All revenue is not created equal, and contrary to popular belief, not every sale is worth “the old college try.” Last month, I turned down $10,000 in sales, and it earned me an additional $50,000 in revenue.
Generating revenue is about calculating your opportunity cost and having the right mindset.
Most business owners believe there are two types prospects: those who need to work with you and those who don’t.
I would challenge that there are, instead, three types of potential clients.
During the past year, I established my agency coaching and support business. In the beginning, I identified a specific niche. Then, I remained focused, resulting in a 75% conversion rate. I sold prospects the products they needed and remained careful not to steer them toward what I wanted them to want.
The vast majority of my clients this past year are happy with the results from the tools and coaching I provide. However, there were some clients that saw little-to-no results. I re-evaluated those clients’ cases and looked for the areas in which I had failed them. Unfortunately, I found one consistency among them: they weren’t willing to do their share of the work.
At the risk of sounding overly confident, I’ve come to the conclusion that it’s not me -- it’s them. (You might relate to this when looking at your own clients.) This exercise helped me discover that there are actually three types of prospects:
Those who want to work with you.
Those who do not want to work with you.
Those who want to work with you and are willing participants.
No matter your industry, your ideal client can’t just want it -- they must desire it.
This change in how I view different prospects led me to bring in an additional $50,000 in revenue last month. Here are two different scenarios that highlight how this change led to increased revenue:
Month A with the “close every deal” mentality:
40 new prospects X average sale price of $1,000 = $40,000 potential revenue
$40,000 potential revenue X 75% conversion rate = $30,000 closed revenue
40 prospects X one hour consulting = 40 hours
40 hours per month = $30,000 revenue
Month B with the “sell to those who desire it” mentality:
20 pre-screened prospects X average LTV of $3,000 = $60,000 potential revenue
$60,000 potential revenue X 75% conversion rate = $45,000 closed revenue
20 prospects X one hour consulting = 20 hours
With an additional 20 hours in my month, I was able to develop a new campaign, which resulted in $50,000 in new revenue.
40 hours per month = $105,000 revenue
As you get more specific and really hone in on your ideal client, the lifetime value of each client will increase.
Try calculating your opportunity cost. Can a change in your mindset more than double your monthly revenue? Remember: it's about quality, not quantity. Don’t just chase revenue. Seek profit.