When it comes down to it, there are only four core ways to increase your company’s revenue:
- Get new customers;
- Get your customers to buy more frequently;
- Get your customers to increase the average spend per order;
- Increase your prices.
Most companies are focused on the first pillar – getting new customers. While no doubt important, this represents just one piece of the big picture. The other three pillars focus on existing customers. The larger your customer base, the more you need to think about it. Every company needs to set it’s own strategy based on it’s goals and corporate philosophy. The key is to make a conscientious decision about each pillar and not ignore them.
Look at it this way; if you have 1,000 customers spending $100 per month your annual revenue is $1,200,000. If you increase your customer base (new sales) 10% you will add 100 customers and your total revenue will be $1,320,000. Your overall growth would be 10%.
If you were also able to develop and implement a plan to get 5% of your customers to buy more frequently than once per month, increase the average $100 transaction 5% and increase your prices 2% then your resulting compounded growth would be 23%.
Think about the pillars in terms of your local McDonalds. The average customer may visit once per month and spend $20. If McDonalds increases their prices 2%, gets 5% of their customers to come each week rather than every month (loyalty card) and increases the average transaction to $21.00 (would you like fries with that?) then that combined growth will far exceed the growth from new customers.
Of course, each percentage needs to be adjusted for your particular industry but again, the key is to give it conscientious thought and then develop and implement a plan. If you need help, call us.
Acreman Business Coachings helps business owners and executives achieve their revenue and profit goals. Let us help you.
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President, Acreman Business Coaching