Want less revenue? No. I thought not!
Every year, in pretty much every company, the clarion call goes out to “grow or die”.
Clearly, revenue growth is an absolute business imperative.
But just how do you increase your revenue?
Surprisingly, there are just 4 ways to increase your revenue
The 4 ways to increase your revenue are:
1. Increase the number of customers you serve
2, Increase your average transaction size
3. Increase the frequency of transactions per customer
4. Increase your prices
The best companies build winning sales strategies around one or more of these principles.
So how do they do it and what can we learn?
1. Increase the number of customers you serve
The 3 most popular ways of growing your customer base are: Market share expansion, product range development, and customer retention.
Do you have competitive advantage through scale?
Or do you operate a disruptive business model like Amazon?
If so, you’ll want to drive market share expansion hard, forcing your less efficient rivals out of business.
Just 10 years ago every high street in Britain boasted a book shop. Now Amazon dominates book retailing and has fundamentally changed the way that written content is bought and sold.
Do you have a strong and stable customer base?
Are you capable of significant product and/or service innovation?
If yes, then product range development could be just right for you.
Again, using Amazon as the example, the business took its online model from books into audio. Then all manner of FMCG markets. What’s more, it continued to innovate its operating model as it scaled up.
But what if you don’t have a stable customer base?
Perhaps, you have a product or service that’s susceptible to customer churn.
If so, it pays to work harder to keep the customers you already have.
For example, take Sky. If you have ever tried to leave at the end of your contract, they will do everything possible to retain your business.
Or Netflix. If you cancel your subscription you can be sure to get a reactivation offer.
2. Increase your average transaction size
It is no secret that the smartest way to do this is by upselling and cross selling.
Perhaps like O2 you have premium offerings that you can persuade your customers to upgrade to?
You can so this either at point of sale or even later in the usage cycle After all, who really wants an iPhone 7 when your friends are all getting the latest generation iPhone 11?
Or maybe you have similar products in your range that your customers could also buy from you?
Then be sure to offen them alongside your “hero product”.
If you have less frequently sold items, increase your revenue through bundling.
A good example of this is HP who promote matching accessory packages with their laptops.
3. Increase the frequency of transactions per customer
Many companies find it easier to increase order frequency rather than order value.
Do you have a product with a high volume or value of repeat sales in a very competitive market place?
If so, it may pay you to introduce a loyalty programme to encourage future purchases.
BA Airmiles (now the somewhat maligned Avios) is perhaps the most famous UK example of this.
Or perhaps you have infrequent purchases with potential future upgrades?
In this case, you might consider changing your business model from one off purchase to subscription.
Microsoft has successfully done this in an attempt to lock users into its operating systems at a time of increasing competition.
Where you have variable demand and high fixed costs for a series of events, it may be a sensible strategy to offer “multi buys” or season tickets.
This has the added benefit of improving cash flow for marginal businesses such as professional football clubs and theatres.
4. Increase your prices
If all else fails, raise your prices.
Is demand for your product or service price inelastic?
Is there significant inertia or high switching costs that cause customers to think twice before moving to a competitor?
If so, it might be easier than you think to simply raise your prices to increase revenue. BT are masters at this strategy.
But beware, competition authorities and regulators are working hard to remove barriers to switching in areas such as banking, utilities and insurance.
Also, for many businesses increasing prices won’t be viable without enhancing the underlying value proposition.
Perhaps you can emulate internet service providers such as Virgin Media?
They’ve discontinued certain cheaper services and replaced them with more highly featured versions which cost little more to provide. But, for which their existing customers happily pay a lot more to receive.
In summary
Boosting revenue is not easy, but as top companies from Amazon to Virgin show, where there’s a will there’s a way.
You can download this post in infographic format.
If you find it is not possible at this stage to grow your revenues, you can of course still improve your bottom line through increased efficiencies or more cost effective ways of delivering your products and services.
For more information on how to achieve this, please read 3 ways to make more profit without selling more
