The thrust of any business or startup is to be profitable. It is one of the definitive metrics because there are several others that matter as well. Strange as it sounds, some people operate ventures at a loss without even noticing. This can be due to overestimating or underestimating their financials. Poor financial management is a widespread problem amongst many business people and entrepreneurs. Our subject matter today is ways to increase your profits by more than 40 percent.
How To Roll Out Your Efforts Or Strategies
Once you are done with all the analyses of your key profit drivers, you will have a fair appreciation of what needs to be done. However, there is a need not to do things anyhow; you must be systematic. What should come first and what comes after what? You have to be consciously deliberate in the order of things to do. Clearly, you want to boost profits, right?
1. Widening Your Current Profit Margins
Thus your first focus should be on how you can widen your current profit margins. You can do so by reducing the associated expenses. You can drive down your costs by considering bargaining with your suppliers. You can also try out negotiating for relaxed or flexible payment terms; so much you can explore. You can also enhance your product or service’s value. That would validate possibly increasing the prices and still enjoying customer inflows. Another way is to introduce new products or services. Take note of your most significant (i.e. those who bring in the most profits) customers and prioritize them. That can even take lesser effort than trying to bring in new customers. Widening your profit margins can entail venturing into new markets. These are some of the ways to widen your profit margins.
2. Boosting Customer Retention
The next step will be to get into customer retention. There are an infinite number of ways you can boost customer retention. Keeping constant touch with customers is one way – digital marketing and customer relationship management are pivotal in this. Better products or services and preferable pricing also improve customer retention. Here is where customer loyalty programmes come into play as well.
Study your competition and figure out ways to differentiate your brand from them. Solicit candid feedback from your customers to better understand how you can improve their customer experiences. Customer retention is only possible if the customers are getting fulfilling customer experiences from your brand. These are just some examples, but there is plenty more you can do to boost customer retention.
3. Lead Generation
The preceding two areas are mainly focused on current customers. That is obviously your first area of attention. However, it is not enough if lead generation is in shambles. You have to build a system that keeps lead generation active at all times. It should be a structured system that can be troubleshot and redefined to make it better. Finding new customers will always be essential to growing your business. Bear in mind also lead generation also applies to existing customers. This implies you will have to generate leads with regard to upselling or cross-selling to your existing customers. This is where the importance of digital marketing comes to the fore. You have to be active on the internet and social media. Those platforms are the driving forces behind lead generation nowadays. I have often underscored the importance of collaboration and networking. Those efforts are also paramount in lead generation.
Sales And Marketing
This comes down to the importance of knowing your customer acquisition cost (CAC). How much are you using, on average, per customer in acquiring them? This will have a bearing on the profit margins later on. Ideally, you want to manage your CACs such that they are not too high. The other important metric that comes into play here is the customer acquisition rate (CAR). The customer acquisition rate is simply the total number of people who opt-in or sign-up during a marketing campaign divided by the total audience (expressed as a percentage). This is particularly easy to calculate when you do digital marketing campaigns through social media. All this shows the importance of using data analytics in your operations and business strategy formulation. Sales and marketing are central, but you must do it using evidence-based approaches.
Put together everything we have discussed in this article, and you stand a good chance of increasing your profits by over 40 percent. It is not rocket science neither is it magic. It takes critical thinking and using data-based premises in making decisions. Plus, it should be a perpetual process that never ends; it should be a matter of principle. That way, even when crises hit, you will stand and even weather the storms.
