Saying you want to increase your company’s profits is a little like saying you want to “get rich”. Neither of these statements will come as much of a surprise to anyone, and neither is particularly helpful or likely to happen without a more concrete plan.
Increasing revenue on the other hand is a little different though.
Your revenue is the amount of money that your business makes before you deduct expenses and cost per unit. In other words, this is the sum total of all the invoices you send and all the cash you take into the till.
Increasing revenue is a much more focused goal than increasing profit and there are a few useful strategies you can use to get there. Today we will look at four.
The four ways to increase your revenue are:
- Increasing your number of customers
- Increasing your average transaction size
- Increasing your frequency of transactions per customer
- Raising your prices
You probably feel there are many more strategies you can use to increase revenue, but what you’ll find is that most of them are just elaborate ways of achieving the above ends.
Upselling is a great strategy you can use to increase the amount people are spending with you. This is also called the “value add”.
Essentially, you secure your customer first and then once they are ready to purchase, you offer to give them even more premium treatment for just a little extra money. An example of a value add would be offering someone a VIP section once they have already paid to get into your club.
An upsell is actually just increasing the average transaction size.
Another surprising way to increase revenue is to lower your prices. Why? Because in doing this, you make yourself more competitive and more tempting. A greater number of leads will potentially become paying customers. Of course, in reality this is really just a manner of increasing the number of your customers and increasing the frequency of transactions per customer.
Providing Great Service
Providing great service is one of the oldest ways to increase revenue but it is also the best. This simply means making sure that your product or service is worth what people are paying for. This encourages them to come back and use you again (increasing frequency) and at the same time they are more likely to spread the word (increasing customers).