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Simple Math, Simple Success

February 4, 2020 by admin 11 Comments

“Simple Math, Simple Success”

With all the industry changes coming at us rapidly, the last thing we need is a complicated formula for company growth.
Recently I was talking to an agency owner who wanted to see an annualized run rate increase of $200,000 over a 12 month period of time.  In other words, he wanted to see an average monthly revenue increase of just a little more than $16,500.
Now, when someone talks about adding $200,000 to the coffer, even the best business people can get a little nervous.  That’s a lot of money.  It is a huge revenue jump.  When one takes that number and tries to develop a plan to see that increase it gets even worse.  Confusion of what to do sets in and walla…progress stops.
This month I wanted to give you a simple formula and strategy to set revenue increase goals and then a simple thought to accomplish them.

simple math simple success

First, let’s keep in mind that you have never had an order count problem.  If you have ever had a revenue issue it is not because you had an order count problem, but a customer count problem.  Keeping this in mind then we must also consider that the smartest thing to do is to also set goals and strategies the same way.  In other words, how many additional average customers will you need in order to hit the mark.
Here is a simple formula:

Revenue desired (annualized run):     $200,000
Monthly:                                               $16,667.00
Average fee per file:                           $850
Number of new closings monthly:      19.60
Close ratio:                                          70%
Openings needed monthly:                  28.01  (closings needed divided by close ratio)
Divided by 12 months:                         2.33 additional new open orders monthly (over previous month’s)
Divided by average cust volume:        1.5 order capacity for average Realtor
Number of new cust Monthly              1.55 or rounded up to 2

In order words, if you can develop a plan to add 2 new customers monthly (new customer is someone who is currently sending their business to another title agency) you will have 24 new customers in a year.  If each can do 1.5 transactions monthly on average then they will produce 432 additional open orders in a 12 month period of time.  At a 70% file close ratio then 302.4 of those files will actually close.  Multiplied by the average fee per file of $850 this will bring you to a total of $257,040.  This number is higher because we rounded the average number needed from 1.55 above to 2.  This allows for existing customer base attrition and market fluctuations.

Here is the bottom line:  If you will break it down to the basics by asking yourself “How many additional customers are needed each month” to hit the goal?  Not revenue or orders, but customers, then you are significantly more likely to accomplish your goal.

Now, I ask you…can you get two additional people each month to start doing business with you?  I am guessing you can!  If you struggle with accomplishing this goal of 2 new customers monthly, contact us at 209-589-9000.

Darryl Turner is the CEO of the Darryl Turner Corporation based in California.  DTC organizations specialize in the advancement of companies in any economy.  Darryl is also an international motivational, business, sales, management and leadership speaker delivering more than 200 live events annually.

You can follow Darryl on Twitter at www.Twitter.com/DarrylTurner.

For more information about Darryl Turner, visit www.DarrylTurner.com or call 209-589-9000

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