While this isn't the be-all and end-all of growing your business, it does summarise the four different things that make businesses grow. The effect of each one will vary depending on your business but generally the effects of one compound the others. Before we start on the detail it's important to define what we mean by the title. Most of the words are self-explanatory, but it's particularly important we understand grow.
To grow a business is to make it more valuable. For example, growing sales is usually relatively simple, but can drive you into the ground if not properly managed. Given that, there really are only four ways to grow your business you need to manage each to get the best from your business. The four ways are:
- increase the number of customers of the type you want
- increase the number of times customers come back
- increase the average value of each sale
- increase the effectiveness of each process within the business
This article only touches the surface - you can go forever on each of these four, and on combining them, and on each of the points under each of the four. The secret is finding how best to combine them in your business.
You may also find there's nothing new here. If that's the case, the question is have you implemented the ways that produce results for your business?
The first time a potential customer deals with you is when most business owners focus first. It's the "front end" of the business. Notice we said, "of the type you want". Some customers cost more than they give, perhaps in dollar terms or in the fact you shudder at each encounter. Not only do you need to define what sort of customers you want but you also need to compare against the customers you are getting.
There are hundreds of ways to win new customers but there are six major strategies:
- Developing unique core differentiators for your products and services - developing your UCDs will help potential customers understand the added value you offer
- Tapping the power of the phone - why invest in generating new leads when you might just be turning them off when they call?
- Tapping the power of the internet - cheap and wide reach but most commonly under-producing
- Implementing a sales system - people buy from a business they trust; creating effective and consistent ways of selling within your business will help build that trust
- Using market research - identify markets within your market and advertise the benefits, not the features i.e. What’s In It For Me (WIIFM) not What We Do (WWD)
- Developing a promotions plan - set up an annual promotion schedule to maintain consistent and constant activity
The second way (customers coming back) is vital to your long-term health. It generally costs 6 times more to win a new customer than it does to get an existing customer to purchase again. The main strategies are:
- Classify your customers - allows you to develop appropriate marketing for each group
- Ask them to return - it's as simple as that!
- Provide awesome service - offer service that goes above and beyond the norm
- Nurture your customers - treat customer relationships in the same way you would any other important relationship
- Use customer comments - following up after purchase to ensure satisfaction and avoid post-purchase dissonance
The third way (increase the average sale value) follows customers coming to you for help and guidance; if you let them just come in, select their item and leave, you've missed an opportunity. The major strategies are:
- Cross-selling - ask yourself “What else could we offer to go with this item that would add value and/or help the customer get the most out of their purchase?”
- Up-selling - encourage the customer to move from purchasing a lower-end item to a higher-end one
- Bundling - putting products or services together into a single attractive package
- Smart merchandising - the way you present your products or services
- Working your margins and pricing - have a firm understanding of your margins and how they affect your bottom line
Finally, we have issues not directly related to selling. These include"
- Develop a mission and goals - understand the real purpose of being in business
- Understand your strengths, weaknesses, opportunities and threats
- Work ON not IN - step back and look at your business objectively to see what needs to be improved to help it grow
- Systemise processes - makes your business more valuable because it doesn’t have to depend entirely on you to operate
- Build a team - involve your team in growing your business
Finally combining all is not to be sniffed at. You have a customer base of 1,000 and increase the number of new customers by 10% to 1,100, increase the number of times each customer purchases from you by 10% (from once to 1.1), and increase your average sale by 10% (from $100 to $110). Assuming everything else is equal, by what overall percentage will the business grow?
Not by 10% but by 33.3% ($33,100). Try this with your own figures.