Picture this: there’s some candy corn and a few fun-size Snickers bars on your desk and Thanksgiving is in a few weeks. You’ve got more expenses and less time to get things done this year…and you need to raise revenue – fast!
Who’s ready for more revenue?
The best way to ramp up year-end revenue is to start planning early. Because if you can start taking action on your plan in early November, you can use the rest of the year to deal with other things.
What you don’t want to do is wait until December to start thinking about it! If you do, it could be February before you’re ready to take action, and that puts you behind.
So, let’s start NOW. Did you read my blog about the components of revenue? (Click the link and it will open in a new window.) If you did, you’re totally ready for this – I’m going to tell you how to use the components of revenue as the foundation of a strategy to increase your small business revenue.
But this foundation is not your whole strategy. You also need to consider how compatible each idea might be with your overall strategy. You have to think about how well you understand customer perceptions and motivations and the degree to which you can implement each method in the context of your market.
Let’s start with increasing profit.
The marketers’ favorite advice is to increase the number of sales. This requires you to increase the frequency of transactions, and this is one of the best times of year to do this.
- You can encourage repeat business – keeping a current customer only costs about 10% of what it takes to get a new customer. Plus, you’ve already established trust with existing customers. Start an email list and send special offers or buy a pack of punch cards to reward frequent buyers.
- Make use of your biggest fans – reward them for their recommendations. Maybe give them a cumulative credit or discount for every customer they refer, or turn your best swag into prizes that only these brand ambassadors can win.
You can increase the number of customers in two easy ways.
- Are you selling online? Ecommerce grows about 23% every year and about half of shoppers prefer to buy online. Don’t ignore this revenue source.
- Extend your geographic market if you’re a local business. You can’t just assume nearby markets are being served. Do your research on competitors and plan to reach out. People will go a little farther for something new and interesting.
You can also increase your average transaction size, with some thoughtful planning.
- Coupons and/or discount offers may slightly reduce the profit on one sale but allow you to make more on another. This method can produce a flurry of smaller sales, but will give you more larger sales, too, especially if customers find value.
- Don’t discount your most profitable products or services, though. Discount related lower-profit items and treat them as add-ons or upsells. A discount on a lower-profit item represents a smaller loss, and it encourages people to buy a higher-profit item to get a discount, which means a bigger transaction.
- While you’re at it, take a look at items that tend to sell together. If you can combine a high-profit item with a low-profit one, bundle them for a slightly lower price. Just like with the add-ons, the bigger transaction makes up for the relatively small reduction in price.
And of course you can raise prices. But be careful with this one.
- If you’re only interested in the math, raise the prices on your most-profitable items or services by 12.5%. Yes, it’s an odd amount, but just trust me. Of course, you also need to factor in the demand. If this isn’t a big seller, the price increase won’t make much difference. On the other hand, if it’s popular, this might hurt sales.
- A more practical option might be to raise prices on your most popular items by 6%. It’s a smaller increase – small enough not to have much affect on sales, but enough to add up across multiple items.
- Or consider shifting to a tiered pricing system like a Saas (Software as a Service) model. You’ve probably seen this with webhosting and internet security packages. It’s where you offer a streamlined version for a minimal price, then add increasing bells and whistles at higher price points.
You can also increase revenue by decreasing costs.
Reduce spending. During your yearly (or quarterly) internal audit, look for ways to reduce your overall monthly costs by 5% to 10%. This small reduction could increase profit by up to 50%.
Spend smarter. Especially when it comes to advertising! For example, Bob Bentz (president of Purplegator) says mobile gets 24% of online time, but only 8% of ad money. This means you could get better ad rates if you limit the ad to mobile. Bonus: it might be the most cost-effective ad for local businesses!
Dump bad customers. There are plenty of individuals out there who are happy to waste your time and money and end up costing more than they’re worth. If you’re not sure how this might work, check out this post about how bad customers can hurt you.
See? Five ways. But wait, there’s more.
Don’t forget about indirect revenue influences!
These things may not make a huge difference immediately but they will pay off within a few months, so work these into your longer-term strategy.
Show off your expertise. Whether someone wants a plumber or pastry chef, they want the best they can afford. You’re a professional in your industry, but does your market know that? Send out newsletters, keep a blog, or post photos and videos that show you know what you’re doing.
Makeover your sales collateral. Take a critical look at your website or Facebook page as well as materials like business cards and brochures. If you haven’t updated them in the past year, it’s time to freshen them up. Be sure your online sources include all your current products or services – with benefits – and contact and buying information. Everything should show off your visual brand elements. And it should go without saying that there can’t be any spelling or grammar mistakes.
(Story time: a few days ago I found a card stuck in my front door. It was from the woman down the street who provides in-home child care. She’s literally 4 houses down from me. On her card, our street name was misspelled and the ZIP code was wrong. And her tagline was “A safe home environment for education your childrens’s.” What?! Not inspiring confidence!)
Accept credit cards. There are multiple sources for free card readers these days. Yes, they’ll cost you a couple points, but weigh that against the convenience you’re offering. Most people don’t carry cash any more, so you’re making it easier for people to buy. And they add a layer of trust to every transaction.
There are conditions for every revenue strategy to succeed.
Success depends on how well the methods fit with your overall strategy, what you know about how your customers think and behave, how you implement the method, and how the method is used in your market.
This means any strategy you develop needs to start with a review of your current situation. You’ll definitely need your financial records at hand and ideally, a SWOT analysis less than 6 months old.
As it happens, I have a new client-requested service for this very thing, which you can check out on my Facebook page. (It’s under the Services tab.)
There’s not much time left in the year. But for those of you who are serious, you can invest a few hours in thoughtful review (or hire me), and set things in motion in time to see a difference THIS YEAR!
Now, if you’ve found any value in this post, please like it, maybe share it with your network, and remember to like the Facebook page too, to stay updated! And as always, I appreciate your comments and questions!