The poor economy in recent years has hit small businesses particularly hard. Whether you’re among the affected companies or just want to boost your sales, the following strategies to raise revenues are effective in most situations. However, your decision to implement any of them should be based upon several factors:
- The compatibility of the strategy with your products
- Your understanding of the buyers’ motives when they purchase your products
- Your company’s willingness and capability to effectively implement the strategy
- Whether competitors will copy your strategy and dilute the impact of the change
- Your expectations of the future economy and its effects upon your business
1. Add Complementary Services to Existing Products
Adding complementary services or products may help you gain new clients, as well as maintain existing ones. For example, a lawn-mowing or landscaping company might add swimming pool maintenance for little additional cost. Neither service is technically complex or difficult to deliver, both require regular home visits, and each are a burden to the homeowner.Similarly, a home repair company can easily serve the commercial market with the same crews and equipment used in its normal residential business. Contracts to provide future maintenance or extended warranties can be sold with almost all capital equipment. Review the products of your competitors for ideas. If someone, even a competitor, has an “extra” that appeals to customers, copy it.
2. Extend the Geographic Market Area
Many small businesses limit their marketing and sales efforts to the immediate area surrounding the central location of their business. A Dallas distributor of playground equipment discovered that none of his competitors marketed in several of the suburbs surrounding the city, probably because no distributor was located within those communities. The additional cost to cover the larger market was minimal and more than doubled potential sales. Don’t assume another market is being served without investigation.3. Enter Into Cooperative Sales Agreements
Contact companies that sell a complementary product or service with a request to sell your products also. For example, computer hardware companies often sell software, which facilitates the sale of their hardware. Furthermore, pet food distributors offer proprietary vitamins and pet furniture, and home remodeling businesses also sell landscaping.Many companies actively seek complementary products as they add very little to marketing and sales expenses – it is just a matter of finding the right partner. Adding additional salespeople for no out-of-pocket cost is a sure sales booster.
4. Raise or Lower Prices
The prices of products constantly change, so you should not be reluctant to adjust your prices to meet your objectives or the market situation. An immediate price increase will bring additional revenues and profits to the company if the price increase doesn’t negatively impact sales. A price reduction will stimulate more sales and take market share away from other suppliers. Knowing how your products compare with similar products from the buyers’ viewpoint, as well as the prices of competitive products, will allow you to best position your prices in the marketplace.Changing prices may “shake things up,” so you should be particularly sensitive to the reaction of your customers and prospects as the new prices go into effect. If the reaction is not positive, you can make further adjustments, including a return to the old prices.
You may also consider regularly raising your prices. Consumers rarely react to slight price increases and often overlook them. While a small increase in price may not seem significant when compared to the full price, the impact of the increase on profits is magnified since the increase will flow directly to the bottom line.
6. Add, Reduce, or Eliminate Shipping and Handling Charges
In lieu of raising the price of a product, consider adding a shipping and handling charge. The net effect on revenues is the same while avoiding buyer backlash to a price increase. If you currently charge for shipping and handling, consider reducing or eliminating the charge for a specific time frame in order to stimulate sales.7. Offer Special Discounts
Discounts, properly marketed, create a special buying opportunity in consumers’ minds, often spurring them to take action. The discounts can be applied to limited products, such as a single manufacturer’s brand, a limited category like school supplies, or all products in a store-wide sale.In fact, you can create a sale environment for almost any reason:
- Quantity Discount: When two or more of the same product are purchased at the same time
- Tie-In Discount (“Bundling”): When two or more different products are purchased at the same time
- Seasonal Discount: When products are bought within a specific time-frame
- Conditional Discount: When the products purchased are used or reconditioned
- Stripped Discount: When the products purchased are “stripped” of one or more features
8. Offer a Rebate
A rebate is a deferred discount, issuing a percentage of the price in cash after the product is purchased. Popular with consumers, they are often associated with the sale of new cars. Rebates typically have redemption rates less than 50%, according to John Courville, professor of marketing at Harvard Business School. This means that the publicized discount can be effective in generating additional sales while the lower redemption rate reduces its cost.On the negative side, failure to promptly redeem a rebate can cause bad customer relations. Because of growing complaints, some companies have discontinued rebate programs.
9. Incentivize Your Sales Partners
Revise your commission structure to “shake up” the sales force. Most commission schedules are tiered where the salesperson receives a lower commission rate as his sales increase. If you’re using that approach, flip the incentive ratio from top to bottom by making the higher commissions applicable to the greater volume of sales.For example, rather than paying the highest percentage commission at the bottom tier, reward the superior salespeople with higher commissions at the top. A compensation plan of this sort aligns the company’s and the salesman’s interest. The promise of an even higher income as sales grow is a powerful incentive to make more sales.
For a temporary boost in revenues, create a sales contest where the salespeople compete for a cash prize, a luxurious trip, or some other desired perquisite if they reach a targeted level of sales or new accounts. If successful, follow one contest after another with a different prize each time.
10. Renew Old Relationships
It is easier to sell to an old customer than to find a new one. Products previously purchased wear out, break down, or become obsolete. Develop a marketing program to communicate with old customers and prospects, and contact them on a regular basis about your company and your products. Ask your old customers for referrals and written references. Make them feel as if they are a valuable component of your success.Final Word
Many business theorists claim that a business is either growing or declining. Successful companies continually reinvent themselves by listening to their customers and by adapting their products, sales strategies, and processes to meet a constantly changing paradigm. Each of these strategies are powerful revenue generators in the right circumstances, but the optimum choices for your company will depend upon your understanding and knowledge of the customers you serve.What other methods can you suggest to jumpstart revenue in your business?