As business owners and entrepreneurs, we are constantly looking for different ways to grow our revenue. However, did you know that there are 3 ways to grow your business? Yet most of us only focus on one way and this is often the hardest path to travel. What is even more amazing is that when we focus on incremental improvements in all areas, the growth in our business can be exponential!

What are the three ways?

1. Increase the number of customers – this is without doubt the most common way and also the most difficult way to grow a business because the cost of acquisition of a new customer is so high. Also the time and effort is great – yet this is often the only way people know how to grow a business.
2. Increase the number of times a customer buys from you. May business owners only sell to our customers a fixed number of times – yet once a customer buys from us, they are far more likely to buy from us again. Any successful business owner will tell you that it is much easier to sell to an existing customer than to a first time customer.So why don’t we then try and sell more often to our customers? Often because most business owners believe that customers are there to buy our products and we are there to sell customers our products. However, this is not the case – in fact once we have sold a customer on something, our sales opportunities do not end; in fact they are just beginning.

   Once a customer has bought from us, we have gained their trust (presuming of course that our goods and services are of great quality). Once they trust us, we have an opportunity to gain a deeper understanding of their needs and we can then sell them complementary products which they are more than willing to buy from us.

3. Increase the average value of each customer transaction. In tough economic times, when people are cutting prices, how can we justify increasing our prices? The only way is because we increase the value of what customers get even more. For example – if the average sale from each customer is $100, is it possible for us to give them $250 worth of value and then charge $200? In many cases it is. In this example, the customer is actually getting a $50 or 20% saving off their purchase – yet we as the business owner are getting a 100% increase in revenue. It’s all about looking at what we have and working out how we can give more value.

Now a 100% increase in the average transaction may not sound feasible. So let’s look at a more plausible example. Let’s say you have a business that has:

1. 1000 customers
2. Each customer buys on average twice per year from you
3. The average cost per transaction of each customer is $100.

Therefore your average annual turnover is 1000 x 2 x $100 = $200,000

Now let’s imagine that we make some changes to your advertising and you increase your customer base by just 10%. Is that possible? Absolutely! So you now have 1100 customers buying from you.

Let’s also look at adding more value to our customers such that they buy more from us. Let’s again be conservative and presume that our customer now buys 10% more from us – so the average income per transaction is now $110.

Finally, let’s say we’re also able to increase the average number of times a customer buys from you per year – and conservatively speaking, let’s say we can increase that by 10% as well. So by increasing the 3 key business growth factors by 10%, have we increased business turnover by 10%?

Well, let’s have a look.

Annual turnover = 1100 customers x 2.2 transactions per year x $110 (average sale) = $266,200

In other words, by making small 10% increments in each key factor of our business, we have increased total business turnover by over 33%!! That’s exponential growth and that’s what we want in our business – and it happens by realising that there are 3 ways to grow our business (not just one) and we can make small increments in any of the 3 factors but we get the maximum results when we make increments in all three.

I hope you found this article helpful and if you did, please share it on Digg, Delicious and Stumbleupon and retweet it. I’d really appreciate it.

Thanks,

Niro

PS: If you would like someone to help you with growing your business, feel free to email me at niro@undergroundsuccess.com

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