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#Marketing - Understanding the Revenue Formula Makes Complex Revenue Meetings Easier

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Created: 2024-01-17

Created: 2024-01-17 14:55

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Sales meetings always feel heavy.

Sales meetings always feel heavy.

As soon as you come to work on Monday, the CEO comes in with his hands in his pockets and talks for over an hour during the meeting time, and most of the meeting participants are bowing their heads.

"What?! Our competitors are growing every time and their sales are also increasing, but why are we continuously declining!"

"CEO Kim of ㅇㅇ company increased sales through ㅇㅇㅇ, let's do that too. Shouldn't ㅇㅇㅇ have investigated and proposed this in advance?!"

Then, the manager-level employees answer, and the meeting ends. After the meeting, the manager-level employees ask the staff or team leaders to find out how to do what the CEO said and go out to smoke, and Monday's work begins.


Why are sales meetings always difficult?

The answer is simple. First of all, it's because they don't know how to prepare for a sales meeting or what to talk about.

Then, how should we approach such sales meetings?

In that case, substitute it into the following formula and set the topics separately.

Sales Formula

DB x Average Order Value x Conversion Rate = Sales

This formula is like magic, but it's actually a very useful formula. When I asked those working in the field, especially those with the job title of marketer, about the sales formula, most of them couldn't answer (they might have been embarrassed to answer, but anyway), and only one person answered similarly until the beginning of this year.

Let's learn a little about that formula.


DB (Customers)

DB refers to the number of customers. In reality, many of the advertisements we run aim to expose these DBs and secure DBs.

Average Order Value (Product or Service Price)

Average Order Value refers to the price of a product or service. The important thing here is that if there are multiple products, it's good to prepare them individually and also as an average value. (Personally, I prefer the average value.)

At this time, if you applied a discount due to an event or coupon, etc., let's calculate and record those sales separately as well.

Conversion Rate (Percentage of successful sales)

Conversion Rate is important. Even if you have many customers and the price of the product is accurately measured, if the conversion rate is 0%, the sales will inevitably be 0.

For example, if you sold 100-won items to 10 customers with a 100% probability, the sales would be 1,000 won. If the conversion rate is 50% here, it becomes 500 won. But at this time, to double the sales?

Just adjust one of DB, Average Order Value, and Conversion Rate to double the value. (Oh! It's incredibly easy!)

But is it really that easy?


Then, let's apply this content to a sales meeting!

Conversion Rate

Is the conversion rate something I or we can influence? Nope! The conversion rate is something the customer chooses. It's not something I can easily increase just because I want to. (Darn it, then why did you talk about it?)

But are we just going to sit idly by and watch the conversion rate because it's hard to increase?

The conversion rate is about creating an environment where customers have no choice but to buy my product. The important word here is Nudge. Nudge means gently nudging someone with your elbow, and it refers to designing choices so that customers follow along. To increase the conversion rate, you need to create a "customer purchase process" so that the user can play in the arena I have designed, set up various stories, and set paths. (It's easy to say... but it's difficult. I'll talk about this in more detail separately later.)

Average Order Value

To increase sales 10 times, can you sell a 1,000-won instant ramen sold at a convenience store for 10,000 won?

Would you eat a 10,000-won instant ramen bag if you were me? Since there's a market price for Average Order Value, it's very tricky to raise it.

Then, is there no way to increase the Average Order Value?

There are ways to increase Average Order Value. Average Order Value has a close relationship with the product, and when designing the product or service, if you keep three things in mind, you can set the Average Order Value as you wish.

1. First: If I do it first, since there's no established market price, I can set the Average Order Value.

2. Best: If I make the best, like the expensive watch brands we all know.

3. Only: If only I can sell it, if there are no competitors, who would I care about when raising the price.

But this is also difficult. Something that doesn't exist in the world? Me? First? Me? Best? Me? Hahaha (It's difficult, but I'll discuss the approach and related content in detail again.)

DB

DB is the easiest thing to increase sales with. (At least... sigh) Literally, you just have to gather people.

Here, set two criteria, "What we've been doing", and "What we haven't done", create a simple table, and first record what we've been doing. Record things I can record, such as growth trends, average values, costs, etc., and then figure out if there's a direction to delve deeper into it. Next, list the things we haven't done, and then find out about success stories and implementation methods among the things we haven't done.

Just assume you understand this far and let's have a sales meeting.


CEO: Our sales are continuously declining! Our competitors' sales are increasing, but why are ours continuously declining?

Marketer: Currently, our sales are not significantly different from the previous month in terms of customer inflow, but there is a problem with the sales conversion rate. It seems that the increase in Average Order Value implemented last month is the cause. Comparing our Average Order Value with competitors, it was found that ours was ㅇㅇ% higher, and to increase sales with the increased Average Order Value, it seems that we need to further collect DBs.

CEO: Then, what are the ways to increase DBs?

Marketer: The channel where our target group mainly frequents is ㅇㅇㅇ, and running ads there might be a solution. There was a success story of a competitor running a promotion on that channel...


If you have a sales formula, you can have a marketer-like or insightful meeting.

Newbies, don't be afraid of sales meetings.

This is a tip, but there are countless CEOs who are running businesses without even knowing the sales formula.

Let's try to conduct a more proactive meeting with just this one formula :)

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