This year has been marked by inflation and conflict, causing consumers to tighten their belts and reduce spending. Businesses and organisations are not immune and have had to make tough decisions to meet stretch targets they may have made during last year’s budget exercise.
As organisations start to think about next year’s budget, here are 6 ways that you can consider to mitigate the risk of the current economic challenges, and grow your sales:
- Increase prices – small business owners are often sceptical of raising prices, given the competitive market they operate in. However, consider that most medium to large businesses regularly increase their prices year on year, in line with market conditions – and we continue to buy from them. Conduct scenario analysis to see how various price increases (e.g., 5% vs 10% may impact your revenue), and test the increase on a small scale to gauge reaction. The reality is only a small fraction of your customers, the uber price-sensitive may choose to leave – and if your business aims to offer value and service over price, that’s just as well.
- Diversify – Expand your products and services offerings. To increase your revenue, you are going to have to sell more. Add more offerings. Ask yourself, what else does my customer need/want that would make their life or job easier and less painful? Listening and understanding to your customers may reveal opportunities e.g. a health clinic that conducts an annual health check, may partner with a pharmacy that offers free home delivery of required medications.
- Cross-selling/Upselling – It’s surprising how many businesses do not train their front-line staff to ask customers if they need anything else. A simple question, such as “would you be interested in “x” product while you are here?”, can often result in additional income. Customers are time-poor, and if they can avoid going to another place or waiting in another queue, they will surely choose the easy way, and buy your product/service there and then.
- Down selling – Customer acquisition is costly, and you are already winning if a customer has entered your premises and is browsing – so consider offering the customer a more cost-effective option to start with, until they are ready to buy more. The key is to get the customer into a relationship with you and grow from there.
- Bundling – Have you wondered why Amazon has a handy little “Frequently bought together” as you scroll through the item you wish to buy? Bundling is not new but is a great tactic to offer value to customers.
- Payment collections – Finally, while you may have worked tirelessly to increase sales, hoping that customers pay their invoices on time is not a sound strategy. Payments are often a manual task, and someone needs to check the invoice, and then make the payment. It’s likely that the same person is overwhelmed with their workload and may have forgotten. So put in place a policy, with clear payment terms, and a procedure for your staff to send a reminder and call the customer. Consider it another opportunity to touch base with your client.
Reach out if you want to talk further about how to manage the risk of economic conditions, and still achieve your income targets, or indeed, exceed them.