It’s frustrating to hire someone to help you with Marketing or Sales but not see your sales increase. We’ve all been there. Period. You sit with someone selling you a service, everything looks great like they are going to be able to drive a con of revenue for you, but then six months into the project you realize it’s been a money losing nightmare.
At HelpFlow, we take a different approach with sales. Rather than trying to predict some magical number of sales that are going to be produced, we make sure that generating a profit is going to be dead simple no matter how we look at it. This builds the confidence of everyone involved to move forward with a strong foundation built on facts, rather than magical projections.
Projections Are Always Wrong
I’m not saying that you’ve been swindled by other service providers, but getting sales projections right is tough for everyone.
You can use rules of thumb for increasing sales at certain parts of the marketing funnel, but ultimately you’re still blind to the details of how it’s actually going to play out.
People buying services like projections because it gives them clarity of the path forward. The problem is, that path forward is usually wrong, and that screws up everything for you in hiring someone and also for the person you are hiring.
The Benchmark- Will ROI Be Easy?
Rather than trying to oversize what sales may occur, it’s better to figure out where the break-even point is, to make sure it’s going to be that simple to get there. Once you are breaking even, everything else is profit on top of that.
Here’s how to do it:
- Determine your profit per order. Use your overall product margin and average order value to determine how much profit you have in a typical order. For example, if you have a $100 average order value and your margin is around 30%, then you will have $30 in profit per order.
- How many orders you need to break even? Once you know that you have $30 in profit per order, you can figure out how many orders you need to have enough profit to pay for the service you’re investing in. For example, if the service is $1,000 per month and you have $30 in profit per order, then you need around 33 orders to break even on the $1,000 investment. At $100 per order, this is $3,300 in revenue.
Now you know that this $1,000 investment needs to produce $3,300 in revenue for it to start producing a profit.
Now let’s see if that’s possible.
Recover Lost Revenue Easily To Start Profiting
The first place we look to generate revenue from our clients is the leaks in their checkout process on their website.
Here are some facts that might surprise you:
- 70% of the people that add a product to their cart do not complete a purchase.
- Around 50% of the people that get to the payment step in the checkout process do not complete their order.
- A big chunk of the people on your website filtering products or using your search box to find something don’t ultimately find what they’re looking for to buy.
The HelpFlow Team recover much of this revenue by integrating a 24/7 live chat into the purchase process. We can track when people are likely to abandon their carts and invite them to chat to address their concerns.
Will ROI Be Easy For You?
By using the analysis process above, we have a clear understanding of your total revenue and also the amount of revenue you are leaking out of your purchase process.
We then determine if capturing even just a small percentage of the different areas where you are leaking revenue will cover the cost of our service.
- Recapturing around 15% of customers that abandon checkout at the last step of payment is reasonable.
- Capturing a small percent of people that add items to their cart but abandons them, such as 3% to 5%, is typically reasonable.
- Lastly, converting around 2% or 3% of the people that repeatedly search for products or filter products on the website is reasonable, depending on the flow of your website.
By looking at the different amounts of re-captured revenue above, we typically see that profiting from the cost of our service is a no brainer. In addition, we may determine that we need to generate $15,000 in revenue to cover the cost of our service, but we see a clear path to generating $50,000 in revenue. That’s a no brainer.
Let’s Review Your Business
If you’re making any sort of marketing decision, use a framework like the above. Rather than focusing on how much money the marketing initiatives are going to produce, make sure that producing a profit at all is going to be simple. The rest is outside.
If you want to increase conversions on your website, live chat is a great way to go. We provide 24/7 live chat sales team to E-commerce stores and can do the same for you. Book a strategy call here so we can walk through this analysis for your business. No pressure, no pitch, just a no brainer ROI that you will want to move forward on.
Jon Tucker is CEO of HelpFlow, a provider of 24/7 live chat and customer service teams for 100+ eCommerce stores. Launched in 2015, their team of agents has produced nearly $100M in chat revenue for a wide range of stores using a conversion-focused approach to live chat.
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At HelpFlow, we've run live chat and customer service operations for 100+ brands since 2015. While we offer full service live chat and customer service solutions, we also support leadership teams to overcome challenges and pursue new opportunities through consulting projects.