Most Business Owners Only Think to Do 1 of These, and it’s the Most Difficult
As a business consultant, one of the things that I often ask new business owners is: “What do you think you need to make more money in your business?”
And without fail, most owners will say something like: “I just need more customers.” But knowing how to increase business revenue is much simpler than that.
And sure, this is true. If a business has more customers, there’s a good chance that will increase revenue. Assuming that the pricing is set up for profitability. However, that is only part of the big picture. And often times in businesses, it’s the most difficult and most expensive.
The 3 Ways to Increase Revenue in Business
And let’s be clear, these are the only 3 ways, in the most general of terms. Sure, you can break these 3 down to the infinite, but it comes back to these 3 principles:
- More customers
- Raise prices on existing products and
- Increase product selection available to your customers
With struggling business owners, it is all about the first method
I used to work in the dental sales industry. I travelled around North America attending seminars, continuing education events and meetings, etc. And whenever you’d ask either a dentist/owner or practice manager what they needed to do to increase revenues, they’d always say “more customers.”
And most practices have a decent book of customers already. Most are pretty close to capacity with availability, staffing, etc.
Customer acquisition, though very important, is not the easiest way to increase profits however. But it’s the method that most people fall back to. First of all, it costs the most money because, well, you have to advertise!
An Easier Method to Immediately Increase Business Profits
The first thing I ask business owners then is: “When is the last time you raised your prices?” Many will say 1 of 2 things: “I just did” or “Not in a long time and we’re afraid of losing customers.”
If prices were just raised, then there’s not much to do. If it’s “not in a long time” then it’s probably time to increase prices. And if you lose customers, that’s okay. Because what tends to happen is you lose the worst of your existing customers; those that complain the most, bring you the least amount of revenue, and have the highest costs to your business!
The Fastest Method to Increasing Business Revenues Immediately
The last method, and really the easiest to implement is creating other products or services for your existing customers. Remember Pareto’s principe, the 80/20 rule (where 80% of your revenue probably comes from 20% of your customers)?
If you take your best 20% of customers, they probably would purchase some extra service or product that you had, if you made it available to them. These customers are your raving fans, and they value your professional expertise and level of service.
Related: Are Upsells a Scam?
In our dental practice analogy, it can be something as simple as a whitening service, or even more esthetic work.
And remember earlier where we spoke about our worst customers? You could also add another product on the low tier, to reengage those bottom clients. You can always add more “bells & whistles” to your product selection to create packages, that provide more value and immediately increase profits.
Tying the 3 Methods together, the best long term strategy
If you really want to double, triple, quadruple your output and profits, you can implement all 3 of these methods! Obviously, if cash flow is an issue, focus on on the latter 2 methods, then focus on more customers afterwards.
If you have a tiered product selection, that moves beginning customers from a low-ticket front-end offer, to mid ticket products, and high ticket products, that is the recipe for optimal business profits!
High profiting businesses are consistently marketing and advertising, getting new customers into their funnel (or pipeline). Do this as well as keep moving your existing customers to other offers. And remember, not every one of your customers will “ascend” through your product base. Just focus on solving problems based on needs and wants.
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