During quarantine, my 12-year-old daughter decided she wanted to start her own business making lip gloss and lip scrub and selling those products online.
Of course her business-owning entrepreneur parents encouraged her to go for it, and Buzzy Bees was born.
She’s already loving the entrepreneur life, and she absolutely lights up every time she gets a sale. I know that feeling.
She recently asked her dad (me) for help increasing her revenue, and I gave her a simple formula that works for anything from Buzzy Bees lip gloss to short term rentals—and everything in between.
Who doesn’t want their business to earn more money, right? If you’d like your STR business to earn more money, you’re welcome to learn along with Buzzy Bees.
The basic equation is this:
Income - expenses = GP (gross profit)
And here’s how you increase that income:
L x C x M x F = GP
Let’s break down this formula letter by letter.
I asked my daughter how much money her new business has brought in so far. She said $205 spread out over 8 orders—3 orders of 1 item, 2 orders of 2 items, and 1 order each of 3, 4, and 5 items.
Her average order is $25.62.
Her ultimate goal is to create more of those bigger orders. That’s everyone’s goal, right? Bigger sales and more of them. So, how does she get that done?
L = Leads.
If someone goes to the Buzzy Bees website right now and leaves without making a purchase, she currently has nothing set in place to turn them into a lead.
Do you? If people come to your site or view your page, what do you have set up that turns them from a visitor into a lead? How do you get a potential customer to take a step instead of just taking a look?
My daughter suggested a pop-up for email marketing. Great idea. She said she could pay for an ad to get more people to her site or create content on TikTok.
(Side note: If you don’t know about TikTok, you might want to find out and jump on board. It’s the hottest thing on the internet right now with the younger crowd.)
C = Customers.
How do you turn leads into customers? Let’s say someone goes to your site, fills in some basic info, and now you have their name and email, but they haven’t purchased.
Buzzy Bees has a feature called “abandoned checkout” that will email the person and ask them to come back if they left items in their cart without buying them.
My daughter and I discussed promotions and other things that might interest people. You really can try anything here, like: “Hey, it’s my sister’s birthday! 5% off!”
I suggested she do a TikTok video or a tutorial on how to use her products. (She laughed at me, because she thinks it’s obvious how to use her products, but it’s not to me!)
What kinds of videos could you put on your page to turn leads into customers?
M = Margin.
Obviously, you want to raise the average amount of each sale. Right now her average is around $25. How can she get them to spend MORE?
She could offer an incentive. If you spend x amount of dollars, you get free shipping. Or buy four items, get one free. You could suggest smaller items that pair well with more expensive items.
How can you translate this to the STR world? Get creative!
F = Frequency.
How often are your customers coming back? How can you get them to come back to your store a second, third, fourth time?
Buzzy Bees has a brilliant plan for this. They have their own currency. For every dollar you spend on the site, you get 10 Buzzy Coins. What’s a Buzzy Coin good for? I have no idea, but apparently the younger generation is really into this kind of reward system.
And they aren’t the only ones. How many of us have a Starbucks Rewards card? Or any number of similar cards for restaurants, gas stations, department stores, grocery stores? Right?
Those loyalty cards keep us coming back.
How could you set up a rewards system for your customers so they’ll stick with you every time they need a short term rental?
A newsletter is another great way to remind your customers that you’re there and invite them back. Regular content from you straight into people’s inboxes is a great way to keep your STR business in the forefront of their minds.
So, in summary, you want to turn people into leads (get them in your database), turn leads into customers (get them to buy), increase their margin (get them to buy even more), and increase their frequency (get them to come back).
If you do all those things simultaneously, and do them well, your revenue will grow exponentially. I guarantee it.