Podcast Summary
Setting accurate goals for business growth: During a recent event, it was emphasized that making accurate predictions six to nine months in advance can lead to successful business growth. This can be achieved by reverse engineering goals using tools like 'back of napkin math' and calculating growth rates.
Precision and accuracy are key when setting goals for business growth. During a recent event with top sellers and gym owners, the topic of reverse engineering goals came up. It was emphasized that making accurate predictions six to nine months in advance can lead to successful growth, and Alex's "back of napkin math" was cited as an effective tool for this. Monica Matar, a gym owner who had recently gone from 0 to 150 recurring members in just two months, was used as an example. She had restarted her gym after dealing with emotional issues, and was curious about how quickly she should set her goals for future growth. The group broke down her numbers, showing her how to calculate her growth rate and set realistic goals based on her current rate of success. This process requires thought and effort, but can lead to significant business growth.
Reaching a membership goal through consistent growth: To reach a goal of 300 members, aim for 20 new members per month, conduct 8 sessions a day, and account for monthly attrition.
With a current membership base of 100 EFTs (EFTs being Electronic Funds Transfer, presumably for her fitness business), the speaker suggests that she can realistically reach her goal of 300 members by gaining an average of 20 new members per month for the next 10 months, despite her monthly attrition rate of 6%. This calculation is based on her conducting 8 sessions a day, each with a capacity of 22 members, totaling 176 new members per day, and 352 new members per week. With this strategy, she would reach her goal of 300 members before the end of the year. The speaker emphasizes that this goal is achievable based on her current capacity and that she should aim for more than her stated goal to account for potential growth beyond her initial target.
Calculate conversion and attrition rates to reach business goals: To achieve a specific business goal, determine the conversion and attrition rates at each sales funnel stage, calculate the number of new sign-ups needed, and set a manageable weekly target.
To achieve a specific goal in business, such as reaching a certain number of recurring customers per month, it's important to calculate the conversion rates and attrition rates at each stage of the sales funnel. By working backwards from the desired end result, you can determine the number of new sign-ups required per month, and then break that down into a manageable weekly target. However, it's essential to use accurate data from your current performance to make realistic predictions, rather than relying on hypothetical conversion rates. In this example, if a business owner wants to sign up 36 new recurring customers per month, they would need to sign up approximately 55 new customers per month after accounting for a 10% drop-off between sign-ups and starts. To meet this target, they would need to aim for 15 new sign-ups per week. This approach allows for some flexibility and room for error, while still keeping the end goal in sight.
Salesperson's Weekly Lead Generation and Conversion Process: To secure 3 new clients daily, a salesperson invests $720 per week on online ads, converting 2 out of 3 in-person leads and scheduling 22 shows per week. This results in 5 in-person meetings daily, requiring a total of 25 meetings per week.
To achieve her goal of having 120 clients per month, the salesperson needs to generate 60 leads per week through online ads, which costs her approximately $720 per week. She converts 2 out of 3 people who walk in her door into leads, and out of those, 50% show up for the appointment. To schedule 22 shows per week, she needs to have 44 scheduled appointments, which requires 60 leads per week. She spends $10 per day on ads to get 12 winning ad sets, meaning she creates 36 ad sets in total. To meet her goal of 3 sign-ups per day, she needs to sit down with 5 people a day, which equates to 25 in-person meetings per week. This process requires a significant investment in advertising costs.
Calculating Business Goals: A Deep Dive into Sales Funnels: To reach 36 EFTs per month, a businesswoman needs 60 leads weekly, $36,100 monthly ad spend, and 4 hours weekly for ads. Of those leads, 22 sign up, 13 start, and 9 finish, taking 10 months.
Achieving a specific business goal requires a deep understanding of the numbers involved and the conversion rates at each stage of the sales funnel. Using the example of a businesswoman aiming for 36 Electronic Funds Transfers (EFTs) per month, we calculated that she would need 60 leads per week, which would require $36,100 in monthly ad spend and 4 hours per week to create ads. Of those leads, she could expect 22 to sign up, 13 to start, and 9 to finish the process, resulting in 36 EFTs within 10 months. However, if her scheduling or show rates were lower, she would need significantly more leads per week to reach her goal. It's crucial to use accurate numbers for your business and adjust your strategy accordingly.
Making Accurate Business Predictions: Analyze current data, identify logical next steps, focus on current reality, allow for improvement, and don't rely on best-case scenarios.
Accurate predictions in business can be made by analyzing current data and identifying the logical next steps. This involves understanding the number of appointments needed to meet goals, the conversion rates at each stage of the funnel, and the current performance of sales teams. Predictions should be based on current reality, with room for improvement, as growth brings new challenges and broken systems that need to be fixed. Don't rely on best-case scenarios, but rather focus on current data and give yourself some wiggle room for errors. And remember, even if you've believed you were bad at math, like I once did, don't let that limit your ability to make accurate predictions in business.
Past experiences and math learning: Focus on tens, fives, and ones to quickly calculate percentages in your head, saving time and maintaining momentum
Our ability to excel in math, or any subject for that matter, can be influenced by our past experiences, such as having a poor teacher or not taking full responsibility for our learning. However, it's important to remember that not all mathematical concepts are necessary for certain fields, like business. But, if you want to quickly calculate percentages in your head, a useful hack is to focus on tens, fives, and ones. For example, to find 17% of 240, think of it as 10% (24), 5% (12), and 1% (2.4), which equals 40.8, and round up to 17%. This method can save time and keep your momentum going. So, even if you may have struggled with math in the past, remember that simple hacks like this can make calculations easier and more efficient.
