Generating More Revenue
In the Parthenon Principle, while it is not a sole revenue focus, several of the core business functions the principle focuses on are key to generating more revenue. These include:
To provide some background, the Parthenon Principle starts with the greatest Greek temple, The Parthenon. It is supported by over 150 pillars. Similarly, a business is built on pillars of specific business activity that are integral to the growth and, ultimately, the survival of the business. Plus, as important as the Parthenon was to the Greeks, a business is as an important to an owner.
And while other pillars of the business have an impact on generating revenue as well, sales, pricing and profitability have the largest impact directly on revenue. And increased revenue helps to fuel growth. There are seven key ways to generate more revenue.
Before diving into the details of the various ways to generate more revenue, remember, a plan of action needs to be put into place in order to achieve the goal. Same way we talked about a plan and strategy for annual goals. Where businesses go wrong is simply stated “go get more sales,” but not devising a strategy, plan of action and milestone goals. Simply a “go/do” command will not work. While the overall ways are presented below along with examples, they are not plans of actions, but simply ideas to develop a strategy and plan.
There is nothing more frustrating to a team of marching orders to achieve a goal with no planning, strategy or direction. It is a leader’s job to provide structure as well as accountability to help the team plan and execute toward a goal. The key is to motivate the team, not deflate. And lack of direction and plan will certainly deflate a team quickly.
Sounds simple, right? Generally, generating more sales produces more revenue. In other words, expand and attract more and new customers. While the approach will be different business to business, it ultimately means making more people aware of the business, services and/or products, and attracting these potential customers to buy.
Sell More to Existing Customers
Upsells, more quantities or services, more often, are all great options to gain more revenue from existing customers. Too many times sales people or account managers found out late in the relationship there was something else that could be offered to the customer. Could be months or years of wasted opportunity. Knowing customers and their needs is key to winning them in spending more money with the business.
Sell Something Else
This can be hard for some business owners. They tend to look for something really new, maybe unknown or very different from their existing business. But think simple, at least to start. What goes with the current product or service? Sell custom-made jewelry? Add matching handbags. Personal trainer or yoga instructor? Offer healthy recipes or workout supplements. Maybe even partner with another business to sell a bundle that would be attractive to both customer audiences.
Make Larger Sales
Who doesn’t want to make larger sales? Easiest way is to increase the average order size. Offer special promotions for larger order sizes. Again, concentrate on small, consistent increases. An average order size of $50 increases to $55. That is a 10% increase. If that holds for 100 orders, that is an additional $500 dollars, not bad. Build on this. Make attractive bundles of products and services. Market to a new audience with more buying power.
Increase Your Prices
Another tricky one for business owners. Again, focus on small increments. If you are an annual or bi-annual service type company (e.g. HVAC, dentist), most customers would not notice small percentage bump, especially for a service that they probably don’t remember what they paid for the 6 or 12 months prior. Not to gouge them, but most things increase every year. The secret is to still be competitive. Being priced above the competition is not a bad thing, but customers will want to know why, so make sure there is a value proposition they can buy into.
Make More Profitable Sales
Having a clear understanding of each customer type and product will help determine the strategy to consider in making more profitable sales. Some customers and products are more profitable than others. There is a balance, however, knowing which customers and products to spend time on to gain more profitable sales makes a huge difference. Loss leaders are invaluable, too many may hurt the business or the profit.
Reduce Your Selling Costs
Vendor costs, commissions, the sales process and who or what is involved is where to look to make adjustments. It can be negotiating new rates, changing vendors, or even automating a sales process versus an employee having to do things manually. There are always ways to cut selling costs. However, do not cut costs by sacrificing quality, particularly if that is why customers buy from the business.
The Key Component No Matter the Way
Here is the overall key to generating more revenue: Change. All of the ways above require some type of change, from thinking, to pricing, to audience and much more. Without change, businesses gain little, if any traction, in growing or generating more revenue each year.
And if we go back to the Parthenon Principle, small and incremental changes in several areas can have a cumulative effect on the business. Imagine a business that successfully utilized three ways of generating revenue: More sales, increased pricing and more profitable sales. They have not only generated more revenue, they have also improved sales, pricing and profitability which will all have a positive impact on the business.
The question now is where will you start? If feeling overwhelmed, I can help define this process and help lead an effective direction to help create a plan to generate more revenue. Contact me today to set up an initial call to find out how I can help.