five strategies to increase profit
Most businesses seek to increase their profit year to year. Here are five ways you can look to increase your bottom line.
1. Increase your leads
First, build a larger pipeline of prospective customers by:
- Identifying your most successful promotional tactics and repeat
- Identifying your best customers and contact them directly (if possible)
- Attending industry events and conferences (virtual and physical) to meet potential customers outside their work environment
- Ensuring your website is set up to generate new leads
- Developing new distribution channels – think about using agents, licensing your goods, or utilizing a new distributor
- Asking current clients to provide referrals
- Actively ask people to get in touch by creating calls to action or incentives through promotional material, your website, blog advice, social media platforms, and free trial offers
- Running webinars or speaking at events
- Creating thought leadership content, whitepapers, blogs or opinions and syndicate in social media.
2. Convert more of your leads into customers
Once you have more leads, increase your conversion rate (the number of leads divided by the number of confirmed customers). To help achieve this, try:
- Training staff on selling techniques and closing methods to help them convert
- Providing staff with incentives or bonuses for higher conversion rates
- Running demonstrations for potential customers to see what you have to offer and how they could benefit. Sign them up
- Develop content where potential customers need to register to access, providing you a more qualified leads list
- Create offers to encourage customers to buy.
3. Increase the number of items you sell per customer
If you can entice your customers to buy just one more item, or hour, or extra service from your business, your sales (and your profits) should increase. Cross-selling additional items is a tried-and-true tactic to improve profit.
- Adding impulse or lower cost products at checkout (physical and online) or a final sell when closing
- Asking customers what else they would be interested in buying from you and then widen your product range to accommodate their needs
- Bundling products together or prompting at check out ‘other people also bought XYZ’
- Adding services if you sell products, adding products if you sell services.
4. Increase your average sale
If you can increase the average value of each sale, you should directly improve your profit (unless you’re selling any items for less than they cost).
To increase your average sale, try:
- Ensuring your highest margin products and services are prominent on your website, and they have the most promotional budget allocated to selling
- Training employees to know which products have the highest margins and then incentivize them to sell more
- Increasing prices as even small improvements will show direct profit results
- Profiling higher margin products on your website and allocating higher advertising dollars to their promotion
- Introducing new premium products or services that have a higher value.
5. Increase net profit percentage
Net profit can be improved by looking carefully at your gross and net margins.
Try these tactics to improve your net profit:
- Review all of your main suppliers and determine if you can swap any out for lower cost provider (however, ensure less expensive suppliers can match the quality and service you expect)
- Renegotiate with contractors or ask suppliers to re-quote if you believe there are savings to be made
- See if you have any components or parts of your business that can be sub-contracted out to cheaper suppliers
- Identify your top five overhead costs to find savings. Overheads such as power, insurance, office supplies, internet, subscriptions and communications often reduce in price year by year. Make sure you’re getting these reductions
- Trim any other costs that you may no longer need.
Even if sales revenue is static, you should be able to increase profit by using the latest software and the production or deployment techniques to improve efficiency and output.
If you need to increase your profit, share the task with your employees (who can have a different outlook than you as the owner), your accountant or any other advisors you use, to brainstorm additional tactics.
Monitor your main competitors to see if you can adopt what they are doing to increase sales, reduce costs or improve their profit. Finally, keep up-to-date with any industry trends, ideas or technologies that may lower your costs or make your business more efficient.