<p>The easiest method to improve your profit is to increase your price. All things being equal (as in customers are still happy to buy from you and competitors don’t undercut), any increase will go straight to the bottom line. But it’s not always possible to raise prices overnight or without customers noticing. We have five steps on improving the profit in your business that don’t rely on adjusting price.</p> <p><b>Step 1. Increase leads</b></p> <p>The more leads, the more chances of converting them to customers. This could be more traffic to your website, more people walking past your location, more people calling your business, or being invited to pitch for more contracts by business customers.</p> <p>Increase leads by:</p> <ul> <li>Being active in social media by talking about staff, customers and success in <a href="https://www.facebook.com/" target="_blank">Facebook</a>, use <a href="http://www.linkedin.com/" target="_blank">LinkedIn’s</a> networking platform to connect on a professional level, <a href="http://www.twitter.com/" target="_blank">Twitter</a> allows you to microblog, <a href="http://www.youtube.com/" target="_blank">YouTube</a> and <a href="http://www.instagram.com/" target="_blank">Instagram</a> help distribute videos and images.</li> <li>Gather more leads from your website with an e-newsletter, product whitepapers, free demos, samples, reviews, video explanations or quotes.</li> <li>Create a blog to build interest in your business and position yourself as an expert.</li> <li>Advertise to create awareness (it’s still ok to use offline media if it works), or advertise on the online platforms e.g. Google Ads.</li> <li>Identify developing new customer targets and markets and move from selling to consumers to business, or vice versa.</li> <li>Partnering with another business to open up a whole new market.</li> <li>Build an online distribution channel to open up your business to customers outside your current location and region.</li> </ul> <p><b>Step 2. Increase your conversion rate</b></p> <p>Once you’ve got more people discovering your business, it’s time to convert them into customers. First, create a profile of your perfect customer and identify what their triggers are, to determine what causes most customers to make the decision to purchase. Once you start uncovering why people buy, you might find out why they don’t.</p> <p>To help you convert more leads into customers run staff sales training, set up a sales funnel to identify and use customer relationship management (CRM) software such as <a href="http://www.hubspot.com/" target="_blank">Hubspot</a>, which allows you to:</p> <ul> <li>Conduct A/B testing and experiment with different messages, promotions, and offers and see which generates the most conversions.</li> <li>Rank your contacts in order of sales readiness and prioritise them according to their engagement and level of interest.</li> <li>Calculate the average time it takes to move a potential customer from the inquiry stage to a sale and track your analytics throughout the process to see where potential customers might be dropping off.</li> </ul> <p>By understanding the entire lead nurturing process with the right CRM system, you’ll be able to enhance your business’s efficiency, increase revenue and better those customer relationships.</p> <p><b>Step 3: Increase the number of transactions per customer</b></p> <p>The next metric is to increase the number of things customers buy from you. It can be products, hours, services, warranties, insurance; in fact anything where a customer is encouraged to buy two things rather than one. It can be simply a matter of predicting when a customer will need an extra item and reminding them to linking their purchase data to complementary items they should be buying to analysing seasonal demand.</p> <p>You can also:</p> <ul> <li>Expand the range of what you offer, so there’s an increased opportunity for a customer to add on.</li> <li>Use virtual warehousing and online sales to diversify and extend your product range without investing in more stock.</li> <li>Work faster by ironing out inefficiencies by streamlining systems and processes, such as delegating work, using technology, upgrading equipment or ditching unnecessary tasks and making sure staff are working efficiently.</li> </ul> <p><b>Step 4: Increase the average value of each sale</b></p> <p>If you can increase the average value of each sale, then it multiplies when combined with the previous three steps. If you’re able to develop premium products and services, then you can start to sell items that cost more (which is different from increasing your price).</p> <p>You could also focus on selling more of the products or services that have the biggest margins.</p> <p>Likewise, review the viability of lower-margin products or services, and switch out any that are not adding value to your bottom line, relative to space or resource they consume in selling.</p> <p><b>Step 5: Improve net profit percentage</b></p> <p>Finally, it’s essential to look at how lowering the percentage of costs compared to sales can help improve your profits. How can you widen the gap between what you pay for raw materials, stock, or components and the final selling price? Take a look at your ongoing, variable costs as chances are you’ll find ways you can cut back, such as:</p> <ul> <li>Reducing cost of goods sold (COGS) by using lower-cost materials where possible, without affecting quality.</li> <li>Talk to your suppliers about renegotiating your terms. It could be that they can offer you discounts or updated payment options. If they’re not willing to re-negotiate, start researching new suppliers who can offer you more options.</li> <li>Reduce waste, buy only what you need, recycle and reuse where you can.</li> <li>Eliminate unnecessary product features, which could be a significant production cost, as customers may not care if the feature is there or not.</li> <li>Take advantage of discounts for paying on time, paying early, or buying in bulk. If you have the cash in reserve, then use it to drive your costs down.</li> </ul> <p>You won’t find that every product or service you use in your business can be lowered or re-negotiated, but there’ll be more than you think.</p> <p><b>Next steps</b></p> <ul> <li>Contact one of our friendly Business Relationship Managers to see how we can help your business improve your profit.</li> <li>Ask your suppliers to re-quote prices on materials, products or services to make sure you get the best price.</li> <li>Invest in accounting and CRM software to accurately track sales, expenses, margins and customer success tactics.</li> <li>Speak with your accountant to explore additional ideas to improve your margins.</li> </ul>