Influencing the Value of Your Company
Peter Sage is Managing Director of the Sage Group of companies. His latest entrepreneurial project involves the commercialization of space in association with NASA. For more details, resources and other useful free gifts, visit www.petersage.com.
When I started my first business at 17, I had tons of enthusiasm but no start-up capital. As you can imagine, that’s not the right combination to entice banks to give you money, so I had to develop creative strategies that would allow me to build my business. Since then, I have applied those strategies to more than 20 start-ups and have seen the value of creativity proven time and again.
For many of us, we instantly think of how we can best spend any spare cash flow the moment it is in our hands. But what if, instead of focusing on how you can use money to get what you want, you used creativity instead?
It seems that, all too often, we end up running to the bank instead of drawing from the large bank of ideas and knowledge that exists between our ears. After all, I believe the true measure of an entrepreneur is demonstrated by his or her ability to produce results with little or no resources. So how can you increase your profits without spending a fortune?
1. Increase the Number of Customers or Clients
This is usually the hardest and most expensive course of action, but for those who are still committed to doing so, here are a couple of quick ideas that exercise your brain and not your bank account.
It still amazes me that most companies do not have a formal, structured method for generating referrals. The simple fact is that your cheapest and best source of new customers is always recommendations from existing ones. While you should have a standard referral program always in place, I suggest testing a different way of generating referrals every 90 days using a variety of approaches and incentives. Benchmark these new methods against the current best performing method to date. After all, just because something is working well does not mean it can’t work better. And you may find that different approaches work better for different types of clients.
This acts similar to a referral system but uses another company instead of customers to refer clients. After all, if another company has spent years building trust and loyalty with its clients, and you can cash in on their efforts by reciprocating, you have achieved a natural win-win. Simply ask the question: What do my customers buy after they leave my store or office? This is also a great way to build established credibility by co-venturing with a well-known brand.
2. Increase the Amount Each Customer Spends
You can do this in one of two ways: The classic up-sell, or, even better, by targeting higher volume purchasers.
Generally, I have found that the biggest challenge in up-selling additional products or services is training staff to ask the right question at the right time. Decide on a phrase that staff can memorize and deliver with enthusiasm. This can mean the simple difference between, “Would you like X?” versus, “Would you like to take advantage of an unpublicized in-store offer only available to customers who purchase $X of merchandise today?” Put together an appealing package that includes a discounted second product you still have margin in but people probably would not have bought unless asked.
We all have what I call “average clients” who spend an average amount per transaction. We also have “dream clients” who need, afford and purchase way more. What is the difference in profile between these and ideal clients?
Many data companies will profile your clients through a lifestyle database that allows you to target more of the people who are already buying your products. Before you ask, do this with your entire client database; however, separate your best-buying customers and review any differences that exist in their profiles. You will probably find that it costs the same amount of money to target these people, so why not focus on them?
3. Increase the Frequency at Which Customers Buy
Grow your business without spending big bucks by focusing on how to get existing clients to spend more frequently.
Depending on the nature of your product, auto shipment and repeat order/appointment systems can be a godsend as they not only help tap into the lifetime value of your customers but also set up multiple potential orders from one initial marketing cost. This means you can spend far more than your competitors on acquiring the initial order because you will save in the long run.
These simple loyalty or reward systems can also be great when utilized effectively; however, it is worth noting that most loyalty card systems are underutilized by customers as they concentrate far more on preventing attrition than up-selling special offers profiled against spending patterns.
There are countless things you can do to increase and improve your business. Remember that you reached your current status because of your ability to find value in creative situations and locations, not necessarily because of an excess of cash. Your continued success lies in harnessing that unique perspective to propel you closer to your vision and even greater and sustainable success.