Do You Know the Four Main Ways to Grow Your Business?Tina Ferguson
June 10, 2008
Many people think growing a business is a complex process, but it is simpler
than most think. In fact, if you’re seeking suggestions as to what guidelines
to follow here are four that should become your guidepost.
- Increase the number of customers (of the type you want);
- Increase the transaction frequency;
- Increase the transaction or value of “average sale”; and
- Increase the effectiveness of each process in your business.
Okay, this seems easy enough. In fact, it may appear to be too easy, but
companies really need only to focus and commit to these functions for optimum
success in the area of growth.
Increase the Number of Customers (of the type you want)
Getting business through the door often proves to be the most challenging
and expensive aspect of growing a company. It’s tempting to assume that you
automatically need to seek new business without making sure you’ve already
tapped the business you have. However, finding a brand new customer can cost
significantly more ’some experts estimate six times as much’ than working with
the customers you already have. What exactly does this mean? You already have a
customer base that is sold on the services you provide. This captured audience
is just waiting for you. Some of the best advertising you could ever have is
the kind that a satisfied customer will do for you. These customers also
provide a higher chance of finding you the type of business you want versus
whatever simply walks through the door. If your company is business to business,
ask customers for referrals to other companies that operate with a similar
mindset. If your company is business to consumer, engage activities that draw
new customers from your current customer base.
Increase the Transaction Frequency
Once you have the right
type of clients (that means the kind you enjoy working with and those who pay on
time), you want to ensure that they not only stay with you, but increase the
amount of business they do with you. A one-time only customer may not seem like
the best one for you. Yet, if the customer is the perfect fit in the type of
business you’re looking for, you need only to foster the relationship.
Customers will come to you for different reasons. They may have been told about
your service from someone else, or found you on their own. The point is that
the customer may initiate the relationship, but it’s up to you to nurture it and
make it grow. When you offer exceptional customer service and let the client
know how much they are appreciated, you will create a client that returns again
and again.
Increase the Transaction Value, or ‘average sale’
Business owners are often passive about the amount they sell to a
customer. However, if a customer seeks you out, you have to remember they are
looking to you for your expertise. Cross-selling is not only a benefit to you,
but to the customer as well. When you bring more value to the customer through
multiple services or products you provide them with more opportunity. In turn,
you have created a more valuable customer relationship, which is easier and more
cost-effective than creating a new one. And, as customers come back more
frequently, their average sale often increases.
Increasing price should also
be considered, but is sometimes difficult since clients become accustomed to a
certain cost. However, when you are able to break down price, volume, fixed
costs and variable costs you’ll find that increasing your cost means truly
applying the correct price to reflect the value of the service or product you
offer. Some companies have taken a lesson from fast food restaurants, and have
started offering ‘package’ deals. This pushes the customer to a higher price
point with the perception of receiving a ‘discount’ on the overall order. This
technique may be used in many industries.
It’s important to keep in mind
that companies can lull into a comfy, cozy state of cost coma. One manufacturer,
for instance, had not changed prices in 10 years. By increasing the price of
just one product, the company increased profits 11 percent. The average sale is
a powerful growth mechanism.
Increase the Effectiveness of Each Process in Your Business
How
many of us just jump into work and do it? There may not necessarily be a defined
process, but who has the time to figure out if there’s a better way of getting
things done? The truth is that the time you take to increase your business’s
efficiencies will have a direct affect on a project’s outcome and, ultimately,
your profitability.
Business is a group of people carrying out a series of processes. If the
processes in place aren’t running as smoothly as possible, you can lose a
considerable amount of time ‘and money ‘ on things such as overcompensation for
mistakes, inadvertent doubling up of manpower, and troubleshooting problems. Taking the time to evaluate how business is generated, whether or not the
customer service chain is efficient, and where time is lost in the moving of
products or delivery of services can provide you with more information for
scrapping a system or improving on one that is seeing a significant return on
investment.
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