Utilise existing customers
The simplest way to increase sales is to sell more of your products or services to the customers who are already buying them. For most businesses this involves:
- persuading one-off customers to become repeat customers.
- finding customers who’ve stopped buying from you and trying to win them back.
- selling more of the same products or services to your regular customers.
By keeping a record of who your customers are and what you have sold to them, you can work out who’s stopped buying from you, and who might consider buying more. Targeting these customers is often a cheaper and more effective way to increase sales than trying to find new ones.
Review your prices
Regularly reviewing your prices and checking them against your competitors can be an effective way of increasing your sales, profits, or both.
Estimate the effects
You should try to estimate the likely effect of different price changes on the sales, cash flow and profitability of your business before making any changes.
To do this successfully, you need to understand:
- the ‘cost structure’ of your business (including regular ‘fixed’ costs, and ‘variable’ costs that change according to your business’ activity).
- the value your customers place on your products and services.
Beware of discounting
It’s worth bearing in mind that offering a discount can sometimes reduce your overall profitability, even if your sales go up. Equally, you might be able to make more profit overall by increasing prices, even if you’re selling fewer items.
Small changes to pricing like providing loyalty schemes or bulk discounts can increase sales to both existing and former customers.
For example: Costa Coffee has a loyalty scheme where a customer gets a free tenth cup of coffee when they buy nine and have their loyalty card stamped. Even though they’re giving something away for free, the value of repeat business from loyal customers means that profits go up. It’s likely that it would have cost significantly more to generate the same amount of sales with new customers, resulting in less profit.
Check your competitors
Regularly check your prices against competitors to find out if you’re:
- losing customers who get the same product or service elsewhere for less money.
- sacrificing profitability, because customers are willing to pay more than you’re charging them.
Developing new products and services
If you’re planning to develop new products and services, you should test them with your customers with just as much care and attention as a new business going to market for the first time.
By making sure there’s real demand for what you’re planning to sell, you can find out about any problems and fix them before you’ve wasted too much time, effort and money.
Talk to existing and potential customers and find out about their needs.
If you can, develop a prototype as quickly and cheaply as possible. Work out the minimum investment that lets you find out if you’re meeting a real need.
Test it with customers and get feedback. Find out what they’d be willing to pay for it. Try out different prices with different customers in a consistent, realistic way to see what people will really pay. Can you make enough money for a return on the investment you’d need to develop your new product or service?
If there are other businesses competing for your market, think about what will make you different. Can you provide something better than what’s already available? And is it significantly different or better to what you’re already offering?
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