Growing your business isn’t easy. Many business owners make it very hard by focussing on the wrong things, thinking that the only way to grow is to get more customers. That’s only part of the answer and in some respects, the most difficult.
The easy way to answer the business growth question is to “sell more to more people.” A little more clarity will provide more of the how…
1. Increase the number of customers.
Of course the first of the three ways to grow a business is simply to increase the number of customers you have. This is achieved through marketing. The key here is to find as many ways to market your business as you can. This could be using social media, pay-per-click advertising, your website, leaflets, letters, emails, SMS, posters, newspaper adverts, joint ventures etc.
Without delving too deep into marketing, all of the listed marketing methods above are tools. How you apply them, and to which target groups makes the difference between success and failure. Remember, at any given time that only a small percentage may be ready to buy. This is why you must continually repeat the use of the tools because people buy when they are ready, not when you market.
2. Increase the average order value.
The second method to increase your sales is to increase the average value of an order. If you’re unclear what this means, let me use a simple example. You walk into a fast food chain and ask for a burger. The person taking your order immediately asks, would you like fries to go with that or perhaps a drink? You’re suckered in and before you know it, you’ve just bought a meal deal.
Let’s say that a burger sells for £1.00 – you leave the store having spent £3.75. The salesperson has just up-sold you and the business makes the extra profit on all three products you purchased. Note, this profit is slightly less than they would have if they sold each product separately however, it’s still good profit and from one customer rather than three. Isn’t that much better?
Have you ever purchased from Amazon? As soon as you look at an item, you see the line “customers who purchased this also purchased…”and there’s a list of three or four other items. I expect Amazon scores a high percentage of conversions through these recommendations although it’s more likely a customer chooses one additional item rather than all.
Increasing the average order value is achieved through improving your sales system. Note it is usually achieved at the point of sale. That’s why supermarkets place bars of chocolate and cheap DVD’s near the checkout. It’s one of those spontaneous decisions to treat yourself or treat your children. At such low cost it’s virtually a no brainer to through the item into your basket or trolley.
3. Increase the frequency of purchase.
The final way to grow your business is to increase the number of times a customer returns and purchases from you. This is also part of the sales system you need to build. A good example here is cleaning carpets. By educating the house holder exactly what’s in the carpets, how toxic this is, how it needs to be treated and finally how often they should be treated/cleaned, this presents a clear, simple message to the buyer.
A good education system is imperative to persuade and condition the buyer into more regular purchases, unless of course the product runs out quickly and therefore has to be re-purchased often.
Let’s take a look at the numbers…
By focussing on just one area of growth it is possible to achieve good results. However, when you grow all three areas, you can achieve amazing results. Let’s take a quick look.
Let’s say you have 100 customers who buy from you 10 times per annum and on average they spend £100 per visit.
100 customers
Buying frequency 10 times per annum
Average spend £100 per visit.
If you increase each activity by 10% you grow your business by how much? Most people say 10% but that’s wrong. You will actually grow your business by over 30%. Let’s do the sums…
- 100 grows to 110 customers
- 10 times per annum becomes 11
- Average spend grows from £100 to £110
- 100 x 10 x 100 = £100,000 in sales
- 110 x 11 x 110 = £133,100 in sales.
Doing this is very possible – it’s just a matter of finding the ways to make each happen. The easiest way is to initially focus on your sales methods as finding news customers takes a little longer. However, I still encourage you to begin other marketing activity. All I’m saying here is to place your energy where you can obtain the fastest results.
You may find as you improve using these strategies that you achieve considerably better results than my example. I’ve seen growth of 40% or more using these methods and sometimes considerably higher going way beyond 300%. Of course the more variations you can add into your sales funnel the better.
The greater number of customers you have, the more money you can potentially make by focussing on these growth methods. As your customer numbers grow, you should be able to use the other growth methods, even on the first sale.
I’m excited for you and hope you discover lots of ways to grow your business. Good luck.
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