What are effective ways to increase revenue in your business?
You work hard to move a new customer into your pipeline. You network. Maybe you pay for advertising. You work for links to your website.
Anything to get those precious people into your sales funnel.
Anything to make sales.
Anything to gain the opportunity to help your customer and help yourself in the process.
You want to increase revenue without increasing your expenses. There are many tips and tricks you can find online. However, they ultimately fall into one of these three categories. And, as you read through them, you’ll find multiple opportunities to increase revenue in your business.
Big doors swing on small hinges. When you understand these three principles you’ll realize you’ve only cracked open a very large door and have left a large amount of revenue sitting outside.
1. Increase Revenue With More New Customer Sales
Of the three ways to increase revenue, this is the most obvious solution and the one most businesses work to improve.
There are two ways you can increase new customer sales:
- Sell your stuff to more people, or
- Convert more existing prospect to buy your stuff.
These seem the same but they’re two slightly different details. And, they both revolve around your conversion rates.
So, what are your conversion rates? How many people buy who visit your website, walk through your doors, receive your marketing, etc.? If you don’t know your conversion rates then you need to start measuring.
In order to sell your stuff to more people you can increase the traffic to your website or store. This involves more advertising, networking, etc. You’re working around your existing conversion rate and playing the numbers game in sales.
For example, if you have 100 visitors and 5 buy something then your conversion rate is 5%. If you want to double your sales based on this, you’ll need 200 visitors to make 10 sales. Fairly straight forward and simple right?
Your other option is to increase your conversion rate. If you don’t want to work on getting more visitors you can work on increasing your conversion rate from 5% to 10% so you can sell those 10 items.
Increasing conversion rates has become a hot topic recently because of the big impact it can have to increase revenue. For example, if you’re currently converting 50% of your visitors and you increase that to 60% it’s not a 10% increase in revenue. That’s a 20% increase in revenue.
That’s a huge impact!
It’s important you’re measuring these numbers so you can deeply understand the dramatic difference any small changes will make on your bottom line.
2. Increase Your Average Sale Per Customer
Now that you’ve started to convert more visitors into sales, you want to make sure you’re able to get as much money out of each customer as they’re willing to spend.
In most small businesses the sales process is some random series of events. There’s no systematic way to upsell or bundle products and maximize the revenue per customer. Many big chains do it but the mom and pop, main street business, or blogger hasn’t really embraced this. Often there’s the sense of community and a fear of offending your customer (you really won’t but it’s a common fear).
In my first insurance agency, I remember looking at our reports that showed the average auto insurance policy premium of our agency compared with others in our area. Our average premium was $770 for a six month policy and the rest of our district was only $701. We were 10% more per customer.
This additional revenue meant I had to service 10% fewer customers to earn the same income as the other agents. This led to lower staff expenses, time spent on policy changes, etc. It also meant our customers had better protection then the average agent because we were offering more and they were buying. We had a systematic process each agent went through when discussing coverage and options to yield this additional income.
It was critical. It was required!
When you go to almost any fast food franchise you get an upsell via two different processes.
The first thing they do is bundle products together. You probably only want a hamburger and drink. But, for an additional 20 cents you can bundle the fries into your meal. This would save you 90 cents if you bought them separately (it’s on sale so I have to upgrade! Yes?).
Then, after you place your order they ask you if you want to “go large” or “super size.” This is only an additional 24 cents. So, why not take the large? The Illusion of Value has been created and they’ve extracted the additional revenue out of your wallet.
Search through what you offer. What can you offer after the initial sale? What can you bundle? What can you add to existing products/services and create a premium offer (ex. a silver, gold, and platinum level)?
You may not think what you sell could be bundled however, you’ll be surprised how you can bundle many random things and, because it’s a bundled “savings,” you will sell more stuff.
You may not want to do this because you don’t want to offer a discount on a bundled item. You’re making a big mistake. If you weren’t making the additional sale in the first place this discount is found money. Naturally, you want to be profitable so make the numbers work and think…
Where can you create the illusion of value?
3. Increase The Frequency Of Customer Purchases
What are you doing to get customers to buy your products more frequently? Do you mail or email your customer often enough?
I hear you thinking to yourself:
“I don’t want to spam my list!”
“I don’t want to pester my customer and prospect list, they may unsubscribe or tell me to stop mailing.”
Okay. Good points.
How about this?
What if you make extra sales from those that stick around? What if you make a lot of extra sales from those that stick around? Would it be worth losing the complaining part of your list if you create a few more happy customers? (I hope you said “Yes!”)
Of the three ways to increase revenue in your business I’ve found this to be the most neglected. I believe it’s mainly because of the fear of pushing too hard or asking too often.
Naturally, you want to provide value so you aren’t seen as a greedy business person. You can offer discounts, coupons, frequent buyer programs, etc. to get customers to come back more often. Repetition of your offer will also increase curiosity and desire in your product. A discount can give them that extra nudge to move ahead and invest in your offer.
You can think of many creative ways to get people to buy more frequently. I love an example in the book Priceless about a movie theater that gave customers a Loyalty Card. The first visit to the theater each month was regular price. Each visit after the first the customer paid less and less. The number of tickets sold to card holders went up 22%. They also earned additional revenue from concessions. This was a win/win for everyone involved.
If you only offer one or two products or services, how can you increase buyer frequency?
Find similar businesses that support what you do and offer their products or services to your customers for commission. If you’re selling online, look into affiliate marketing. There are many missed opportunities for any business to increase their revenue with the products and services of another’s when you begin to search around.
There Are Only 3 Ways To Increase Revenue, Where Will You Start?
If you don’t have any statistics for your current conversion rates, average sale per customer, or the frequency of customer purchases you want to start measuring where you’re at now! Then, as you begin to really understand those numbers, dive into each of these three ways to increase revenue.
As I said at the beginning, big doors swing on small hinges. As you work on each of these areas, you’ll realize the enormous door of opportunity has only been cracked open and you’ll be able to swing it wide open.