What do I know about Yoga?
More than you might think. In fact, back when I was at University, I nearly became a Yoga instructor. Try not to imagine me in spandex, though. It won’t help your concentration and what I’m about to share is going to be of huge value to your business, whatever your chosen niche.
You may, or may not, have heard me talking before about the “7 Levers”. For the uninitiated, this is a strategy whereby you identify the 7 areas of your business that are related to your profits and improve, or “pull” on them, to increase their performance.
The idea is to increase each of the 7 levers by 10% and, if you do so, by a strange quirk of mathematics your profits will increase, not by 70%, but by 94.8%. Sounds odd, I know, and if you want to see the numbers in action then I encourage you to check out the http://www.7leverscalculator.com/, but what I really love about this strategy is that it can be applied to virtually ANY business in ANY niche.
The terminology may initially make it seem as if it’s only applicable to online businesses, but this simply isn’t the case. All too often people hear about the 7 Levers and then quickly assume that it won’t work for their business when in fact it is applicable to every business owner.
It’s simply a case of understanding how to interpret the 7 Levers through your business and thinking laterally.
So, as an example, I’m going to apply the 7 Levers to an imaginary Yoga business. If you’re a Yoga instructor, then this is going to explode your profits. If your business is in a different industry, then study carefully the way in which the 7 Levers are applied in this case and you’ll soon figure out how easy it is to apply this process to your own niche.
LEVER ONE: TRAFFIC
If you have an offline business, then “traffic” refers to the people that see or hear about your business. My imaginary yoga business, like most, is serving a local community so pulling on this lever requires finding new and effective methods of raising my profile.
Flyers and business cards may seem old-fashioned, but this is still highly effective for a local business. I’m going to figure out the places where my target audience goes to shop or enjoy recreation and establish a presence.
Even though my business is local I can still increase my traffic by advertising online. Marking my studio on Google Maps is a good start and I’ll also set up an Adwords campaign that only targets local searches.
For good measure, I’ll also add my studio to some online directories. I’m not talking about spammy directories that solely exist for SEO purposes. I’m talking about relevant directories that people actually use to find local service providers. www.mindbodygreen.com is a good example.
I’ll probably want to set up a website eventually, but you’ll notice that none of the above requires this. Just by focusing on the above steps, I can ramp up my traffic by at least 10% in a very short space of time.
LEVER TWO: OPT-INS
The opt-ins in this case are the people that learn about my studio and then make some sort of contact. Maybe a phone call or preferably a visit to the studio to find out more about my classes.
I can encourage this by creating a nice introductory offer – perhaps a free trial class. An extra person in a class doesn’t cost me anything extra and allows the interested party the opportunity to see how everything works.
But I’m going to go an extra step and put on a special, free introductory class twice a month. That way I’ll know virtually everyone attending is a beginner and I can tailor my class accordingly.
Once that’s running nicely, I’ll step things up by aligning myself with local health food and sporting equipment stores, offering them a commission when they recommend my studio to someone who eventually becomes a member.
LEVER THREE: CONVERSIONS
Running free trial classes is a good opportunity to turn interested people into regular customers, but there are still lots more ways to improve my conversion rate.
The most obvious is to improve my selling skills, talking to each new visitor in person and making them feel welcome and keen to come back for a second lesson. The icing on the cake would be a one-time discount on the next few classes, but only if they sign up that same evening.
LEVER FOUR: ITEMS PER SALE
The first three levers are quite straightforward, but this is one of the levers where people often get stuck. Most people are going to attend one yoga class per week; is it really realistic to try and get people to start coming more frequently?
This is where the lateral thinking comes in. Instead of trying to get my customers to attend more classes, instead I concentrate on finding different but related items to sell. I’m going to go to Alibaba.com and purchase, wholesale, some nice Yoga mats, extra-large water bottles, and health supplements. At the end of each class, I’ll remind all my members that there are items available to purchase.
The profit margins on these items will be pretty good, but I’m going to do even better with the meditation CD I’m going to create, consisting of a voiceover on top of royalty-free music.
Although a 10% bump is the target, I’m fully expecting to sail past this because there are so many different ways to pull on this lever.
LEVER FIVE: AVERAGE ITEM VALUE
A 10% increase in this lever means increasing my prices by 10%. Carrying this out is easy; making it appear justifiable to my customers is a little harder.
To charge more than the competition without losing business means setting myself apart and positioning myself as a “premium” yoga studio. I’m going to buy some high-quality Yoga mats for my clients to use so they don’t need to bring their own and I’m going to provide free, healthy drinks and snacks.
To reinforce my appearance as a superior Yoga instructor, I’m also going to take additional training courses and ensure my certificates are framed and visible to all.
LEVER SIX: TRANSACTIONS PER CUSTOMER
I’m sensible enough to keep careful track of every customer and how long they’ve been coming so I know, on average, how often my clients attend. It turns out, on average, each customer attends 8 classes per quarter so I introduce a loyalty card that provides them with 2 free classes if they attend 10 classes in a three-month period.
I pull on this lever a little harder by offering discounts for those who setup a subscription payment or purchase sessions in blocks of 12.
LEVER SEVEN: PROFIT MARGIN
This is probably the hardest lever for my Yoga business to pull because improving profit margins is usually accomplished by cutting costs.
I research online wholesalers and manage to find some slightly cheaper suppliers for the extras that I sell, and I increase the length of my lease on the studio in exchange for a discount. In the end, I only manage a 5% increase, but since I’ve increased all of the other six levers by more than the target of 10% I’m still coming out ahead and my profits have doubled in the last six months.
So there we have it; a simple blueprint that Yoga instructors can use to drive up their profits. There are so many possibilities with this business that I’m almost tempted to get into the industry.
Not a Yoga instructor? No problem. Focus, not on the specific ideas, but on the principles and you should have no problem coming up with your own ideas that will work for your business.
Why not aim to work on just one lever every month? If you can achieve an average increase of just over 10% on each lever, then you’ll have doubled your profits in just seven months.
And then, of course, there’s nothing to stop you from pulling on some of those levers for a second time…
Pete Williams is an award-winning entrepreneur, author, and marketer from Melbourne, Australia. At the young age of 21, he sold the Melbourne Cricket Ground (Australia’s Yankee Stadium) for under $500! He’s made the pages of numerous media publications and been dubbed as “Australia’s Richard Branson” in media publications all over the continent.
Pete is the founder of several companies including On Hold Advertising, Infiniti Telecommunications, Simply Headsets, and Preneur Group. He has been named the Global Runner-Up in the JCI Creative Young Entrepreneur Awards for 2009, Southern Region Finalist in the Ernst & Young 2010 Entrepreneur of the Year, and a member of Smart Companies: Top 30 Under 30.
Pete also has a popular blog that you can check out here.
Pete is also an international speaker, marketing consultant, and a faculty member of one of the world’s largest Internet marketing training academies, the Thirty Day Challenge.
* Published as Issue #230 on January 15, 2014