There are 6 basic drivers that effect our business:
• New enquiries
• First assessments
• New clients
• Drop out rate
• Total number of clients (Which is a reflection of new clients and drop out rate)
• Average client spend
And, the score card – Revenue
Although profit is the ultimate business outcome, our business is ultimately a fixed cost business. Therefor, revenue per week is a very good indication of whether we are above the line or below the line in terms of making the desired profit.
As a business, we report these numbers weekly in our management meetings. They drive our short term and medium term decision making of what we have to do on a weekly or monthly basis to make sure our business is moving in the desired direction.
For example, if our drop-out rate is greater than our new client acquisition rate, then our total number of clients is shrinking. There is no point trying to spend time and money on marketing if we are losing more clients than we are gaining. So, our major effects need to be directed towards working out and acting on the reasons why we are losing clients.
One of the most common reasons for increased drop out in our business is public holidays and when our services stop becoming a routine for our clients.
A public holiday during the week often means the clients decide to take a mini break and a short holiday, cancelling their appointments for the week. When they get back, their lives are busy to catch up on all the personal errands they were not able to do when they were away. Very quickly, 1 week’s break, becomes 2 weeks, then 3, then you are not longer part of their routine and they no longer feel the benefits of your service.
The most important thing that we do is continue to keep contact with our clients, even when they are not with us. This is just to check up on them and to ensure that we do not fall off their radar.
Often, we get our drop off rate under control and can focus once again on new enquires and growth.
What formula drives your business?
So, what are the small number of important “levers” that you can pull in your business that have a direct effect on how your business and your most important score card measure?
This means that you can allocate your time and resources on the things on your business that will have the most impact and will achieve your desired goals.
Determine and write down the key drivers for your business?
Try to keep it to no more than 5 or 6
You can’t do everything and not everything is that important. Keeping it a few drivers means that you can focus on the important things, not everything.
This doesn’t mean when something goes wrong, you won’t drill down and try to work out why that driver is affected. This is the whole point. For example, if there is something wrong with the drop-out rate, we will try to work out the why? Is it:
• Poor customer service
• Lack of follow-up
• Public holidays
• Increased competition (rarely the actual case)
You will always have limited time and resources, so you want to allocate your time/effort on the most important things first.
Now narrow it down. Which of the key drivers (no more than 5 or 6) really run your business?
Which one do you focus on this week?
Every week, one driver is going to stand out more than others. This week it may be new enquiries, another week it may be drop-out rate.
For the most effective use of our time, as a management team, we focus on that 1 driver for the week and really drill down and act on the cause.
If it is new enquires, which marketing activities do we need to change or focus on to make a difference? If we have been having a busy previous few weeks, we may have delayed sending out our regular newsletter to our clients, which stops us being top of mind when our services are needed. Our task may be to make time once again to focus on these marketing activities to get our most important driver of the week, new enquires back on track.
What is your most important driver of the week?
Join the discussion and have your say?
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- Call us on (03) 9857 0644 or (07) 3505 1494 (Paddington)
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Our clinical staff would be happy to have chat if you have any questions.