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Nov 15

Earn More Money the Only Logical Way

There are only four ways you can earn more money. You can see more prospects, increase your closing ratio, earn more on each client, or spend less money. If there was a way to accomplish all four at once, can you imagine the impact it would have on your business? There is a way and I will show you how.

For over 17 years, I have been trying to help professionals grow their business. I spent years trying to figure out how to generate more prospects for them. When I did, the strategy accidentally increased their closing ratio, increased the amount they earned on clients and reduced expenses. What is the strategy? Earn referrals the right way.

In this article, I will explain how earning referrals the right way will significantly boost your income because it helps you earn more money all four ways. See other articles for how to earn referrals the right way. The first way to earn more money is to see more prospects. Even if you do not increase your closing ratio, you could logically earn twice as much if you saw twice as many prospects. A good referral-generating system will generate some referrals from your existing clients and lots of referrals from other business professionals. A good referral-generating system will create a non-stop flow of prospects for your business. You should never have to worry about having enough prospects to see. Generating referrals is the only consistently effective prospecting method that I have found.

The second way to earn more money is to increase your closing ratio. If you saw the same quantity of prospects this year that you saw last year, but you converted twice as many to clients, you would have a significant increase in your revenue. How can earning referrals increase your closing ratio? Let me ask a different question first. What is one of the biggest challenges in making a sale? The biggest challenge in most sales situations is establishing your credibility. You must get the prospect to like and trust you. When you are referred by someone else, you start off with a much higher level of trust with the prospect. This is why prospects attained as referrals have a significantly higher closing ratio than prospects attained by mass marketing. The results are further compounded if the person giving you the referral has been trained to give effective referrals.

The third way to earn more money is to earn more money on each client. Your income would increase if you closed the exact same number of sales, but earned more money each time. How can referrals accomplish this? When you mass market, your prospects come from a variety of backgrounds and you probably experience the 80/20 Rule (80% of your income is from 20% of your clients). However, when you use a good referral system, you have the ability to attract just the more profitable prospects. In other words, you can stop wasting time with the 80% of your prospects who only generate 20% of your income and you can focus on the most profitable 20%.

The fourth way to earn more money is to reduce your expenses. This one is pretty easy. When you use an effective referral-generating system, you have little to no costs to create these referrals. If you utilize only traditional marketing (TV, radio, mailers, billboards, telemarketing, etc.) you incur higher costs. Before you quit your other marketing “cold turkey” you should determine how many referrals you need to generate enough revenue. Perform the following simple calculations.

For these calculations, use the numbers from the past year. For Annual Income Generated, only consider the income from clients added during that time, not repeat business or “renewals” from earlier sales. Closing Ratio = # Buying Units Presented to/# Buying Units Who Purchased Income Per Sale = $ of Annual Income Generated/# of Buying Units Who Purchased Referrals Needed = $ of Annual Income Goal/$ of Income Per Sale

Tracking these numbers helps you determine how many referrals it will take to hit your income goals. Remember: as you referrals increase, your closing ratio increases, your income per sale increases, and your costs decrease. Recalculate your referrals needed with improved these improved numbers and referrals become even more important to your business.

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