The purpose of any business is to turn a profit and the easiest way to do this is to make more money! Of course, it also helps to keep your costs low. The difficult part comes in working out how to make more money. This article explores different methods you can employ to increase your sales and therefore profits.
Before we dive into the details, here are a few quick tips if you are starting out. First of all, if you are worrying about where you can get the funds to start your business, put your time to better use and figure out where you will get your income from. Second, try to tie all of your recurring activities to making money. Finally, you should only be spending money on things that will build your brand and boost your sales.
Growing the Business
Once your business is running and turning a profit, you’ve normally found something that is working and that your customers want. From this starting point, it isn’t too difficult to start growing your business and attracting more customers to your existing product or service. Here are a few tricks you can use to increase your business opportunities:
Increase Conversion Rates
This involves increasing the proportion of customers who visit your shop or website that end up making a purchase. This is possible through making small changes to your offer and measuring to see if your change has made any difference. Commonly used methods include the A/B Test. You could also examine the source from which your customers are coming and tailor your offer to them; this commonly yields great returns. Another option is to show prospective customers the benefits your product or service provides through previous customer testimonials.
Attract New Customers
This is self-explanatory. The more people that visit your shop or website, the more people will purchase something. The difficulty is getting more customers. You can try special offers, website search engine optimisation or even advertising to name a few. Spend some time working out how to encourage referrals from your existing customers and you will see your company grow.
Increase your Average Sale Price
For a given number of customers, if you can increase the amount they spend at your shop or website, you will increase the amount of profit you can make. There are three ways you can do this:
Offer a higher-level version or additional item upon purchase. The best place to do this is on the page after a sale has been made.
Offer a related item upon purchase.
Sell After Sale
Send a tailor-made special offer immediately after your last sale. Remember that existing customers are more likely to respond to your messages. Keep in touch with them and continue to offer them something of value.
An often-neglected aspect to pricing is the need to regularly raise your prices. Inflation is a fact of life. What your product is worth today is not what it is worth tomorrow. Ensure you regularly raise the price, perhaps on an annual basis. You may offer a discount for existing customers to maintain their business. Annual rises will reduce the amount of work you need to do to maintain the same amount of income.
The Perfect Offer
When you create an offer you want your customers to leap at the opportunity you have provided. This is achieved by creating an illusion that the purchase is an invitation and not a pitch. If your customer feels they have won by completing the transaction, you are doing it right! Simply create a compelling offer that highlights the immediate benefits and demonstrate why they outweigh the purchase cost. In essence, you need to make an offer your customers cannot refuse. There are three simple ways to do this:
- Sell what people want to buy (not necessarily what they say they want to buy)
- Sell to the right people at the right time
- Craft a compelling pitch
The way we place value on a product or service is not always rational and may not actually relate to the real-world value. If you can engage the emotional side of your customer, you can bypass their rational brain and increase the likelihood that they will make a purchase. Think about value the way your customer does and use this to your advantage when making a successful pitch. Ensure your customer knows the primary benefit - this is not the product features, but the way it will improve their life.
Use nudges to help your customers make the decision to buy. Create a sense of urgency in your offer and encourage immediate action. Examples include the language you use or a deadline for the sale.
When creating your offer, take a moment to consider the main objections your customers would have to making the purchase. Then spend a moment considering how you might counter these objections. Finally flip the objection around and state why you have the trust required for the purchase. Use this method to proactively respond to concerns and increase your sales!
An After Thought
You can win over your customers future trust by overdelivering. This is quite simple to do. When a customer purchases a product, offer them a little something extra. An example would be quick access to the product or an unexpected pack of sweets at delivery. You might even randomly upgrade a proportion of purchases. Another option is to offer a simple guarantee with clear criteria for reimbursement in case your customers don't like the purchase.
Frequently Asked Questions (FAQs)
FAQs are your secret best friend. Remember that time you listed all the reasons a person might not make the purchase. Well, this is the section where you address their concerns and provide reassurance to potential buyers. Overcome their objections in advance. Objections come in two forms:
General objections relate to the core concerns of trust and authority. How can I trust this works? Is this really a good investment? What do others think? Can I get this product without paying? Is my information safe online? Specific objections are unique to the product or service in question.
Price on Benefit
When you create the price for your product or service, you should base the figure on the benefit it offers your customer, not the cost it took to create. It is much better to complete on value offered than on the lowest price.
A Range of Prices
If you offer your customer a limited range of prices, on average you are more likely to get a higher price for your efforts. This is because people always tend to choose the biggest and the best. The higher price creates an anchor point and makes us consider the lower price as a bargain. The question your customer is now asking is which product to buy, not whether they would like to buy or not. You can usually offer the same product with little change to create this tiered service. Use A/B Testing to establish the optimal price points for your offering.
When you offer a product, it can usually be bought only once. The trouble is that you’ve put a lot of effort into this sale and you've only been paid once. What happens if you revise your product and improve the customer experience? Customers will either get the updated version for free (and your work goes unpaid) or they will continue on with the older version (and have a sub-optimal experience).
Creating a method of repeat paydays leads to a more reliable income source and ensures your continued efforts are rewarded. Examples methods include membership or subscription options. Changing the number of subscribers or the price they pay (even if a small amount) can lead to huge changes in your income. Furthermore, if your customer remains happy, they are more likely to purchase other products from you.
You aim is to move as many customers from one-time purchases to a recurring membership or subscription plan. Make sure the cancel button is easy to find as this will reduce the fear customers have about cancelling unwanted subscriptions.
- The Lean Startup; Eric Ries
- The $100 Startup; Chris Guillebeau