Regardless of what your product or service is, there are only three ways to grow your business, i.e., increase revenues and improve profitability. That’s it. All paths to growth are a variation on one of these themes.
Once you have grasped this idea, your marketing will become more focused, more organized and more powerful. The three ways to grow your business are:
- Increase the number of customers
- Increase the average size of the sale per customer
- Increase the frequency of purchase
Let’s look at each one in more detail:
1) Increase the number of customers
There’s no denying that customers are very important to any business. It is imperative that you keep a steady stream of customers coming in to your establishment, or taking advantage of your service. They’re out there; you just have to find them. Once you identify them as prospects (leads), you must help them believe in the uniqueness of your product or service. When they believe, then you’ll have a customer. Here are some ideas on how to turn leads into customers:
- Increase the number of referrals: Getting new customers through referrals is one of the most cost-effective methods there is for growing a business.
- Establish joint ventures: Find companies similar to yours that have already spent considerable time, effort and money establishing and building relationships with their customers.
- Select marketing media that can deliver your message to your target market in a cost-effective way.
- Increase your conversion: Increase the conversion ratio of prospects into paying customers.
- Reduce customer loss: Reduce customer defections – don’t let existing customers slip away to do business with the competition.
2) Increase the average size of the sale per customer
Once you have got the customer in the door or in your database, you want them to spend more money, if it is in their best interest to do so. You can do this by raising prices, up-selling, packaging items/services as attractive solutions or expanding your product line.
Always keep in mind that it can cost a fortune to acquire a new customer. However, once you have the customer, you must maximize your sales to them over the life of your business relationship. Here’s how you can do it:
- Raise your prices: Customers are often willing to pay much higher prices than you expect for something. Try raising prices in small increments.
- Up-sell and cross-sell: Don’t be afraid to sell a customer more than what she wants, if you believe she can benefit more from the next level product.
- Package different products or services together: Different people want different things, but everyone loves a “package” deal.
3) Increase the frequency of purchase
The third way to grow your business is to increase the frequency of purchase. A prior purchase (and being satisfied with that purchase) is more likely to bring a customer back. Reselling someone is far less expensive than selling to someone new. And with trust comes more purchasing.
Optimal profits can be earned when you create a structured program that welcomes these folks to purchase more products and services from you.
So keep your customers coming back to you again and again. Here are a few ways you can do that:
- Thank you cards/letters: Everyone likes to receive thank you cards or letters. Frequent communication with your customers also creates expectations that they will hear from you. This can be used to your advantage as well.
- Make new offers: They may not buy every time you promote something, but they will continually “keep you in mind.” Staying in touch with your customers has proven to be an effective way to retain them.
- Customer clubs/loyalty programs: Rewarding customers for frequent purchases is a fast, easy and low cost way to retain customer loyalty.
- “By invitation only” events: Any opportunity you can create for your customers to feel more “connected” to your business will pay dividends down the road.
- Reactivate old customers: Inevitably some customers are going to stop doing business with you. Some may get busy with work or the kids’ sports. They may become ill for a few months. Or they may just forget about you. Herein lies a gold-mine of opportunity.
Becoming an astute marketer is a process that will take time and money to master. Learning and implementing this one skill will ensure a steady flow of new customers to your door – a very necessary ingredient for a healthy cash flow and continued prosperity of your business.
For more on this topic, please check out my book “Secrets of Small Business Success in the San Francisco Bay Area“.