Want to make a difference to $ turnover?

Written by

In my BizFizz Workshops, we talk about four ways to grow your business –

  1. Increase the number of clients of the type you want
  2. Increase the number to times they buy from you (transactional frequency)
  3. Increase the average dollar sale value
  4. Build systems in your business to ensure these things happen consistently.

I didn’t make these up – I am sure I learned them elsewhere, but this doesn’t make them less true.

In physiotherapy, or any other service based, personal contact business, there are two ways of increasing customer numbers

  • reduce the number of clients leaving your business
  • increase new clients coming to your business

Let’s say you have a client base of 2000, with an average spend per visit of  $80 and making a spend on average 5 times per year.  This gives you a turnover of $800,000.  What happens if 10% leave per year? If 200 don’t make their $400 worth of purchases?  Obviously you reduce turnover by $80,000.  What happens if you gain 10% new clients?  Remember, you are now only gaining 10% of 1800 clients meaning your base is now 1980 clients.  So your turnover decreases by $8,000. 

If you can reduce the loss to only 5% while gaining 10% new clients the turnover comes out at $836,000.

You can juggle the figures all you like, but here is the take home message.  Increasing  or retaining customers produces modest gains in income.  Modest? Compared with what?

  • What about increasing their transactional frequency by 10%? Up from 5 times per year to 5.5 (on average).  This increases turnover to $880,000.
  • What about increasing the average dollar sale value by %10? Up from $80, to $88.  Turnover ups to $880,000. 

Doing both together (value and frequency) amounts to $968,000 turnover! This represents a 21% increase!

Considering the financial cost of attracting new clients (advertising), it makes more sense to simply keep the ones you have and WOW them sufficiently to make more frequent and slightly more expensive purchases from you. We will talk more about strategies for all these options in later blogs.  If you can’t wait, register for my next BizFizz workshop – go to www.redsok.com for a list of upcoming events.