Boost. Revenue. Are there any two sweeter words to a business owner?!
About now, you’ve probably start thinking about what kind of year your business will have in 2014. Should I increase my marketing budget? Offer additional products online? Change my in-store displays?
In many cases, there are no absolute answers. But despite the variables you face every day, there are actually concrete actions you can take to increase your sales and profits. We came across artist, entrepreneur and direct marketing expert Charles George, who says there are only three ways to increase your revenue and profit. George’s three broad principles are based on simplicity and common sense, which we love! We all get caught up in more complicated thinking. But revisiting some fundamentals will help you lay a sound foundation for next year.
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Increase the number of your customers.
So who isn’t constantly trying to build their customer base? But, George says, for established businesses, this is the least effective of the three strategies—and the most expensive. And here’s a sobering statistic: Acquiring new customers can cost up to eight times that of retaining current ones! The most efficient way to get new customers is motivating current customers with incentives to make referrals.
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Increase frequency of purchase.
What if you could motivate customers who buy from you just twice a year now to purchase four times? Boom! Your income is doubled. Getting new customers to make additional purchases—quickly—increases the chances they’ll be loyal, long-term customers. Doing this means staying in contact with them, through emails, direct mail, phone calls—whatever—and by making sure you’re delivering something of value with every contact.
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Increase transaction size.
This doesn’t even have to be a big increase to make a big difference. If customers’ average spend is $100, can you help boost that to $125? George points out that once customers have had a positive experience, they’ll be less price sensitive and will spend more freely.
One fairly easy and effective tactic is bundling products or services. Maybe you pair a good seller with something that’s not moving as well. The hot seller obviously leads the sale, which increases your revenue, gives the purchaser two products for a lower price than they would have been individually, and helps reduce your inventory.
Executive educator and Fortune Magazine contributor Verne Harnish also offers advice on boosting your company’s revenue. Two of Harnish’s tips round out our list of five ways to raise your revenue:
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Gather daily intel.
Harnish talks about a field sales team, but we’ve adapted this to “all your employees”—the eyes and ears of your business. They’re interacting daily with customers, vendors and others and consequently, have valuable information to share. Check in with them regularly for a data download and to solve any issues they’re having. The benefits of making this a disciplined practice will flow to your bottom line.
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Raise your prices.
Despite rising costs everywhere, many business owners are reluctant to raise their own prices, mostly for fear of losing customers. But those who’ve done it say that, although they lost some customers, they tended to be among the least unprofitable. Without them, these businesses found they could focus all their efforts on their most profitable customers, along with promising prospects.
Image courtesy of Stuart Miles / FreeDigitalPhotos.net
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