The ONLY Three Ways To Grow Your Business
At the start of the 1990's De La Soul released a song entitled, 'Three is the magic number', whilst three referred to the number of members in the band, when it comes to business, three is indeed a magic number.
There are only ever three types of sales:
There are also only three ways to grow your business:
Volume, frequency and spend. That's it.
Whether you are in the business-to-business market or business-to-consumer, if you want to grow your business these are the three critical metrics that you need to focus on improving and the adoption of a few simple strategies can help you do just that.
Increase awareness: Growing your customer base is critical to any start up and small company. Many entrepreneurs believe that one of the key factors hampering their growth is that their target audience just doesn't know that they exist and if they just had bigger budgets they could advertise more and build greater awareness, faster. I'm afraid that's just not true, it's simply an excuse. Success is not determined by the size of a marketing budget, but by smart, creative strategies.
There is a tendency to believe that it is pretty hard to get featured in mainstream media these days, by this I mean on TV, radio and in national papers, if you're relatively unknown. However, I was once given the greatest insight from a top journalist; newsrooms are often desperate for stories as the news channels are on 24 hours a day, which is a lot of airspace to fill! If you can help deliver something topical and relevant and you suggest your angle to the newsroom, chances are you'll get featured. Why? Because most people do not do this!
As with anything in life, if you take action, you get results
Increase distribution: Expanding and extending where and how your products and services are distributed is a great way to acquire new customers. However, if you are just starting out, getting stocked by major distributors is no mean feat, they squeeze margins and hold all the power and the decision making process takes a lot longer than you think. So think laterally and explore other routes to market. Once you're more established you will then have better bargaining chips. Consider joint venture partnerships with companies targeting the same niche as you and leverage their route to market.
It's really important to analyse purchasing patterns to identify the frequency that your customers buy your products and services. You need to understand not only the difference between your light, medium and heavy buyers, but also why your heavies use, or consume so much more than your lights. These insights can help you to create strategies to move your lights to mediums and your mediums to heavies. That's the theory anyway, but in reality it is a bit more complicated than that!
Frequent communication: One of the biggest ways to drive up frequency of purchase is actually one of the easiest. Frequent communication. Just because someone has bought from you once or twice, there is no guarantee that that they will buy from you again. You need to build a relationship and show that you care through regular communication that helps you to stay top of mind.
Increase volume of usage per occasion: Could you increase the amount of your product that gets used each time? Toothpaste manufacturers have been known to widen the opening so that a larger amount is consumed each time someone brushes their teeth. Axe deodorants for men launched the 'Spray more, get more' campaign that encouraged teenage boys to liberally apply the deodorant all over their body, not just under their arms, to increase their success with the opposite sex. Sounds incredulous, but it was very successful at increasing frequency of purchase! Hay-fever remedy manufacturers encouraged sufferers to start taking their products before the hay-fever season kicked in, as a preventative measure. Naturally they had to continue taking them through the season too. What could you do in your business? Does the 'prevention is better than cure' tactic apply to you? Could you introduce a sharing occasion like Wrigley's gum with their 'Great to chew, even better to share' campaign from years ago?
Loyalty Schemes: These are a great way to drive up frequency, as customers are rewarded for every purchase that they make. As points accrue they get closer to the rewards and they become more likely to choose your brand over the competition.
Special offers: The most successful special offers are those that create scarcity through limited availability. This can mean a limited time frame, e.g today only or limited volume, e.g just one hundred available. It's vital you stick to your claims though or you lose credibility. There are so many ways to create a special offer, these can be for everyone - seasonal sales, introductory offers or targeted - birthday offers, 100th, 1,000th customer etc. Track and evaluate uptake so that you identify and re-run the most successful.
Volume discounts: Discounts for multiple purchases made at once can be effective frequency drivers, but you need to find the sweet spot for your industry. Retailers are famous for their 'buy one get one free' deals, or 'three for two' or 'buy five get one free', or percentage discounts for multiple purchases. Just take a look at the shelves and you will see the variations. You need to analyse the numbers and then start experimenting and tracking all the results. Start by looking at what your competitors are doing, those that are frequently running are the most effective.
Managing cash flow can be a big problem when you first start out and strategies that focus on increasing average order value can be a great way to ease this problem.
Cross-sells: This is when you suggest related products to the buyer, it's vital they are relevant and add genuine value. Let's assume you sell shoes, typical cross-sells are cleaning products, protectors, shoehorns, inner soles etc. All of the products are directly related to what is being purchased, but they all focus on increasing customer spend at the point of purchase. It is advisable to offer discounts based on bundled purchases to further encourage take up. Ensure you track and monitor the impact of your cross-sells, week in, week out. If take up is low, then reconsider the products on offer.
Up-sells: An up-sell is when you encourage a customer to buy the more expensive version of whatever product or service they are about to buy. Tiered pricing up-sells are very effective. You could consider creating 'Bronze', 'Silver' and 'Gold' packages of increasing value by bundling products and services together as this is an effective way to drive up order values. This is a key sales strategy for mobile phone providers. They have myriad of packages of increasing value based on more or less airtime, messages, Internet usage etc. If you only have one product or service, then explore joint venture partnerships to bundle up deals and track and monitor uptake. Alternatively you could offer different priced packages based on different warranties or length of trial offers etc.
Increase your prices: I frequently notice a real nervousness when I suggest increasing the prices of my clients' goods and services. It usually stems from a fear of losing customers to the competition. Justified you might think and you possibly harbour that same fear. But what would happen if you increased your prices by just 1% overnight? I can answer that for you. Usually nothing at all, well, except a greater cash flow into your business that is. So do the sums, what impact would an increase of 1-5% do for you?
Alternatively you can 'premiumise' your product or services and add extra value to justify extra price. Gillette is phenomenal at this - every razor launched has a new functionality over and above the last. The cost for each is increased as a result.
These strategies are just examples designed to get you thinking. There are many more ways to increase each of these three metrics, so brainstorm what could work in your business. Make sure you track and evaluate the effectiveness of each at the end of every month and do more of what works and less of what doesn't.
Jacqueline Biggs is a marketing expert and international best selling author. Her latest book, Marketing to win - how small businesses can do more with less has just been released and is already no 1 on Amazon. If you buy the book TODAY you get access to over £400 of bonus products to help you make 2013 your best year yet. Don't miss out - find out more here