Are you looking to add more revenue to your business? Most of us are at some point in the growth of our companies. When it comes down to it, adding more revenue to your business is a relatively simple concept. There are only 4 ways to do it and they apply to just about any business.
The first way to grow revenue is to increase the size of the transaction, which is the actual amount that a customer spends when they purchase from you. This commonly known as an “upsell” when you have the intention of purchasing a certain item and you wind up purchasing a more expensive item or additional products or services.
Anytime you go to a restaurant and are asked about coffee and dessert, are in the checkout line at the grocery store and are contemplating picking up a magazine or a candy bar, or on Amazon and the site suggests additional items or “bundles” you are witnessing a company attempting to increase the size of the purchase. They know that if they can systematically increase the average purchase per customer, it will have a major impact on their top line.
The second method of increasing revenue in your business is to increase the number of transactions made by each purchaser. This is essentially creating repeat customers who will buy from your or your company multiple times in one year or over the course of their lives.
This can be the same product or service when they need it again, or it could be additional products or services that you offer. Businesses use memberships, thank you cards, email marketing, subscription services, and loyalty programs to increase revenue in this way.
The third way to grow sales and revenue is to simply raise your prices on the products or services that you are already offering the marketplace. This is of course is the easiest to implement but also carries some risk. You have to make sure that you are delivering enough value to justify the increase and have to ask the question if the market will bear such a move.
You see many companies increase pricing slightly year to year and justify it due to cost of living. This becomes somewhat of a self-fulfilling prophecy because if everyone moves their pricing up in lock step then the cost of living definitely will definitely rise as a result!
The businesses that are most successful with this method tend to offer premium products or services as people often want the best that they can afford and there can be a certain cache to being priced at the top of the market. You just have to make sure that the quality matches the price point.
The last way to increase revenue in your business is to increase the number of clients or customers that you serve. It is crucially important to have systems in place that generate new customers or leads and it is the main difference between companies that thrive and those that struggle to survive but it is also the most expensive way to generate more cash in your business.
You want to make sure that your lead generation strategies are highly targeted and that you are getting a return on your investments in terms of both customer acquisition costs vs average lifetime value of each customer. This is the difference between “hope and pray” marketing and having a lead generation machine that you can count on to generate significant cash flow month after month.
Looking at your business today how would you apply each?