The first quarter is coming to an end, and I am sure that most of you have forgotten about the goals that you set back in January (i.e. New Year’s). So, now is the time to look at your quarterly financial reports and see if you are achieving your goals. Whether or not you are satisfied with your first quarter results, let’s take a look at ways to increase your laboratory sales and revenue.
In this article, I am going to give you some ideas and tips that are sure to increase your bottom line this year. Now, the catch is you have to do some work to make it happen; but, if you set goals and make it a priority to achieve them, you should be golden.
1. Build A Presence
Presence is important and should be a top priority! If you are not building awareness for your laboratory and its services, you are losing potential sales. When your laboratory services are needed, do people think of contacting you? If not, that’s a problem and it is time to fix it.
Presence brings awareness. If prospective customers do not know that you exist, they are not going to do business with you. To build awareness, start advertising. Put advertisements where your customers will see it. Industry journals and magazines are a great place to start. If your budget is small, try writing papers and getting them published. It’s free and builds awareness very effectively.
Another way to build awareness is to attend industry events and conferences like the NCSLi Workshop and Symposium. Better yet, get a booth and be an exhibitor. If your budget is small, be a presenter and give an informative presentation to a large group.
I also recommend that you attend events and conferences where your prospective customers will be. If competition is low, you can find a lot of new leads with very little effort.
Presence is the key to building brand recognition. If you are not going to do it, someone else will. To reap the rewards you need put in the effort and be consistently present!
2. Start Networking
Now that you are building a presence, it’s time to leverage the benefits of networking. Networking is important and can lead to many unforeseen opportunities. Ultimately, it could be the secret weapon to greatly increasing laboratory sales and revenue through word of mouth referrals.
Word of mouth referrals are the best way to gain valuable customers and increase revenue. If you are not sure, check out this article from the Harvard Business Review. According to the New York Times, 65% of new business comes from referrals, and a study by the Wharton School of Business found that the Lifetime Value of a new referral customer is 16% higher.
To start, get out there and meet people! Better yet, get to know people. For the best results, help others even if you do so for free. Don’t just help either, go out of your way (above and beyond expectations) to impress others. Trust me, you will be remembered and people will think of you when they need your service.
Also, it is important to work on your elevator pitch. Practice saying it and be ready to deliver it in 5 seconds or less! People do not have a lot of time, so you need to give them only the most important information. Tell people your name, the name of your laboratory, and what your laboratory does. If they want to know more, they will ask.
Networking is huge! I know it can be intimidating, but the rewards are limitless. Most of the people that you meet will have interests similar to yours. This will allow you to easily communicate with others without the awkward feeling. Who knows, you may make some new friends. In return, they may refer your business to their friends and customers that they may benefit from your laboratory’s services.
3. Create Partnerships
When you are networking and making connections, it is important to consider the potential of building relationships with other laboratories. Most likely, you have customers that need tests and calibrations that are outside the scope of your laboratory. This means that you have to subcontract or refer the work to another laboratory. Worst of all, you may lose these customers all together to a laboratory who will be a one-stop shop for the customer.
To end this cycle, try partnering with laboratories who can benefit from your services and vice versa. If you perform electrical tests and calibrations, try partnering with a laboratory who provides mechanical tests and calibrations. Together, your laboratories are stronger, can provide better customer service, and retain longer customer relationships.
Another benefit of partnering is the ability to support big contract jobs. I am sure that you have avoided bidding on contracts or large corporate accounts due to the scope of your services. With the right partner, this will no longer be a problem. So, partner up and go after bigger jobs!
4. Enhance Customer Service
Customer service will make or break your business. It is important to increasing revenue and retaining customers. Great customer service will carry you far while terrible customer service will lead you to failure no matter how great your laboratory is.
Did you know that it cost 6 to 7 times more to get new customers verses retaining your current clients? According to a study by Bain & Co, customers are 4 times more likely to buy from a competitor if the problem is service related vs. price.
In another study by Nielsen-McKinsey, 33% of consumers would recommend a brand that provides a quick but ineffective response, while only 17% of consumers would recommend a brand that provides a slow but effective solution. In the RightNow Customer Experience Impact Report, 89% of consumers have stopped doing business with a company after experiencing poor customer service.
So, what kind of experience do you provide your customers? Take a moment and think about it. If you have eaten at expensive restaurants with great food and lousy service, then you know that it really makes you angry and frustrated to spend a lot of money for a terrible experience. Most likely, you will not go back to that restaurant; and, if you do, it won’t be anytime soon.
The lesson here is customer service and speed are more important than price. Train your personnel to provide your customers with a great experience. If you do not, they will most likely take their business elsewhere.
