Rogerson Kenny Business Accountants Melbourne

Increasing Sales

To Increase Sales or to Increase Price?

How to increase sales? This is the age-old question people in business ask themselves. However, there is one key consideration to think about first. Do you want to increase sales or do you want to increase profit? Increasing sales can be a business breaking exercise, often for little reward.

If you increase the volume of sales, you may also need to increase:

• Inventory
• Staff (sales, admin, factory)
• Storage space
• Bank overdraft
• Debtors may blow out due to better terms from you

However, by simply raising your price by a few percent, you can dodge all of the associated costs of increasing sales. A 10% sales increase can often have the same results as a 1% price rise. Think about it. If you try and grow too quickly, your cash flow will be impacted so severely your business may not recover. This is a fine balancing act.

 

Growing your sales

After considering a price rise (which should be done every year). Logically, the business still has to grow and thus sales do have to increase. The next question you must ask yourself is where will my growth come from?

Your growth will come from 2 sources: existing customers and new customers. Too often business people think about growing sales with new customers. The effort and hassle you need to go through to make this happen is costly and time consuming. Your best option is to increase your sales with your existing customers.

 

Existing Customers – Ideas for increasing sales and retaining them

Growing with existing customers is by far the easiest way to obtain sales growth. You must ask the question of every customer…what else can I sell them? What are your competitors offering? Are there new products or add on sales you can sell them? Have you ever been asked ‘Would you like fries with that?’ You need to have that mentality with your customers. Find out what else they may need, spend time with your key customers, look for opportunities to deliver a solution that includes you and the selling of more or higher margin products. Far better to sell less products and make more money, than sell lots of products and make no money!

Here are some ways you can increase sales and retain existing customers:-

• Before you deal with a client problem or query think… what is the lifetime value of this customer – then act
• Always ask for an order
• Be proactive with problems – hop on the phone and call!
• Give them offers

• See the opportunity in their business, understand their business – what do they need – be a problem solver for them
• Have someone visit them, face to face selling
• If presenting a new product or service, give them pricing and value options. As the value goes up, so does the price. i.e., think of a  Holden, BMW and Aston Martin. As the value goes up, so does price. If the customer thinks the Aston Martin or BMW are too expensive, tell them that is why we can offer you a Holden! Don’t discount your price if you can help it – discount the value first.
• Follow up on everything and deliver on your promises – build that trust
• Educate them on better products. Take the time to show them the benefit in using a more expensive product (that you make better money on). Think of the fourth sale first – don’t see the exercise as a waste of time
• Maintain the relationship – they need to be loved and feel like they are getting value / exceptional service to stay loyal with your business
• Support programs – web based, email, phone
• Hand written cards – birthday, Christmas – always have a meaningful note with it
• Testimonials – keep them thinking that they are doing the right thing buying products / services from you
• Product training (if a re seller) support your customers staff – make it easy for them to sell your product over someone else’s. A sales person will sell something that they believe in and are knowledgeable in. Give them the tools they need to sell your products with confidence (this is a customers sales people)
• Feedback surveys
• Complaint handling – do it with a smile. Think of the lifetime value of the customer when you are dealing with a complaint
• Loyalty program
• Have fun with your customers

 

New Customers – How to find them and sell them products / services

New customers are the most expensive to attract and even harder to retain. They already have a relationship with one of your competitors and if you are cold calling them, they are likely to be happy with their current supplier.

What you need to do with them is a needs analysis. Find a gap in the business that you can satisfy. Here are some useful questions you can ask a potential customer about their business. From here, you can lead the conversation and find an opportunity:-

• How is business? (this can lead anywhere – but often that anywhere is an opportunity)
• What do you expect in a supplier? What do you like / dislike? What is important to you?
• What do you like / dislike about your current supplier?
• Are you happy with the product(s) you are using, in terms of price, quality, delivery time, and support? (You are fishing here for an opening)
• If there was one thing about your products / services you receive that you could improve, what would it be?

From here, you will have to question your potential customer and take the conversation wherever it may go. Basically, you want to find out what they are not happy with, what they would like, what they expect from a supplier in terms of price, quality, payment terms, delivery etc.

Your opening to turn the lead into a relationship is to say, based on the answers from the questions above: “If I could provide you with a product that lasted longer than what you are using by 10%, but was only marginally more expensive, with same day delivery and 30 day credit terms, would you be interested? From here, away you go. You just match what they said to what you can offer.

Please click here for our marketing page, which will show you how to generate leads for potential new customers.

Below are some ideas on how to convert that lead into a new customer

• Ask for an order
• Always follow up
• Deliver on your promises
• Keep calling – it often takes 7 calls (visits) to turn a potential customer into a customer
• Don’t pressure them to take over their whole business. There is nothing wrong with small steps. This way, you can test them just as much as they test you. Test if they pay on time, order consistently, dispute invoices etc
• Give them a written 2 page proposal with value and pricing options.
• Win-win negotiating
• Educate them
• Testimonials
• Find solutions for their business (with your products)
• See the gaps and opportunities. Try and save them money with better products and processes

Remember to think of the lifetime value of a customer. From here, when dealing with a customer on a day-to-day issue, things will seem so much clearer.

 

Existing Customers x Retention rate = Retained customers

Number of Leads / Enquiries x Conversion rate = New customers

Retained Customers x New Customers = Total number of customers
Click here for more information about a Business Focus Session

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