Maximizing your business revenue
by Peter Anderson
BrokeSucks.com Editor
Another title for this article could be "Making the Most out of what you Have." Why? Because I'm not going to talk about where to spend thousands of dollars for a chance to increase your sells. Rather, I am going to tell you how small changes can have dramatic leverage on your profits.
I look at a business as a machine. Just like a vehicle, some can be race cars, others can be bulldozers. By tweaking a car you can make it turn sharper, or accelerate faster. But those tweaks cost money! What if you could leverage your existing assets to maximize your business's earnings?
As I did with the "How will you maximize your revenues" section of "How to Start Your Own Business" I am going to go through the business process step by step, starting with aquiring customers
More leads -- more sales
In order to make a sale a potential customer first needs to know you even exist! This step alone slows a business's growth down by years. Arguably, much of the entire product life cycle is a result of where on the curve awareness of the product is.
Good news, our age of technology can dramatically speed up this process when used properly.
Lets start with the web. Do early adopters know about your product or service? If you have a high profit margin item it can be painless to send free samples to bloggers in your market.
Look for big web sites with newsletter or communities. Offer to give away free stuff to their readers. Sponsoring a contest is a very low cost way to capture an extremely large, and targeted audience for a fraction of the cost of buying advertising.
Another way to maximize leads, online and offline, is to partner with related, but not competing businesses.
If you are a golf ball manufacturer talk to someone who makes golf clubs. You could offer to put their clubs in your catalog if they put your balls in their's. Or you cut a deal to private label your balls with their brand. The variations to this approach are endless.
Here is another example. Lets say you are a logo designer. You could find a web site designer and tell them for every customer they send you, you'll pay them $150. They may even agree to pay you to send them customers as well. By paying for performance you are never put in to a position to lose money. Additionally, it incentivizes the partner to push a little bit for the sale.
If instead you pay a partner $500 to put your sign up in their shop, there is no incentive for them to mention you, much less say anything good about your business.
Increasing Revenue per customer/client
Are you offering your customer everything they are willing to by? There are so many different ways to can increase your revenue per customer, I can hardly begin to touch on this subject.
Upselling and cross-selling are two very powerful techniques that can increase your average sale size.
When you upsell a customer it means you offer them a bigger or better version of what they want to buy. McDonalds asks, "would you like to super-size that?" A car salesman may try to push you to buy the V8 instead of the V6 model.
Cross-selling is a little different. Rather than selling a bigger and better version of the same product/service, you sell them something related. If you are buying a box of cigars perhaps you need a humidor, cutter, and lighter? Back to the car dealership, they try to sell you a maintance package.
Simply by utilizing upselling and cross-selling you can see huge changes to your business's bottom line without increasing your customer base. Increase your customer base and do this and you could see an unbelievable boost in profits.
Getting your customers to buy more often
Tanning salons don't just charge money every time a customer uses their service -- they put them on a monthly plan that automatically bills to their credit card. This dramatically increases customer loyalty and revenue! After all why go somewhere else if you are already paying for the service?
Recuring billing is a very powerful tool. It will also give you a very blatent look at your business's health. You may have heard large comapnies talk about churn rates. Its great that your business adds 2,000 new customers a month. Not so pretty when you are losing 2,500 at the same pace.
Gillette gives away free razors, and then charges an arm and a leg for the blades. Mr. Clean AutoDry Car Wash System requires users to purchase not only more soap but also new water filters.
Not all products can easily be molded in to this catagory, but it can be very beneficial to your bottom line if your customer is not just a one timer. In fact, the more often they must buy from you the better!
There are two keys here. First, structure your business model around bringing the same customers back again and again. Second, make purchasing your product or service as painless as possible. Even better -- make it automatic.
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