Whether you have had a good or bad 2016 there are always ways you can improve your business. If you are planning to grow your business in 2017 here are 7 tips for you.
1. Prospect & Lead management
Before a customer become a customer they will usually become a lead beforehand. Understanding how much you pay for a lead are an essential part of running and growing your business. What do you do to get people or businesses interested in your product or service? How do you convert customers into leads and leads to customers? A minor change in how you do this can lead to a massive increase in sales.
Firstly, you need to understand how much new leads and prospects are worth to your business. A simple calculation to find out how much you pay for leads is by dividing your monthly marketing spend by a number of new leads you get each month.
Simple ways to improve your cost per lead is to ensure all marketing channels are measurable. Cut out any areas that do not bring in tangible results. Test and find out what works for you and amplify any areas that are producing results.
You would hope that that the more leads you get the more you will convert into customers.
Document your sales process, review it regularly and tweak it to optimise conversion rates. Conversion rates are “the success” rate where you get a person to complete your desired action. An example of this is pay per click (PPC) campaign where you want them to buy a product.
To improve conversion rates you have to analyse why people are not doing what you want them to do and make changes. Sometimes small changes make the difference, but to make significant improvements you need to be prepared to make drastic changes.
2. Sales from existing customers
Is easier and cheaper to sell to existing customers. It’s surprising why more companies do not invest more of their marketing budget on existing customers.
“The probability of selling to an existing customer is 60 – 70%. The probability of selling to a new prospect is 5-20%” – Marketing Metrics.
Your best customers are your existing customers. Find new ways to deepen your relationship with existing customers to improve their experience further.
Offer them a total solution to their problem. If this means you have to cross- sell additional related products or form a partnership with another company then do so.
Start a loyalty scheme for your existing customers and reward them for choosing your business. Encourage them to recommend your business to their friends and family with an incentive.
3. Sales from old customers
Every business loses customers, but to keep this as low as possible you need to find out why they have stopped buying from you.
“A 5% reduction in the customer defection rate can increase profits by 5 – 95%” –Bain & Company.
Keeping your customers happy should be a priority. Old customers are not always lost. They just need a good reason to return.
Try to re-engage your old customers.
Firstly find out why they left your business in the first place. Secondly, provide them with assurances that these issues have been addressed and provide them with an offer that entices them to return.
4. Marketing Effectiveness
It’s been reported that 80% of most businesses marketed spend is wasted. The only way that you can find out whether your marketing efforts are being wasted is by measuring performance.
Write a clear concise marketing with clear targets, expected conversion rates and your budget. Monitor the impact of your campaigns closely and stop doing anything that doesn’t work, focus your spend on channels that work.
5. Increase Prices
“55% of customers would pay extra to guarantee a better service,” – Defaqto research.
It is startling how many businesses think they have to keep costs low to make sales. Buying decisions are not made on price, they are based on perceived value. Small business owners underestimate the value they bring to customers.
Most customers buy based on value, not price.
If you are doing a great job in providing value for your existing customers it would be wise to quantify exactly what your goods or services are worth to them. You may find out that even if you raised the price by 10% your customer will still consider it value for money. Try to find a “biting point” for your price increase where it doesn’t affect volumes.
Even if it affects volumes you will make more of a profit on each unit.
6. Variable Costs
Variable costs are costs you only incur when you make a product or sell one.
Many costs have fixed and variable cost components.
Examples of variable costs are:
- Some staffing costs
When trying to keep down costs you need to work out which variable costs make the most impact. Strip out anything that does not add value to your customer.
Build a sales forecast for the whole of the year, ensure you have planned a budget for costs depending on sales. Start negotiating costs with your suppliers in advance understanding your demand for the next year. Reduce the number of suppliers you have to increase your bargaining power.
7. Fixed Costs
Fixed costs are costs that are fixed every month or year, like rent or insurance. Fixed costs should be kept to a minimum, make your business cost base agile, giving you the flexibility to increase or decrease expenditure depending on when you are busy.
Start by reviewing all of your long term fixed contracts and agree on flexible contracts as soon as you can. Challenge your fixed costs. Do you really need what you are buying?
Remember your aim is to provide as much value to your customers as possible. Anything that doesn’t add value can be eliminated.
Treat staff as a variable cost, not a fixed cost where possible. Every company has permanent employees that do not contribute as much as they could. To eliminate the problem of not getting value for money by employing staff on fixed-term contracts of 6 months to 2 years.
Mapping out how you can improve every part of your business is your responsibility as a business owner. The market changes constantly so you need to take time out each month to review how your business will overcome the challenges that lay ahead and take advantage of the opportunities you have.
These seven steps will provide you with some quick ways to grow your business and improve your bottom line but they will be short-lived unless they are integrated into a business development program.