There are at least three ways to increase your income:
- Increase the number of customers, finding new customers;
- Increase the average value of the economic transaction
- Increase purchase frequency
Each of these potential revenue streams requires a good strategy and a different approach from the sales team.
To achieve results, every function of the organization that regularly interacts with customers needs to be able to implement the strategy and actions to increase revenue in the three ways.
If you don't put the right strategy into practice and if your sales team doesn't understand how to implement it, you run the risk of thwarting your efforts without increasing revenue.
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Increase the number of customers
The first thing that comes to mind is also the simplest. To increase turnover we need more customers.
It's not easy, but if you've set up a system capable of generating value for a group of potential customers, it's possible to get new target contacts on an ongoing basis.
In general, there are two approaches to acquiring new customers:
- A type-based approach Push : when you are looking for customers who we think may be interested in our products;
- And an approach of the Pull when instead we create a system capable of attracting traffic from potential customers interested in what we offer.
Increasing revenue by increasing new customers has been listed as the first way on the list, but it's not really the best way to increase revenue.
It was placed at the top of the list simply because it is almost always what entrepreneurs believe they need to do to grow their business.
Getting more customers is definitely necessary to grow your business in the long run, but if you're looking for a quick and effective way to increase your sales, you should start with the treasury of your current customers.
Remember: getting more customers is difficult and expensive, and it's much easier to sell to your current customers who have trusted you than to new customers who don't know you.
Everyone wants new customers, but acquiring them is difficult and can be costly in terms of time and money.
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Increase the average value of the economic transaction
It's very likely that you're missing out on the opportunity to increase your revenue every time a customer decides to buy from you!
The moment your customers have decided to buy your product or service, you should go out of your way to convince your customers to spend more.
There are various ways to do this. You could lead him to evaluate the purchase of a greater quantity of product (for example by offering volume discounts) or you could lead him to evaluate a model with better characteristics or qualities than the product initially selected.
In general, we can apply up-selling and cross-selling techniques.
- The up-selling it is a sales technique that allows the customer to be incentivized to buy a larger quantity of product than initially requested;
- The Cross-selling It is a technique that increases the average value of the customer's shopping by offering products related to the one already included in the shopping cart.
Up-selling and cross-selling work because the customer has already made the most important decision: buying from you!
Remember; The best time to make a sale is when the customer already has their wallet open.
You must therefore have a strategy and a system to offer your customer the opportunity to spend more at the very moment they have already made the purchase decision.
Think of when you enter the motorway service station to have just a coffee and they ask you if you want to add a juice or a croissant with just 1 euro more.
If the cashier has been taught to add only this simple sentence at the time the customer is paying, there must be a reason!
Surely a good chunk of customers will be led to spend more, but without that simple request they would not have done it independently.
If you're not leveraging the second lever to increase turnover, you're losing money because you don't have a strategy to get the customer to spend more and you haven't trained your sales team to do so.
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Increase purchase frequency
To increase your revenue, you can leverage the third lever, but to do so, you need to add recurring sales to your business model so that your customers can buy more frequently.
First, if your business currently only offers a basic product or service, you need to start building an offer package with annual subscription plans so that you can generate recurring revenue.
Subscriptions to streaming services or software usage are just some of the most popular examples that allow your customer to have free access to a series of services after paying a monthly or annual subscription.
If you do not sell licensed services, you can always offer support and maintenance of the product you have supplied or installed to your customer.
After understanding how important it is to have a business model with recurring revenue, let's see how you can increase the frequency of purchases.
First of all, you should add subscription plans to your business model, but in other cases, you could also provide a product to a company that uses it to resell its services, in which case you should make sure that your customer can come back to buy from you more frequently.
There are several ways to increase the purchase frequency of your customers, but in general, what you should do is find ways to communicate effectively with your customers.
Marketing is not only about acquiring new potential customers but must allow you to maintain the relationship with your current customers, making sure to build a relationship of mutual trust by doing business continuously over time.
To encourage a customer to buy several times during the year, you should provide them with valid reasons or unmissable offers.
In other cases, you could also just send him useful and valuable information so that you can continuously be in his head and be the first supplier he thinks of when he decides to do a material review.
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BONUS: Increase your prices!
After realizing that they exist At least three ways to increase revenue , I want to surprise you by adding a fourth way: increase prices! yes, you got it right.
It could be a counter-intuitive system, in fact the mere thought of it alarms us because by doing so we could even lose customers. It could happen!
But while lowering prices is something that everyone can do. Even your greengrocer can put up a sign and draw a nice line at the original price and present you with the reduced price!
I assure you that this system is used by many companies to increase their revenue, even after taking into account the loss of a part of the customers.
If you offer a service or product with real value, then you need to implement this strategy.
It's not easy, but it's much better to have a few high-spending customers than many customers who have chosen you just for the low price and who may turn out to be even more pretentious.
Here are some questions you should ask yourself:
- Which of the three ways listed are you currently using to increase your income?
- Why did you choose to use only that method? Maybe you don't have the right strategy or what else is holding you back?
- What other modalities do you think you should integrate right now?
- What methods should you invest the most time and energy in?
- Which of the three ways to increase turnover are you not applying and why?
