I've been running my own businesses since 1984 and during that time I've learned there are 4 Ways To Grow Your Business. It doesn't matter what type of business either. In my business consultancy work, I consult with directors and owners of firms providing services ... products ... content ... and all sorts of things. And the four ways apply to all of those businesses too. So, if you're looking to grow your business - read on.
There Are 4 Ways To Grow Your Business
Think about that statement for a moment. There are four ways that any business can increase its turnover. Increase its sales. Increase its profit. When we think about it they are, briefly:
1 - Increase the number of customers that you have.
2 - Increase the average order value - the amount that each customer spends with you.
3 - Increase the frequency with which they come and spend.
4 - And increase the overall time they stay as a customer.
Four ways.
Let's have a look in detail, at each of those.
1 - Increase the Number of Customers that You Have
Now, increase the number of customers that you have ... seems fairly self-explanatory really. If you have 1000 customers and you can increase to 2000 customers - and they all spend, on average, the same amount - then you double your turnover. You double your profit, perhaps. Or maybe you double your profit by more, because you may have fixed overheads and, therefore, they won't change when you double your sales.
That could increase your profit by more than 100%.
So, think about ways that your business could increase the number of customers you have. There are bound to be ways. There are oodles of ways. It's only really limited by the way we think. So, be creative. Aim to get customers queuing to do business with you.
2 - Increase the Average Order Value
Each one of your average customers will come along and they will spend an average amount of money with you. Some customers will spend less ….. and some will spend more ….. but there's an average amount. The questions is ... "How can you get people to spend more than average?"
Think about it. The supermarkets do this, all the time.
You may go into the supermarket in the morning on your way into work to get a sandwich for lunch. A sandwich at £2.00 maybe. But then you see there's a 'Meal Deal' for £3.00, in which case you get a drink and a bag of crisps, as well. So, the supermarket's got you to increase your spend by 50%, from £2.00 to £3.00. Yes, you're getting more, but from their point of view, their sales turnover has gone up and they make a profit on that drink and those crisps.
Think about the ways that you could get your customers to spend more with you - to increase their average order value.
3 - Increase the Frequency of Purchase
Again this is a simple theory. But in practice, how can you get your customers to come back to you more often?
This question reminds me of a discussion with a dentist years ago. He was concerned about the hygienists' quarterly appointments, where patients go and get their teeth cleaned. The dentist was struggling, frankly, with the overheads and with getting the numbers right, so, the subject of these quarterly checks came up.
Now, he had a system whereby the receptionist would telephone each one of the patients, every quarter, to book up an hygienist appointment. The call was booked up in the diary 13 weeks after the previous visit. So when someone came to see the hygienist, the receptionist would count up 13 weeks and make a note in the diary to contact that patient again.
And they did so. 13 weeks later.
But the patient couldn't instantly come in. They'd book up that appointment for a week later, 2 weeks later or whenever that patient could fit it into their diary or when the dental surgery could fit them in. The net effect was that 15 weeks passed from one appointment to the next, on average.
Instead of visiting every 13 weeks, which would be four visits a year, visiting every 15 weeks worked out to 3.467 times a year. So, instead of getting 100% of their target of 4 visits a year, they were actually getting only 86.68% - 13% under target.
I suggested to this dentist, that it would be better to diarise 10 weeks after each visit, so the receptionist would call 10 weeks after each visit and book them in the next week, week after or whatever it was.
He tried that and soon enough, those appointments were being booked up, on average, every 12 weeks. Just slightly earlier than once a quarter. This meant that patients were now visiting 4.334 times a year, or just over 108% of the target.
That difference between patients visiting every 12 weeks, rather than every 15 weeks, amounted to an increase in visits (or increased frequency of purchase) of over 21%, all from the simple process of changing the timing of when patients were called. Calling at 10 weeks brought patients in every 12 weeks, on average, rather than the 15-week average that resulted from calling after 13 weeks.
So ... what can you do in your business to increase the frequency of when customers come back to you?
4 - Increase the Length of Time an Average Customer Stays With Your Business
Now, the ultimate challenge, here, is when you have one-off customers. It reminds me of a solar panels company I was talking to recently. Solar panels are a one-time purchase. You haven't got them, you decide you want to have solar panels on your roof and you get a company to come along and install them. Job done!
You don't have those installed once a year, twice a year or three times a year, do you? They're either installed or they're not installed. So, as far as that business was concerned, they had a whole load of one-off customers.
But, there's always a way to increase the length of time a customer stays with your business.
I was chatting to the owner of the solar panels company and I asked ... "What can you do to make those customers stay in touch with you?" What about booking up an annual test of their system and a clean of the solar panels?
He tried it and every time they put in an installation of solar panels, he agreed with the customer, at that time, a date when they could come back and do a test of the system and clean the panels. For a £100.00 charge.
Now, a year later, those panels are covered in bird poop, bee poop, and whatever - and they're not as efficient at letting the sunlight through and, consequently, the benefit to the customer is less than it otherwise would be.
The solar panel company are now being paid £100.00 to come along and clean those panels to make them all shiny and efficient again - and then checking the wiring and that the system is working, the meter is working etc. And that means they can demonstrate to the customer - well this is what was happening before we cleaned the panels - this is what's happening now, after we've cleaned the panels - you're better off because they're generating more electricity for you. Marvellous!
And then you do the same a year later ... the same another year later ... and you can constantly remind the customer of what a great choice they made by getting you to install those solar panels.
But also ... importantly ...
You can keep up to date with that customer and with things changing along the way. They might get to the point where they're talking about an electric car. And being an electrical company that installs wiring and equipment - you can install an electric charging meter for that car. And then you get another £1000 or whatever - and that customer has spent more money with you.
Not only the £100.00 per year, which is a modest amount, I suppose. But if you have 1000 customers and they all spend an extra £100.00 with you - your turnover increases by £100,000. Very nice, thank you.
And then if a bunch of them spend £1000.00 with you, installing an electric vehicle charger ... very nice, again.
So ...
Think about your business and what you can do to keep in touch with your customers. To keep them with you for longer. To keep in touch with them - and remind them of how happy they are to do business with you. And as you do that - look for opportunities to get them to buy from you again ... and again ... and again.
To Summarise ...
Let me remind you of those 4 Ways To Grow Your Business.
1 - Increase the number of customers that you have. That's sometimes easier said than done - but there's always a way.
2 - Increase the average order value. Remember 'Meal Deals'. What can you do that's your equivalent of a 'Meal Deal'?
3 - Increase the frequency of purchase. Remember the dentist and how booking up hygienist appointments every 12 weeks is better than booking them every 15 weeks. Review your systems for those regular quarterly things, half-yearly things or whatever. And if you don't have a timetable for your customers, what can you do to encourage them ... to tell them ... to come back to you?
4 - Increase the length of time an average customer stays with your business. Remember the solar panel company - probably the ultimate in one-off purchases - but changed into a regular annual thing? And then an occasional boost in income when something else happens. You're probably not a solar panel company but think about what you can do to get your customers to love you and stay with you forever? Think about it. And get in touch if you get stuck.
So, those are the 4 Ways To Grow Your Business.
I hope those thoughts are getting your brain buzzing with ideas of what you can do in each of those areas.
And you shouldn't just do one.
You should do all of them.
Do let us know what bright ideas you come up with. Leave a comment below or send us an email.
And if this has been useful to you, please tell your friends and spread the word.