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7 Strategic Moves That Boost Your Profits
Work smarter, not harder, by making small but significant shifts in the way you do business. Simple adjustments, clearheaded analysis and two minutes here and there may be all it takes to boost your bottom
1. Drop your least profitable offerings and concentrate on your most profitable ones. Note that I said "profitable" - not those bringing in the most or least money overall. You can sort your products and services by their profitability if you analyze your expenses according to which sources of revenue they support. "Most small business owners lose sight of precisely where they are making money and where they're not," says David Shepherd, author of the book, Your Business or Your Life. By getting rid of the offerings that require the highest percentage of costs in order to deliver them, you can see immediate improvement in profits, says Shepherd.
2. Send "difficult" clients or those you simply don't like to your competitors. In a survey by David Maister, a consultant for top professional firms around the world, only 30-35 percent of respondents said they liked their clients; 50-60 percent said they tolerated their clients; and 5-20 percent didn't like them at all. "Why spend the majority of [your] life working on tolerable stuff for acceptable clients when, with some effort in (for example) client relations, marketing and selling, you can spend your days working on exciting things for interesting people?" asks Maister. You'll feel more enthusiastic about your work and get more done when you send unpleasant or troublesome clients to get their needs met elsewhere.
3. Pursue customers who can or will pay more. A consultant once told me that she'd come to the conclusion that people starting a small business simply wouldn't pay the fees she felt she should charge. I didn't agree, because I'd had clients ready to spend big on launching their new business. They were in their forties and fifties and either had a budget to spend from a company that was laying them off, or they were willing to raid the retirement fund they'd accumulated working for a large corporation. It would be possible to target others like them and make multiples of what she'd be earning from those just scraping by, but I think she just didn't believe what I was saying. Almost always, your existing market includes people who have more money or are willing to spend more of what they have for your stuff, and by marketing to people like them, you earn more for the same effort.
4. Reuse everything you create in different formats or for different purposes. If you've taught a seminar, turn your handouts into an article (that's how what you're reading came about). If you collected industry data to direct your marketing, sell your research to colleagues. If you regularly interview experts about what's new in the field, incorporate their insights into a product. And so on. "Do once, sell three times" is a shrewd money-making mantra.
5. Create an untiring army of sales reps through an affiliate program. Colleagues who don't have their own products or services, or whose offerings complement yours may be happy to promote your wares in exchange for a commission on the business that they refer. On the Internet, so-called affiliate programs make that process easy. You decide on the terms, find marketing partners who agree to them and give those partners a link to use that keeps track of leads or sales coming through that link. I use FusionQuest.com for my affiliate program because unlike most such services, they themselves take no commissions from sales coming through the program.
6. Cultivate and reward your referral partners. Two ordinary words work magic when it comes to nurturing relationships with people who regularly send you business: "Thank you." If they send you sales with a particularly high value, a gift, such as a book, a fruit basket or tickets to a show might be appropriate. How do you initiate such relationships in the first place? This can be as simple as inviting professionals out to lunch and asking them what they do so that you can refer business to them. Only an idiot would not reciprocate by turning the same question back to you.
7. Invest more to get customers who have a high lifetime value. Keep in mind that when done properly, marketing is not an expense but an investment. Correspondingly, you need to know how much you can afford to invest to acquire a customer. The smart way to think about this question is not in terms of an amount for your marketing budget that you think sounds reasonable but in relation to how much you can earn during the whole time someone remains your customer. For instance, spending $100 to lure each new customer may sound outrageous until you realize that each one spends $4,000-5,000 with you over the course of three years. With that profile, it might be smart to spend much more than $100 per customer to lure them into your fold.
Why slave away doing things the way you've always done them when you can earn more by using some of these strategies? Please let me know when you try any of these moves, with extraordinary results!
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