What Are Different Ways To Increase Revenues?
Three Methods to Increase Your Business' Revenue
Out of the three ways to increase revenue, most business owners only put one into practice. This may work to a degree, but to be truly effective you should use all three.
All about the customers
The first revenue increasing technique is to acquire more customers. This is the one that most business owners focus on, while ignoring the others. More customers means more sales and more money. New customer acquisition is also usually the most expensive method of increasing revenue.
The second technique is to increase average sales to your existing customers. Focusing on current customers is a great way to make more money. Total revenue increases by the same rate as average sales per customer.
The third revenue increasing technique is to increase your customers' purchase frequency. If your current repeat customers come back yearly, shortening that timeframe will double revenue per repeat customer. Analyze your business products or services to figure out how you can get customers to buy more frequently.
Multiply your growth
When using all there revenue increasing methods, their effectiveness is multiplied. By only focusing on gaining more customers, doubling your customer base increases revenue three times. Then you manage to get your customers to double their average purchases. You've now increased revenue four times. Finally, you get your average customer to buy twice as often. You've now increased your revenue eight times.
Applying this formula to a business starting with $300,000 annual revenue, you now have a business with $2.4 million annual revenue. Compare this to only acquiring twice as many customers, which results in $600,000 annual revenue.
While it may not be likely that you'll have the same success with each method, it definitely increases your chances of building your business. If your business is struggling with one method, the other two can help take up the slack.
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