The 3, and Only 3, Ways to Increase Revenue
Every business, no matter the size or industry, has the ultimate goal to grow its revenue. The challenge of attracting, selling to, and retaining customers can be one of the most challenging tasks in a company. Even when there is a steady market of customers coming to your door, there will be a day when that stream begins to dry up. Be it changes in the market, competition, innovation, or regulation, there will be an eventual decrease in sales unless there are strategies in place to fuel new revenue.
There are many strategies to increase gross sales. What is interesting however, is that all strategies fall into one of three simple categories:
- Get more customers
- Sell more to each customer
- Raise prices
While these may sound simple, each strategy requires thoughtful execution. Let’s break them down and explore how you can apply them to your business.
Get More Customers
The focus here is twofold: effective marketing and a well-defined sales process.
Marketing: Getting the attention of the right customer
Marketing begins with identifying your perfect customer. Simply stating that anyone with a heartbeat is a potential customer results in a thin message. Meaning, your perfect customer will probably ignore it.
It may seem that targeting a marketing message to a specific customer will limit your audience. It’s very tempting to cast a wide net, to get as many prospective customers as possible. Yet focusing on a specific customer, their needs, concerns, fears, and touching on the emotional triggers to get their attention has proven to be effective in attracting the perfect customer. And better yet, they are open to learning more about your product or service. These are the customers who are ready to buy today, or in the near future.
Knowing who is your perfect customer helps define a specific message that:
- Identifies a problem they have and don’t want,
- Offers a solution they want and do not have,
- Educates them on a decision they are struggling to make, and
- Provides an offer that seems to be obvious to them.
Your ideal customer is well aligned with the image of your company, your brand. They respect your values and can easily communicate with you. They are part of your tribe, and you, one of theirs. Knowing the customer, what they care about, where they buy, how they buy, will lead you to the most effective marketing channels where they can find you.
A strong marketing strategy doesn’t just generate leads. It establishes your brand, your identity to the marketplace. It positions you as being the authority for the solution they need today.
Sales: Converting curiosity into revenue
Once someone shows interest, your sales process takes over. This is where many businesses drop the ball.
A great sales process:
- Builds trust: Through transparency, responsiveness, and listening
- Educates: Helps the customer understand how your product solves their problem
- Engages with simplicity: Makes it easy for the customer to say yes
This last point is important to understand. A confused customer will not buy. Your offering must be simple and obvious to the customer. Putting the customer through a long process or overloading them with a plethora of options will turn them away. They have a need. They want a solution. And they want it to be comfortable in knowing they made the right decision.
Sell More to Each Customer
Whether it is a new customer or your existing customer base, look for ways to sell additional products and services related to the primary offering. There are many strategies to sell more to a customer. Some to note are upselling, cross-selling, bundling, and getting existing customers to buy more often.
Upselling
When a customer is ready to buy, are there upgrades or accessories they can add to the purchase? Ask questions to find if they value a higher quality product for prestige, durability, or loyalty to a name brands.
Cross-selling
The classic example here can be summed with the question, “Do you want fries with that?” Meaning the customer has already made a choice. Is there another product or service that could compliment the choice already made?
Bundling
As with the cross-sell question offering fries with a sandwich, bundling would be to offer a value meal. Examples would be a gym offering personal training, or nutrition coaching. A software company might offer add-ons, integrations, or premium support. A bakery might offer catering, classes, or subscription boxes. The goal here is to create value to the customer, saving money by choosing a package rather than purchasing the products separately.
Sell to existing customers
Often overlooked is the opportunity to sell to existing customers. Ask yourself how you can you get them to come in more often. Or offer other products you know they need. Is there a way to entice them to buy more from you at the point of sale? This tactic is used heavily in retail stores. There are racks of additional products around the cash register tempting you to throw a couple of additional items in your cart.
Know your customer and their buying mentality. Do they want the lowest price? Or do they prefer top brands in everything they buy? Knowing this will help you decide on how to sell more to them. And it helps establish the trust and respect your customer expects when doing business with you.
Raising Prices
If you are like most business owners, the thought of raising prices concerns you. It most likely means you will lose customers. This is in conflict with the number one item on this list… that is, getting more customers.
Also, like other business owners, you know your costs are going up. It is natural and a necessity in a healthy economy to have inflation. Everyone wants to make more money this year than last. It is this motivating factor that drives the markets.
So the questions become, how much do we raise prices, and how many customers can we afford to lose? Based on your margins you need to calculate what percentage of customers you can lose and still break even with the price increase. It can be tricky, especially if you have an extensive product line. Focus on those products you sell the most, and those that generate the most revenue. Compare your pricing to your competitors.
You may feel the need to warn your customers there is a price increase coming. Rarely is this necessary. Instead, maintain a campaign of educating your customers on the value of your product and how you serve them. Focus on their needs, their concerns.
One thing you may find with a price increase is the first customers to leave are those that are not an ideal fit for your business. Usually, the first to go are the ones who base their buying decision on price rather than value.
You also need to consider the impact on your business if you have a few larger customers you cannot afford to lose. For those, you may want to negotiate volume pricing, where prices are set based on an agreed volume of sales over the course of a year or less.
Accept that you will periodically need to raise prices. Know the cost of the products you sell. Calculate the markup percentage to create the margin you need to cover your administrative expenses and still make a profit. Establish an annual routine of reviewing your pricing and the impact you would expect it to have on your sales.
Now, What If?
What if you combined all three sales generating methods, more customers, sell more to each customer and raise prices?
You will find combining these ideas will have a compounding effect. They will build on each other. If you increased each one of the three by 5%, the result would be more than 15%. Take a few minutes and do the math yourself. Take your annual sales and multiply by 1.05. Take that figure and do it once again. And then do it again, for the third time.
You will quickly see that you have a few options when it comes to increasing the gross revenue in your company. To see more about how you can increase the cash flow generated, read our blog on cutting direct costs.
It comes down to these three concepts
Getting more customers is improving marketing and sales.
Selling more to each customer is having the right product offerings and making the buyer aware of them.
Raising prices is a factor of value, charging what you’re worth in terms of dependability, quality, service, and overall customer experience.
We are dedicated to your success! Contact us for help in creating solid, measurable results in your company.
