with them to lift their customer retention rates, sales leads, conversion rates, frequency of purchase, and invoice value. Increasing each of these lead indicators by just a few percent maximises my clients’ cashflow and profit.
Without these figures, I can’t help my clients grow their businesses.
Years back, I worked with a tyre fitter. 80% of his invoices were cash sales, and he refused to record any customer data. He didn’t know who bought his tyres. Did they come back to him every three years, or did they always shop around for the cheapest price?
I pushed my client to gather this data. The more I pushed, the more he resisted. Instead, he poured his money into mass marketing campaigns—newspaper ads pushing special offers, posters on the side of buses, a real scattergun approach. He had no way of measuring which ads worked, and which ones failed. And he wasn’t close enough to his customers to figure out why they returned, or why they went to the tyre store down the road.
Inevitably, his business declined. As his sales dropped he pumped more and more money into advertising—unnecessarily so, from my point of view. I’d run the numbers. Increasing the frequency of his customers’ visits by just 10% would have boosted his turnover by more than a quarter of a million dollars.
Which would have been easy to do, in his game. Offer a free tyre rotation at 5000 kilometres, and a discounted wheel alignment if they showed uneven wear. Regular contact creates plenty of opportunities to upsell. But that meant investing in customer relationships. In the end, he just couldn’t be convinced.
Some folk refuse to dig, even if the treasure lies directly beneath their feet.