It's true. There are 4 fundamental ways to grow your business:
Increase the number of customers (of the type you want)
Increase the transaction frequency
Increase the transaction value or 'average sale'
Increase the effectiveness of each process in your business
If you're at all skeptical 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 find it very
probably 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 help you to actually 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 may have
often thought 'I need more leads', 'I've got to get more inquiries',
'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. Focusing on this way to grow your business is often far
more expensive and the least leveraged. It costs up to 6 times more to
win a new customer than it does to have an existing client do more work
with you and that directly affects your profit potential. The team
at KPC BUSINESS DYNAMICS will work with you to find other leveraged
ways of winning new customers and show you how to improve the
advertising you are doing. And they'll make sure you're winning the
right type of customer - someone who's 'qualified' to buy from you!
They'll also work with you on the 3 remaining ways to grow your
business so you're maximizing all of your opportunities rather than
focusing on just one way to grow.
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 profitability. In fact,
some scholars say this second way is the most important of all. It's a
fancy definition of loyalty, or customer retention, which in and of
itself is closely related to value. An author named Frederick
Reichheld has done extensive work on the subject of customer
retention. It was most recently captured in his brilliant book, 'The
Loyalty Effect'. Reichheld discovered that a 5% increase in retention
(of the right customers) could produce as much as a 125% increase in
profit. He didn't say a $5,000 or $50,000 investment in marketing
could produce a change of 125% in profits. He said JUST a 5% change in
RETENTION of the right customers. Staggering isn't it? And, of
course, you affect loyalty by delivering value and by nurturing your
customers. The team at KPC BUSINESS DYNAMICS knows how to develop your
customer targeting and retention strategies. 3. Increase the transaction value or 'average sale' This
is a 'Blinding Flash of the Obvious' or 'BFO'! However few businesses
realize 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 team at KPC BUSINESS DYNAMICS can teach you how to do
this in a systematic fashion so it happens every time and adds value to
the customer. The second way to increase the average sale is to
raise your prices. When you suggest, "raise your prices" to the
average businessperson, they think you're crazy. But when you sit with
your team from KPC BUSINESS DYNAMICS we'll guide you through what's
called "The Margin Chart". It shows the direct relationship between 4
key variables in your business - price, volume, fixed costs and
variable costs and you'll be amazed at the possibilities. To grasp
the possible effects on your business of increasing the average sale,
you'll be given an opportunity to use the 'Profit Calculator' soon!
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,
so we'll look at exactly what results your current processes are
generating and see if we can't improve those! Find out what
potential your business has for increasing revenues and profits by
asking us about our TBR special software & the Profit Calculator.