MARKETING MATTERS
THIS MONTH IN HIS SALES GROWTH SERIES LOGAN WEDGWOOD EXAMINES THE MERITS OF CHOOSING TO GO FOR GREATER SALES VOLUME OR FOR SIMPLY INCREASING THE VALUE OF EACH SALE.
instalment of our ‘8 levers of sales growth’ series we tackle the decision between aiming for a greater volume of new sales versus increasing the value of each sale.
In some respect, this decision comes down to how many new sales can your business close and process efficiently? Or conversely, whether you’re better to make less sales but charge your clients far more in each.
It might seem obvious to want to charge more – but this isn’t always realistic. Regardless, lever 7 is about increasing your profit – which is a move that takes courage – as compared to pulling lever 6 and focusing on a higher volume of sales.
So, let’s explore further which one works best when.
First though, let’s get clear on one common area of confusion. Pulling lever 6 to increase the volume of new sales is different to pulling lever 3 (if you remember back to the May issue), which is about increasing your volume of new clients. This is because a large percentage of your sales volume can come from your existing client base; they don’t all need to be sales to new customers.
Lever 6 is about getting the best mix of sales between new clients and existing clients (and lots of them!) and then building value over time.
This comes from three main activities:
1. Selling your best-selling products and services to new prospects.
2. Upselling your existing clients with new products or services.
3. Increasing your referralgenerating activity.
These activities will increase your revenue quickly in the short term, but will also lead to a continued increase in the value of your customers over time as new customers become existing customers who eventually buy more.
Pulling lever 6 is a tactical move for businesses that want to show a more consistent growth in sales over the mid-term and a slow but steady increase in value. This is a great approach for businesses to improve the books and increase the business’s value in advance of a sale or exit event. It’s also a good tactic for the business owner who simply wants less stress and more certainty around how much money is coming in each month!
For this approach you need both sales hunters and account management professionals working together effectively and proactively – with a growth (not order-taking) mindset.
PULLING THE PROFIT (VALUE) LEVER
If you don’t have the team, lever 7 could be your key to growth. You’re going to make more profit – but it’s also going to take courage, because the first thing you are going to do is raise your prices. Substantially.
You’re going to do this for all new clients, but you may also need to raise pricing for your existing customers too. You might lose some along the way, or fail to close some deals. But the ones you do close, and the customers you keep, will be better for your profits in the long-term.
Three additional tools to raising your prices are:
1. Upselling.
2. Bundling.
3. Value adding.
Essentially you’re saying, “If you want this, you also need this and this.”
Lever 7 is not for the faint of heart, but it is good for your wallet! However, you need to get clear on one thing: You have to be awesome at what you do.
This approach does not work if you simply do the bare-ass minimum. You can’t only deliver what your customers expect. You need to exceed expectations. You need to smash the competition with your offering. Your customers need to feel like the most cherished there are.
If they’re having an incredible experience they’ll be happy spending more with you.
So, take a hard look at whether your business is geared up to make lever 7 work for you. Are you able to deliver something better than all of your competitors and keep it up for the long-term?
If so, this may well be your ticket to higher profits.