One of the goals of every business is to maximise its profits while not lowering the quality of products or services. To achieve this, you need some strategies, and in this post, I’ll be sharing 15 of them that you can implement in your business and begin to increase your profits.
1. Focus your most-profitable options
Focus your best efforts, talent, and attention on selling your most profitable products, services, customers, niches, or channels.
2. Upgrade your top clients
Strategise on how to upgrade your top 20 per cent of clients to highest value offerings. Ensure this offering is something they want.
3. Bundle products
Look for ways to create bundles by combining different products and services so that you can get customers to buy more items at once and increase the average revenue from each sale.
4. Larger purchase size
Sell your products or services in larger purchase sizes. This is like creating a bigger box of your product or service. It doesn’t only increase revenue per sale, it can also reduce the cost of each sale.
5. Increase transaction value
Think of effective ways to up-sell, cross-sell, and resell customers. The goal is to get each customer transaction to be for a larger amount.
6. Strategic pricing
Use strategies such as the ‘Decoy Effect’ and other incentives to get customers to purchase larger unit sizes of your products.
The Decoy Effect is a marketing strategy businesses use to influence customers to choose a particular option between two offers by adding a third one.
The decoy option is usually the second (middle) version. It is there to make you compare it with the most expensive offer, and oftentimes select that one.
7. Variable and fixed expenses
Know when to move from fixed to a variable cost to give you a better advantage. For instance, instead of paying a salesperson a fixed amount when they can’t guarantee the number of sales they’ll generate, it is better to agree on pay per sale. In some other situations (especially where large volumes are guaranteed), paying a fixed amount can be to your own advantage.
8. Encourage more consumption
Show your customers more ways to get value from your product. Educate them on new ways to use your product. Educate them on new ways to use your products. This can, in turn, lead to them repurchasing more frequently.
9. Increase customer retention
The cost of retaining old customers is lower than the cost of acquiring new ones. How can you increase your customer retention?
10. Feed your winners
Look at your marketing activities and channels; stop what doesn’t work and do more of what works. Feed your winners and starve your losers; this also applies to your staff.
11. Simplify buying from you
Make buying from your easy and simple. Reduce the frustrations or hurdles that customers face when making purchases.
12. Lower your fixed overhead
Look for ways to lower your fixed overhead. Scrutinize your running expenses; what are those things you are spending on that don’t add value to the company or to the customer.
13. Review your business structure
Are there departments that can be restructured to cut down manpower need with no impact on the quality of work? Are there ways of merging departments?
14. Redesign your processes
Redesign your workflows and systems for greater efficiency. Cut some steps, redesign your processes, etc. Eliminate tasks and activities that don’t add value to the company or customer.
15. Negotiate better deals
Make purchases on the best prices and terms you can. Negotiate and get competitive pricing from your suppliers. A little percentage decrease in the price of your supplies can add up to a significant increase in your bottom line profit.
Which of these steps will you be taking immediately?
If you’re interested in redesigning your processes or reviewing your business structure, send us an email at info@owensxley.com.