When I was a kid at summer camp, I watched the old racquetball coach easily defeat our dorm champion. We really thought our dorm champ was going to beat the old coach and had all wagered accordingly. The game that day left a deep impression. Our guy was running around all over the court, while it looked like the old coach stood in the center and barely moved. After the game our guy was exhausted and the old coach hadn’t even broken a sweat. Until that game I thought that improving my racquetball game meant running faster or hitting the ball harder. What I learned that day was how powerful the result is when you focus on the right things. The same lesson also applies in business. Focusing on the right things can provide powerful outcomes. Let’s look at three strategies for doubling your income without raising your prices.
Increase Customer Retention
It is usually far cheaper to retain an existing customer than it is to go out and find a new one. However, most businesses pursue an increase in sales by focusing on the latter and forgetting about the former. Usually this is done because the business owner has no idea what the real value of a customer is to their business. This is wasteful, is a disservice to existing customers, and is a generally all-around bad idea.
One of the most high-leverage ways to increase your income is to focus on improving your customer retention. How long does a customer typically do business with you? Why do they stop? The answers to these questions represent a starting point for increasing customer retention. When you know how long on average you keep a customer, now you’ve got something to measure improvement against. An increase in retention can have a dramatic impact on your sales. Imagine what a 20% increase in customer retention would do for your bottom line.
You’ve got to address the reasons why they stop buying from you if you’re going to retain them longer. Some of this will come down to basic customer relationship stuff – taking great care of your customers, making them feel special, and rewarding them for loyalty, etc.
Increase Purchase Frequency
How frequently do your customers make a purchase? How could it benefit them to purchase more frequently? How can you arrange things so that it is more conducive for them to do so? This isn’t about simply increasing the number of times a customer makes a purchase from you within a month/season/year. This is about you making some changes in the way you are offering your products and services to your customers so that you can provide them with even greater value.
For example – service businesses can provide some kind of regular maintenance. Retail stores can offer an “of the month” club. Seasonal sales and promotions are another frequently used method to increase the frequency of purchase. Ideally you are marketing to your existing customers with various special mailings. If you’re not, you really should consider it. There is a reason that so many well established businesses do this – it works.
Increase Transaction Size
Increasing the transaction size is really about finding ways at the point of sale to provide even more value to the customer. This is done through the use of what are known as up-sells and cross-sells. An up-sell is about offering to super-size it. If you’re hungry and you’re at McDonald’s, the option to super-size your order is something that you appreciate. The cross-sell is about offering another item that may go really well with their purchase. At McDonald’s, that is often a hot apple pie.
Raising your income without raising your prices is really about identifying the ways that you can do things differently so that you can provide much greater value to the customers that you’re currently serving. Increase your customer retention, purchase frequency, and transaction size and watch your sales climb.