For a long time now, many people have been conscious of the different types of strategies there are in the world. Have you ever wondered how smart strategies could possibly be linked to revenue and sales? Let’s start by discussing what the difference between revenue, income and sales are shall we? Well, the term revenue refers to the amount of MONEY being generated from sales, whereas sales is the term used for the number of UNITS being sold.
So is revenue income? No... Income is the PROFIT made from the sales. Revenue is all to do with the amount of money made before taking away the costs of each product. WELL! Lots of maths...right? So let’s see how we can build on some stronger strategies to improve our revenue and sales. Let’s discuss... shall we?
Some strategies to improve Revenue...
According to Josh Kaufman; a best-selling author in the top 100 and renowned researcher; there are only 4 ways to increase revenue that will produce positive outcomes. They are:
- Increasing the amount of customers
- Increasing the average transaction size
- Increasing the frequency of transactions per customer
- Raising your prices.
The above mentioned strategies have massive contributions in increasing revenue. However, the real question here is “is it a future-proof strategy for companies?” Let’s dive in and evaluate it ourselves...
Increasing the number of customers:
When you improve your customer bank, we see growth. Well that’s an undeniable truth - We all know. So where is the magic spell? The more customers that come in, the more likely they will buy something. An example could be of a restaurant where the more customers that come in, the more food will sell. Thereby, increasing sales and revenue.
Increasing the frequency of transactions per customer:
Well! That might seem like a lot of work for the accounts with all those frequent transactions and settlements they have to perform. Increasing the frequency of transactions per customer is the amount of time you want a customer to come in to purchase something.
It all relates to the quality of the products you’re selling or service you’re providing. An example could be JD Sports and the quality of trainers. This all depends on how often you wear them and what they are used for. The majority of people these days have 3 or more pairs of trainers/shoes. Sneaker heads on the other hand have up to double digits, (cheeky confession, I’m on of these people).
Your customers are window shopping every day and your business is competing with their competitors. So do you think raising the costs of goods or services will be appreciated by your valued customers? That’s where your product value and customer retention strategies come in to play.
We can use Subway as an example. Previously they had a variety of subs costing £3. They made adjustments to the list due to high demand and popularity. Their prices have been boosted up to £3.40. It may not seem a lot for some valued customers but may be a lot for customers who are looking for cheaper options. The amount of people buying that sub for 40p more each day, every week! Now I’ve got you thinking about it haven’t I?
So will these strategies work for your business?
2 out of the 3 strategies mentioned earlier will work for businesses. I’m guessing you know which ones I am talking about. Don’t you? You might see some real changes in the numbers when your strategies contribute to ‘increasing the number of customers’ and ‘increasing the frequency of transactions per customer’. However, you might re-evaluate your product credibility and customer retention strategies to see direct reflection in your business. Do you agree? It is very easy for businesses to gain more customers; all they have to do is market and advertise it at the right time and in the right place. Additionally, you might rethink and introduce some beneficial offers that might improve the amount of sales , the return on sales and sales overall....
So what are your tools for improved sales?
Recent research demonstrates that customers buy into products that have made better market impact. So you might reflect on reviews, product description, service availability and various other factors that indirectly will affect your revenue and sales. Certain businesses illustrate to their customers product value and benefits more than the price. Promotions are second in line to attract more customers and can sometimes be an effective tool in hijacking customers from your competitors as well. The more you reflect on benefits of the product and services rather than the actual product the better impact it creates in the mind of your customers. ‘People buy benefits’- this was mentioned by a renowned entrepreneur and business coach Brain Tracy. Therefore, we can see that when VO5 – a leading hair stying company started focusing more on customers benefit from their product, they actually conquered the market. Their hair styling gel has made massive impact on customers who are seeking for high-end hair styling products at an affordable cost. VO5 advertisement focuses on trending styles, which are appreciated by all generations. Their ads have made ground-breaking impact on lives of people which makes customer consider their product over their competitors. Creating a remarkable impact on minds of your customer is crucial and we must master these skills sooner then later. Do you agree?
Few other strategies that can be used to increase revenue and sales...
Aligning pricing with customer requirement
Sell to customers’ needs. Make your customers feel valued by catering to their needs
Increasing product quantity and availability
Advertisement retargeting towards customer focused solutions
Customer referral schemes
Personalise your communication with customers
Let’s draw our attention to advertising retargeting. When you consider targeting your product and services towards customer based requirements you are equipping yourself with smarter strategies that will focus on customers’ requirements. This will draw your customers towards your business as they will value your business ethos of valuing your customer’s needs and priorities.
You might also align some of your in-demand products pricing with customer requirements. This might seem crucial when customers are searching for your services online. Do keep in mind that they are shopping with a budget in mind. Therefore, investing quality time to research competitor’s strategies and pricing will keep you ahead of competition. If you are a customer-centric business, nothing should hinder your financial growth. Primark has been excelling with similar strategies. They have been exercising similar strategies quite effectively. They made themselves a people-focus brand that does not compromise on quality and promises great pricing!
Majority of businesses these days implement some or all of these strategies to increase their sales and revenue. However some are more effective than others in specific areas. Certain factors might impact on business revenue such as the size of the business and capabilities to take the challenge of ongoing growth and demand. When start-ups and smaller business competes with multi-national companies they do see sometimes restriction in scalability does affect revenue. Footlocker is a leading brand in the UK and the US. Therefore, they have the luxury of larger customer base and product availability. Footlockers’ has achieved massive increase in sales over the past 5 years from $6,101 in 2012 to $7,766 in 2016.
If you reflect on these strategies and how some companies are reaping benefit from them, you might think these strategies will all work for you as well! So why not start now with some stronger and promising strategies?
Let’s get on with some recap...
What do you think? Are these strategies helpful? Looking into some of the businesses that use these strategies it is pretty clear they are helpful and effective. Just remember that not all strategies are suited for all businesses. Being a service business is much different to being a product oriented business. Many of the strategies will suit product oriented businesses better as they can be more flexible with product pricing and the numbers of manufacturing. However, that should not put you off! Better pricing and customer-centric approach will always reap benefits don’t forget that! So on your marks... get set... GO!