If you’re someone who has followed me for any amount of time you have heard me talk about the 3 ways to grow your business. There really is only 3 and if you can grow all 3 you can have an extremely profitable business. Businesses make the gigantic mistake of going after only one of them and it’s the most expensive one. In this post, I am going to cover the basics of each one. But if you follow this blog you will learn far more in-depth on how to master all 3. Mastering all 3 is what has some businesses thriving even in the worst economies.
This is the first thought that comes to a business owner’s mind when you ask how they can grow their business. Their brain tends to be stuck on more customers. This is also the most expensive way to grow your business. New customers can cost a fortune to market to.
Businesses will often make extremely poor decisions and buy into whatever sounds like it might work to attract these new customers. If panic sets in because times are slow, businesses will flush money down the toilet if they think it will bring in new customers. They get desperate and the potential customers see this. I once heard someone say “Never buy from a salesman who is out of breath.” Desperation doesn’t sell well.
There are of course many smart ways to get new customers and every business should be engaged in them. On this blog, you will find plenty of them. But, it is not the only way and should not be done in desperation.
Higher Transaction Totals per Customer
Another way to grow your business is to increase the transaction totals. Meaning, increase prices. Of course, it can be tough to just arbitrarily raise prices. You need to be able to show more value. You can do this with a UVP (Unique Value Proposition). Meaning that there is something unique about your business that would make people pay more for your product or service.
People will pay more when they see a higher value. Even just a better experience will be worth paying more for. While some restaurants are starving for business some of the most expensive steakhouses are packed nightly.
You can offer up-sells and cross–sells. Instead of selling one item at a time, offer an upgrade or a bundle that will increase the transaction size. Even if it means that you sell the items for less profit, combined it is a profit increase. If you sell an item individually for $10 profit but 2 items bundled are only $7.50 profit each. That’s a total of $15 profit in the transaction. A little better than the $10 profit for selling 1. If a 50% increase is only a “little” better.
More Frequent Transactions per Customer
One other way to grow your business is to increase the frequency that a customer buys from you. Once a customer makes a purchase most businesses completely ignore them. They do not get the customers info, do not follow up on the sale or invite them back again. Your current customers are the easiest to market to. They have already said “yes”.
Get them to come in more often and say “yes”. Send them offers, get them on a VIP Club. If you are a service business that customers need more than once, make sure you remind them. For instance, oil changes at a service shop. Carpet cleaners can remind customers of the recommended cleaning schedule.
Now imagine if you could increase each one by just 10%. Imagine what that would do to your overall profits. Instead of focusing all your efforts on new customers, work on all 3 areas.