CONVENTIONAL BUSINESSES over simplify their definition of profit as the difference between sales and expenses. With this approach, there are only three variables that can be manoeuvred or improved to influence profitability. Businesses end up looking only at increasing sales or decreasing expenses to make more profit.
If you move away from this limiting view and break the sales variable into five separate components, they can be adapted individually to leverage profits.
5 ways to grow your business
The five ways to effectively grow your business are: getting more leads, converting those leads into customers, getting customers to make bigger purchases at higher price points, getting them to buy more often and getting more sales at higher profit margins. If you increase all of those factors by just 10%, you can give your bottom line a massive boost.
I have used five simple, proven (and low-cost) strategies that you can implement immediately to get more profit into your business. Most of them involve resources you probably already have or small "tweaks" to strategies you already use.
Find your bestselling product and increase the price by 10%. If you don't know what your strongest product is, now is the time to find out. Once you figure it out, boost the price on that item or service by 10%. It's a manageable size increase and is small enough that most people won't even notice.
Creating sales scripts for you, and particularly for your salespeople, can help boost your average rand sale – the average amount made per sale, estimated over the course of a year. Sales scripts help to frame your sales process, especially if you don't consider yourself a natural ‘salesperson’. A sales script will also help your salespeople initiate and build rapport, which leads to higher sales.
To increase your average number of transactions, create loyalty and referral programmes. However, just having a loyalty strategy doesn’t equate to instant success; to get the most out of a reward programme, it should be targeted at your highest-yield customers - loyal customers or clients who don't quibble over price. The first step is segmenting your client base and identifying who these people are. An effectively implemented rewards or referral programme is not just a tool that defaults to discounts or giveaways, but something that leads to measurable profit increases.
Guarantees go a long way in improving conversion rates, especially if none of your competitors have them. Guarantees are especially good for establishing long-term customer relationships. When developing a guarantee, start by identifying what makes your business or product unique. In other words, what is your unique selling proposition? Start by interviewing your top customers to ascertain what it is and then build your guarantee around that. It is important to get word out about the guarantees you offer, so advertising is essential to success. Guarantees also boost the number of referrals from existing clients and can increase leads.
Well done to Harry Welby-Cooke @ActionC_Africa who's made it as a 'Standard Bank Rising Star Awards' finalist.— RisingStarAwards (@RisingStarSA) July 18, 2014
Lead generation through advertising is the most costly profit-boosting strategy option, so start with low-cost ways you can track results before you start spending large amounts on an advertising campaign.
What's low cost? Something as simple as a direct-response print advert or well-placed online advertising. The key is to ensure you know who you are trying to reach and using the best medium to do so. Once you have that base, a compelling offer and good creative copy that is sales and response oriented will seal the deal.
Remember, you are looking for incremental increases to your bottom line. Small changes can make a big difference if you apply them in the right areas of your business.* Harry Welby-Cooke is a leading business and executive coach and South Africa’s master licensee for global franchise company ActionCOACH.
ActionCOACH founder Brad Sugars on six steps to a winning business.
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