5. Follow Up On Dead Quotes
How many quotes do you close a month? If you do not know your conversion rate, that is a problem. You could be losing a ton of sales and not even know it!
When I first started tracking my laboratory’s conversion rate, we were only closing 55% of quotes. I used to ask myself, “Why weren’t we closing 100%? “ Additionally, I wondered, “How much money are we losing a month,” and “Why are we not converting more sales?”
So, I made it a goal to increase my conversion rate to 80%. The result, 45% in increased revenue! Without having to do anything but close the deal, we were able to significantly increase laboratory sales and revenue.
For example, say you receive $100,000 in quote requests for service each month and you only convert 55% or $55,000. By increasing your conversion rate to 80%, your sales will increase to $80,000. The result is a gain of $35,000 a month or a 45% increase in laboratory sales which will generate $420,000 in additional annual revenue.
6. Deliver Quotes Within 24 Hours
How quickly can your laboratory generate a quote and deliver it? If you do not know, then that is a problem! Slow responses to customer inquiries could be killing your conversion rate and sales.
Put yourself in your customer’s shoes for a second. Do you get frustrated when you request a quote from a company and they do not get back to you for a few days or even a week? If you do, then your customers will too when you do the same thing to them. The result, they take their business elsewhere.
So, monitor and track the time it takes to respond to customer quote inquiries and aim to respond to 100% of requests within 24 hours. Do so and watch your conversion rate and revenue increase.
7. Improve Turnaround Time
How long does it take your laboratory to process customer equipment? If your laboratory takes 14 days or longer to process calibrations, you need to evaluate your process.
From my experience, customers who receive faster turnaround times typically become repeat customers. Additionally, they spend more money on calibration services and have better retention rates. Furthermore, they send more work to the laboratory and are more likely to refer your calibration services.
In 2012, I reduced my laboratories turnaround time from 15 to 5 business days. The time clock started the moment the equipment was received until it was sent to the shipping department, which can sometimes add an additional day. After 12 months of consistently maintaining an average turnaround time of 5 days (this did not include equipment that required repairs, adjustments, etc.), we observed a 27% increase in annual revenue and a 42% increase in new customers. Furthermore, our customer complaints were reduced by more than 60%.
If you still think turnaround time does not matter, ask your customers.
8. Reduce Shipping Time
No matter how fast your turnaround time is, you still have to worry about time in transit. Slow shipping services can impact your customer’s perception of overall turnaround time and lead to angry customers.
When your laboratory ships equipment that is geographically close to your location, it may only take UPS or FEDEX a day or two to ship packages to your customer by ground. However, when you ship items across the country, it can take 4 to 6 days to ship items to the customer. Count that time in both directions and you can end up with angry customers who will look for calibration services elsewhere.
To resolve this is issue, I recommend contacting customers to discuss their needs and expectations. Next, offer several shipping options that will accommodate their needs. Of course there will be additional fees, but some customers will not care and will be happy to pay them.
Another option is you can build the additional shipping costs into the price for calibration service. Just be sure to inform the customer of what your service provides. Market the service appropriately and sell the customer on the benefits (not the features).
9. Improve Efficiency
I have been saving the best for last! Let’s talk about efficiency; my secret weapon to increasing laboratory sales and revenue. By making your organization more efficient, you are able to accomplish more work in less time with fewer resources. In exchange, you will greatly increase revenue and productivity without impacting quality.
Before you say that it is not possible, keep reading. I am going tell you the secret to unlocking huge gains in revenue! First, take a look at your entire process from input to output and map it out. Now, test your process and track the performance of each stage. If everything runs 100% smoothly, then try overloading each stage independently and look for dependencies, redundancies, and bottlenecks.
When you find the weaknesses of your process, formulate solutions that will improve the overall performance. Use A/B testing (i.e. test each change independently) to see which change has the largest improvement. Continue to test your process until you have optimized it for maximum throughput.
When I began to evaluate my laboratory processes to reduce turnaround time, I liked using Kanban. It is a lean methodology developed by Toyota to improve and maintain production levels. By using this method, I was able to easily track performance and find bottlenecks. When we removed the bottlenecks, we increased throughput 200%. Not only did we improve turnaround time, but we were able to get work invoiced faster and improve our cash-flow.
The tips that I have provided here are not overly complex. With a little a bit of commitment toward improvement and setting goals, you can easily make a large financial impact without any sales or marketing. Now, I am not saying that sales and marketing are not important, because they are. Instead, I am saying that too often we blame external influences for our problems rather than focusing on solving internal issues.
So, give these tips a try and be sure contact me and let me know your results!