Attracting new customers is one way to help your cashflow. However, you may be able to increase both revenues and profits without a lot of new customers.
You can do this by making more sales to existing customers, increasing the amount of the average sale, or raising your prices.
You may be able to make more sales by staying in contact with your current customers. Start an online or print newsletter to keep them informed of new products and other information of interest to them. Offer to text or e-mail product specials and sales to them. Call from time to time to remind them to reorder consumable supplies, or just to ask if there is any way you can assist them.
One way to increase the amount of each sale is to sell more items. Offer a discount when customers purchase multiples. For example, one widget is $20, two can be purchased for $35 or three for $45. Yes, you get less per widget. But let’s say your cost per widget is $5. The “three-fer” offer increases your costs by $10 and your revenues by $25.
This is a simplistic example. but it illustrates an important point: Certain fixed costs (e.g., order taking and fulfillment) don’t vary much whether you sell one, three or more items. If you can encourage multiple sales with a discount, you can come out ahead and make your customer happy, too.
Instead of selling more of the same items, you can sell add-ons and extras to increase revenues. Ever notice that toy stores sell batteries? That’s because their customers want to get everything in one place. So do yours.
Finally, you can increase profits by increasing prices. Most small businesses underprice, especially for services, because they believe they have to have the lowest prices to compete. Will charging more cause customers to leave? You might be surprised by the answer. Of course, it depends on how price sensitive your market is, but at least a couple of things can happen when you raise your prices.
One, you can lose customers. But, you might find that you are more profitable without those particular customers. Often, the ones least willing to pay a reasonable price are the most unreasonable in their expectations. You may spend a lot of time and money trying to satisfy these clients—time and money which can be more profitably spent elsewhere.
And, you may attract new customers with a higher price. Others value our products and services only as much as we do. If you charge a cheap price, customers may believe you offer an inferior product or service. Of course, along with a premium price you must deliver a premium result—but you’re already doing that, right?
One other result you may find with these customers is that not only are they willing to pay a premium price, they will buy more products and add-ons than your bargain-hunting customers. Don’t be afraid to charge what you are worth.
