Updated: Aug 20
There are just 4 ways to grow your business:
If you're at all sceptical about whether there really are just 4 ways (obviously with multitudes of strategies under each) think of a strategy to grow your business -any strategy -and you'll probably find it falls under one of these 4 areas.
Conversely, think about a strategy like 'cutting costs' -realistically that won't grow your business unless you use the money you save to promote your business. It may let you control your business better and return greater profits, but it won't grow your business.
1. Increase the number of customers (of the type you want)
If you're like most business owners your primary focus will be on the first way to grow your business -winning new customers. You've probably often thought 'I need more leads', 'I've got to get more enquiries', 'if I could just get the phone to ring and more people to walk through the door we'd be doing really well' and so you invest heavily in advertising for instance. Often there are other ways to win increased sales that don't cost nearly as much and usually those strategies go untouched. For example, develop a referral system, enter new markets or follow up prospects. Statistics show that 80% of sales are made after the 5th contact.
2. Increase the transaction frequency
Increasing the 'transaction frequency' -or the number of times someone deals with you is an important step to increasing your growth & profitability. It's a fancy definition of loyalty, or customer retention, which is closely related to value. An author named Frederick Reichheld has done extensive work on the subject of customer retention. Reichheld discovered that a 5% increase in retention (of the right customers) can produce as much as a 125% increase in profit. Staggering isn't it? And, of course, you affect loyalty by delivering value and by nurturing your customers.
3. To increase the transaction value, or 'average sale'
Few businesses realise its importance (in fact, they do the exact opposite). There are two fundamental ways to increase the average sale. First, by 'cross selling'or 'up-selling', both mean you encourage the customer to buy more. The second way to increase the average sale is to raise your prices. This maybe a challenge but don’t undervalue your product or service.
4. Increase the effectiveness of each process in your business
The fourth way to grow your business is more of an all-encompassing strategy than the other 3 ways. You see, increasing the effectiveness of the way you do business is central to everything but so few people work at it.
When you think about it, a business is nothing more than a group of people carrying out a variety of processes -the quality of the processes defines and determines the quality of the outcomes. Makes sense doesn't it? So going back to the example earlier of a business owner needing 'more leads' we might discover that in fact, the business doesn't need any more leads rather to convert more of the ones they're already receiving! That's a sales 'process' that needs improving.
Truth is that most people don't see their businesses as a series of processes. But that's exactly what they are.