Conversely, think
about a strategy like 'cutting costs' - realistically that
won't grow your business unless you use the money you save
to promote your business. It may let you control your business
better and return greater profits, but it won't grow your
business.
1. Increase the number of customers (of the type you
want)
If you're like most business owners your primary focus will
be on the first way to grow your business - winning new customers.
You've probably often thought 'I need more leads', 'I've got
to get more inquiries', 'if I could just get the phone to
ring and more people to walk through the door we'd be doing
really well' and so you invest heavily in advertising for
instance. Often there are other ways to win increased sales
that don't cost nearly as much and usually those strategies
go untouched.
Focusing on this way to grow your business is often far more
expensive and the least leveraged. It costs up to 6 times
more to win a new customer than it does to have an existing
client do more work with you and that directly effects your
profit potential.
Davidson’s
Business Development Team, Inc. will work with you to find
other leveraged ways of winning new customers and show you
how to improve the advertising you are doing. And we'll make
sure you're winning the right type of customer - someone who's
'qualified' to buy from you!
We'll also work
with you on the 3 remaining ways to grow your business so
you're maximizing all of your opportunities rather than focusing
on just one way to grow.
2. Increase the transaction frequency
Increasing the 'transaction frequency' - or the number of
times someone deals with you is an important step to increasing
your profitability.
In fact, some scholars say this second way is the most important
of all. It's a fancy definition of loyalty, or customer retention,
which in and of itself is closely related to value.
Research has shown
that a 5% increase in retention (of the right customers) can
produce as much as a 125% increase in profit.
That's not to say
a $5,000 or $50,000 investment in marketing can produce a
change of 125% in profits. JUST a 5% change in RETENTION of
the right customers.
Staggering isn't
it? And, of course, you effect loyalty by delivering value
and by nurturing your customers. Davidson’s Business
Development Team, Inc. knows how to develop your customer
targeting and retention strategies.
3. To increase the average value of the sale
This is a fairly obvious strategy. However few businesses
realize its importance (in fact, they do the exact opposite).
There are two fundamental ways to increase the average sale.
First, by 'cross selling' or 'up-selling', both mean you encourage
the customer to buy more. Davidson’s Business Development
Team, Inc. can teach you how do to this in a systematic fashion
so it happens every time and adds value to the customer.
The second way
to increase the average sale is to raise your prices. When
you suggest "raise your prices" to the average business
person they think you're crazy. But when you sit with one
of our Business Development Specialists they'll guide you
through what's called "The Margin Chart". It shows
the direct relationship between 4 key variables in your business
- price, volume, fixed costs and variable costs and you'll
be amazed at the possibilities.
4. Increase the effectiveness of each process in your
business
The fourth way to grow your business is more of an all-encompassing
strategy than the other 3 ways. You see, increasing the effectiveness
of the way you do business is central to everything but so
few people work at it. When you think about it, a business
is nothing more than a group of people carrying out a variety
of processes - the quality of the processes defines and determines
the quality of the outcomes. Makes sense doesn't it?
So going back to the example earlier of a business owner needing
'more leads' we might discover that in fact, the business
doesn't need any more leads rather to convert more of the
ones they're already receiving! That's a sales 'process' that
needs improving.
Truth is that most people don't see their businesses as a series of processes.
By identifying your key process, documenting them to ensure
consistent delivery, and measuring their results, you will
be able to determine which processes should be refined for
better results.
