Before the coronavirus mayhem, we held a successful event named 7 Ways to Grow your Business. The result of each of the 7 ways is; increased profit. Profit is:
Profit = Sales – Direct costs – Overheads
You have four choices right now:
- Do Nothing
- Take Normal Amounts of Action
- Take Massive Amounts of Action
We would like to think during these uncertain times, you are ready to take MASSIVE amounts of action!
So, the 7 ways to grow your business are:
- Increase customer retention rate
- Generate more leads
- Increase conversion rate
- Increase transaction frequency
- Increase transaction value
- Reduce direct costs
- Reduce overheads / wastes.
Thinking of the profit formula, steps 1 to 5 are all about increasing sales. The biggest part of increasing profit is generating a higher sales figure. Reducing costs / wastes in steps 6 and 7 will increase efficiency and a small increase in profit but it isn’t going to have an impact as great as sales would.
What steps can you take in your business to increase customer retention? Do you have a loyalty scheme for example where people will keep coming back to gain something?
How can you generate more leads? The most effective way of generating leads is word of mouth in most industries. Do you have a scheme to promote this either offering an incentive where people are referred or ask people to leave reviews on social media?
Conversion rate is the level of leads that you turn into paying customers. It is a good idea to start measuring this if you don’t currently do so. What can you do to increase this in your business? Tailor your marketing to the desired market? For example, you can boost posts on social media and select the exact demographic you want to target. Let’s say for example you sell handkerchiefs. You might think you want to target men aged 50+ as they are the end users, however they are not the ones who usually buy them. How about changing it to target women aged 40+ in your local area. I know my partner buys all the gifts in our house and targeting that age range are likely to target people with parents who are the most likely to use them and purchase as presents along with socks.
How can you increase transaction frequency in your business? Offer 4 for the price of 3 is one suggestion. You might just have a customer that buys 2 of everything each time but this is going to make spending that extra money more appealing. Amazon have an option to subscribe and save. Basically, asking you to buy items more frequently at a slightly lower cost.
Increase transaction value. What steps can you take to encourage people to buy more from you. Not just charging more but encouraging people to spend more with you. I was recently on a website buying batteries and a pop-up appeared at the checkout which read; ‘Do you want one of our branded battery cases for only £1.60?’ Really, a battery case, I didn’t even know they existed; however, I felt my finger going towards ‘add to basket’ just out of curiosity and the fact it was cheap enough. For people who shop in a supermarket, have you noticed they have sweets near the checkout? Perfectly positioned at eye level for children to see and ask!
Reducing direct costs and wastes. I have grouped these together as I think this process should be done at the same time. We have a video on reducing wastes here https://youtu.be/E-gRo1Dm7nw
I am not going to go into detail as the other content on this is far more valuable but in summary, reducing costs is a bigger process than not spending money. In fact, you may need to spend more on higher quality items to reduce the waste rate and save money overall!
My top tip before starting this is measure where you are currently at so you can see the value added and the improvements made in each area.
As always, we are here to help if you need to go through any of this.
Stay safe, stay positive and use this time wisely!