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The only three ways to increase your business and what you can do to maximize each one -
Part 1
All of us want to grow our businesses and bring in more profits,
right?
Well, it often helps to break down a process to its core elements and get rid of the clutter that can distract
us from doing the important, the “20 percent” in Pareto’s Principle, or the “80/20 Rule” which says that 80
percent of our results come from a special 20 percent of our actions.
When we truly focus on what really makes our businesses grow, I think that we can agree with what Author and
Business Consultant, Jay Abraham, brought to light in his book “Getting Everything You Can out of All You’ve
Gotten.” It’s really a simple and obvious concept, yet very profound and often forgotten.
Here it is:
“There are only three ways to increase your business:
1. Increase the number of clients.
2. Increase the average size of the sale per
client.
3. Increase the number of times clients return and buy
again.”
When we realize the truth and the wisdom in that statement, it can be
refreshing to know that there are only three things on which we need to focus in order to increase our
profits; not 17, not 47... Only three things.
With that in mind, Mr. Abraham offers the following suggestions:
1. Calculate your number of clients.
2. Figure the average amount they spend on each transaction
or sale.
3. Determine how often they make a purchase in a
year.
He goes on to give the following example:
“Let’s say you have one thousand clients. They average $100 per transaction or sale. And they make two
purchases in a year.”
So, 1,000 Clients x $100 Transaction per Client x 2 Transactions per Year = $200,000 in Revenue.
“But look what happens if you increase these three numbers by just 10 percent.”
1,100 Clients x $110 Transaction per Client x 2.2 Transactions per Year = $266,200 in Revenue.
In that example, we can see that just a 10 percent increase in each one of the factors grows your revenue by
33.1 percent.
“A 25 percent increase in these categories nearly doubles your income to $390,625. Very simple. But the results
can be overwhelming. Focusing on this simple formula is just one small way people easily do increase their
incomes or grow their businesses by 100 percent, 200 percent or more.”
Now the question is how can we increase each factor of the formula?
We’re glad you asked.
Here are Some Practical Ideas to Increase Your Number of Clients
1. An obvious one, make sure you do everything in your power to actually
keep the clients you already have! If someone keeps adding new clients but they lose just as many of the
ones they already have at the same rate or higher, they are not really increasing the client base, are
they?
Be intentional about implementing an effective client retention
program. Even simple things such as staying in touch with your clients, surveying them to find out how
you can best serve them, having client appreciation events and offering special discounts and
promotions exclusively for them can go a long way in fostering client loyalty towards you and your
business.
2. Make sure to be constantly and effectively advertising and marketing
your business, your products and services (emphasis on “constantly” and “effectively”). Also common sense,
but it’s easy to get complacent or distracted, especially when business is good, and not maintain or even
increase your promotional strategies.
Make sure to set aside a significant portion of your budget to devote entirely towards your advertising and
marketing efforts. Don’t look at it so much as an “expense” but rather as an investment in the future of
your business and, by default, your future and the future of your employees.
3. Create strategic partnerships or “joint ventures” with people with non-competing but related b
usinesses.
For example, a Veterinarian can partner with the owner of a pet
supplies store and the owner of a pet grooming studio or spa and they can refer clients to each
other.
They can also set up an Affiliate program, such as the one we offer at Merchant Support Network, and they
can create new sources of income, in addition to growing their client base.
But that’s not all, just wait for Part 2 of this article in the next
issue of the Elevate Your Small Business eNewsletter for more proven ideas to increase the number of
clients.
For now, let’s move on, shall we?
Here are Some Practical Ideas to Increase the Size of the Transaction per
Client
1. Think of new related products and services
you can offer your clients. Each new product or service means a new source of revenue. That is often
referred to as “cross-selling.”
That’s why beauty salons don’t just offer hair styling services and manicures; they also sell hair and skin
care products, and cosmetics.
2. Offer a bigger or better alternative to a line of products or services and ask your
clients if they’d rather have those. As you know, we call that “up-selling.”
Just think, “Do you want fries with that?” Or, “would you like ‘the Works’ car wash that includes waxing,
rim shining, and an intoxicating, strawberry fragrance?”
3. Think of ways of improving your products and services to increase their value by
multiple factors and then raise your prices some.
In other words, if you sell a product or service for $100 dollars, find ways to make it much better to
better serve your clients. We mean better to the point where it can demand a price of $150 dollars or more,
but sell it for $125.
Clients have no problem paying a higher price when the value they receive is worth it. Just ask the owners
of higher-end luxury vehicles or those who wear designer clothes and accessories.
Of course, there are many other ways to increase the size of the
transaction, but we can talk about them in the next issue.
Here are Some Great Tips to Increase the Number of Sales per Client
1. Come up with powerful incentives to create
client loyalty. Can you offer an exclusive Membership where clients who join get special offers?
For example, Blockbuster® offers their “Rewards” membership program for about $10 a year and members get 12
free movie rentals per year, “rent a movie, get another one for free” offers, rent “x” number of movies
within a month and you get an additional one for free, etc.
The airlines offer their “frequent flier miles” programs. Subway®, Safeway® and many other businesses give
their customers membership cards and their customers accumulate points towards future purchases or get
instant discounts for being preferred customers.
2. Offer a package deal instead of a one-time transaction.
For example, a carpet cleaning business that usually offers a one-time service for $250 dollars, can offer
a package of four cleanings per year for $800 dollars. The client saves $200 dollars in that year, and the
business owner just secured three additional transactions from that customer during that year.
3. “Reactivate” past clients who haven’t purchased from you in a while by sending them a
well written letter offering them a limited time, special deal that is only available to them.
Again, the ideas to increase the number of clients, to increase the size of each transaction and to
increase the number of transaction per client are endless, and we can certainly discuss more of them in the
next issue. So, stay tuned.
In the mean time, we’d really appreciate your feedback. You may email us at:
PaulAndCharles@MerchantSupport.com and let us know what you thought about this article.
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