Every business owner and every business manager is constantly looking at ways to make their business more profitable.
This article suggests some alternative methods that will increase net profit.
The first thing that managers and business owners look at to increase profits is to reduce costs.
Now most managers and owners would have all ready done this.
They would've kept a very close eye on costs because they know that a dollar saved is easier than a dollar earned.
Keeping Customers.
Not every business has a deliberate strategy to keep their existing customers.
Instead, they rely on a steady stream of incoming customers.
However, every business that wants to make more money should have a strategy for retaining their existing customers.
Think of it this way, the cost of acquiring a customer can be substantial.
Having persuaded them to purchase from you has incurred further costs.
You cannot afford to let these customers go to your opposition, this means that you have to do something about it.
A customer retention strategy will contribute considerably to your objective.
After all, increasing your customer base is not just about getting more customers.
It's retaining your existing customers so that they will find it too expensive to leave you.
So what are you doing to retain your existing customers? Acquiring new customers.
There are lots of ways to acquire new customers but the most cost-effective way is through referrals.
These are referrals from people you know and from your existing customers.
Without a doubt, your existing customers know more of your potential customers than the people that you know.
If you want a certain type of customer, then ask for a referral from one of your existing customers who is similar in nature.
This is the most cost effective way of getting customers that meet the characteristics of your Ideal Customer.
On average, they would know over 30 people that they could refer your business to.
Tap into their networks and discover any completely new market that would benefit your business.
Consider your pricing.
Set your pricing so that you are managing for profit and not for market share.
It is always tempting to scramble for market share and try to increase turnover.
This is the traditional way that businesses try and make more profit.
However, very few of them count the cost of increasing revenue.
This leads to a situation where turnover climbs and profit remains static.
It's strongly suggested that an alternative strategy be employed.
Set your pricing so that you are making the maximum amount of profit.
If your market share drops calculate the increased amount of profit against your revenue.
It won't take long for you to realize that you can afford to drop your revenue and some customers if your margins are increased.
Do the calculation and work out how much more profit you could make regardless of the size of your market share.