Have You Tried These 4 Ways to Increase Your Revenue?
Posted on 22nd February 2017 in Business
Written by James Marren
You work incredibly hard in your business and unfortunately there is no such thing as a time machine to go back and fix mistakes. So we want to support you in working more efficiently any way we can. In this blog we look at some tactics to increase that all important revenue stream and how forecasting can help you achieve the best possible results.
Josh Kaufman is the #1 bestselling business author of The Personal MBA and his website was named one of the “Top 100 Websites for Entrepreneurs” by Forbes
Revenue, sales, income, it’s the amount of money your company earns before any expenses are taken out. Without it, your company cannot earn a profit and stay viable in the long run. Although there are many ways you can increase the top line, to keep things straightforward and give you actionable bite-size ideas, in this blog we’re going to review the 4 methods, Kaufman recommends.
1. Increase your number of customers
One way for your business to achieve this is to turn the volume up to 11 on your marketing. We recommend quality over quantity, however, otherwise your budget could quickly be wasted. This will involve careful planning and test-marketing to maximise your results. For example, if you are a small online retailer, increasing your Google and Facebook Ads budget is a powerful way to drive traffic. In our opinion, it’s vital to test the market by split testing different ads and analysing online stats to maximise any increase in revenue.
2. Increase your average transaction size
We’ve all experienced it, great restaurants are masterful of trying to get their customers to purchase more. When your waiter attempts to offer you the wine list or the dessert menu, this is a subtle form of up-selling. One great tip discussed by Brad Sugars, Founder and Chairman of ActionCOACH, is to “Bundle your offerings and encourage customers to spend more by giving them a package deal on multiple products or services. At a car repair shop, it might be a tune-up and oil change rolled into one visit.”
Trying to extract the maximum amount of money from each customer is a valuable tool to increasing your revenue, but it must be done in a way that considers your relationship with the customer. You don’t want to be the annoying waiter or business that over pressurises someone into spending more than they are comfortable with and losing their future business.
3. Increase the frequency of transactions per customer
As Robert Clay, Founder of Marketingwizdom.com explains, “It costs five to fifty times more to generate a new customer from the “cold” market than to get further sales or referrals from the customers you already have.” That’s why your email list is so valuable as it allows you to send great offers and information about your latest products to your network. Of course, it’s vital not to overdo this, as no one wants their email to be listed as spam. Also, email is certainly not the only option to disseminating this information, a fully functioning social media account is another great way to nudge and remind your customers.
4. Raise your prices
If we assume your volume, average transaction size, and frequency stay the same, then raising your prices will bring in more revenue for an equal amount of effort. As Pius Boachie, Social Media Strategist and writer for business.com, says, “In business, it is much more profitable to have fewer customers or clients who pay a premium than to have a large base of customers or clients who pay peanuts.”
It’s important to analyse your competition before raising prices, find out what they are charging and adjust your prices based on your goals. Lowering prices can increase revenues to make up for lower margins while raising your prices can create a higher perceived value in the minds of consumers and increase your margins.
Before choosing any of these tactics to increase your revenue, it’s important to Forecast the effect upon your business. It’s a game of ‘what-if’ and it should be fun. In FUTRLI, our 3-Way Forecasting engine allows you to use your historical data to predict a range of possible outcomes. For example, optimistic, negative and most likely. You can build your base scenario and then copy it to play with your assumptions, for example, you might want to look at the impact of the same method but with a different start date beforehand. This way you know upfront which options are most likely to have the greatest impact to help you reach your business goals and, the best bit, you’ll know exactly where to invest your time and resources.