These 5 ways to generate more income from your customers have the potential to add more profitability to your bottom line faster, easier and more cost effectively than any other method. You should pay very careful attention to each of the following sub categories.
1. Increase The Value Of Each Sale
Getting more money from each sale, or increasing the average transactional value of each sale – that is, getting more money from every purchase your customers make has the potential to add an immediate 30 to 40 percent in pure profits to your bottom line. Using this technique, and making a simple suggestion, fast food restaurants add millions in profits to their coffers every day. They use the strategies of:
- Up-selling – not selling anything additional – just offering a larger size or more of the same item the customer is already purchasing. Super-sizing a drink or an order is an example of Up-selling.
- Cross-selling, or suggesting that your customer buys an additional item that they didn’t intend to purchase, is another effective way to increase the size of the order. Asking if a customer wants fries with their hamburger and drink is an example of how a fast food restaurant uses this technique.
- Packaging, bundling, or combining several items together and giving a discounted price is another way to get your customers to spend just a little more and get a better value. Happy meals or Value meals are an example of this technique.
Each of these techniques only adds a little more to the total cost of the meal, and aside from the actual hard costs of the additional products, that “little more” income is pure profit since there are no advertising, marketing or acquisition costs involved.
2. Sell More Products Or Services
The goal of every business should be to make sure their customers are getting the maximum value, use, enjoyment, benefit, and satisfaction from the products and services they purchase from them. If your business has additional products or services that would help your customers increase the benefits they derive from their original purchase, you have an obligation to your customers to make those products or services available to them.
If you don’t have anything additional that you can make available to them, you could easily look outside your company to other businesses who offer products or services that are complimentary, but not competing, and that would enhance the value of the original purchase, and work out joint venture arrangements to make those products available to your customers.
3. Increase The Number Of Times Customers Purchase
Too many businesses operate with a one-time sale mentality. They give very little thought to repeat sales or back-end purchases. But that is where the real money is. It’s not uncommon for a business to lose money or barely break even on the initial sale. And it oftentimes takes several repurchases before any real money is made.
4. Establish And Maintain A Segmented Database
One of the most effective ways to increase sales is by having an up to date, clean and segmented database of all your customers – past, present and future customers – your prospects. When you keep track of your customers and what they’ve purchased in the past, and then see that they are informed of special sales and offers, special events, and new items, and discounts and promotions on items they would be interested in, shows them that you care about them, and encourages them to make additional, often more profitable purchases.
5. Increase The Average Buying Lifetime Of Each Customer
It just makes sense that the longer a customer continues to do business with you, the more products and services you’ll have the opportunity to sell that customer, which of course, translates into more profits.
But also, the longer that customer keeps coming back and buying from you, the more benefits they’ll receive from the products and services they’ve purchased, which leads to a more satisfied customer, and again, means more profits to you.
For example’s sake, let’s say your average customer trades with you for a period of five years before moving on to do business with another company, or no longer needs the product or service your business offers.
If that five years could be extended by just one year, it would mean an increase in profits of 20 percent – even if nothing else changed. Actually, it would be somewhat more than 20 percent, because there were no acquisition costs for that extra year like there was for the first year the customer did business with you.
And naturally, the longer the customer’s buying lifetime with you, the more chances you’ll have of getting referrals of others who can use and benefit from the products and services you sell.