To truly succeed in business, you need to think of your company as an investment. This is something you invest money into, with the hope of generating profits. Therefore, you have to consider how you’re able to turn your business into a profitable enterprise. What can you do to ensure you generate a lot of income? Not only that but how do you consistently keep generating more money than you spend?
It’s a tricky question for most business owners as you simply don’t know how to strike the right balance! Sometimes you can spend a lot of money, which increases your sales and generates a lot of income. The problem is that you spend too much money, so even your increased sales figures don’t overcome your expenses. As a result, you make a loss or barely scrape a profit.
Today, you’ll learn a few subtle ways to grow your business and increase profits. Furthermore, all of these ideas revolve around the same two principles: gaining and retaining customers. So, before we jump into the tips and ideas, let’s go over why these two things are important for business growth.
Why do you need to gain and retain customers?
Ultimately, customers are the people that make money for your business. Without them, you won’t bring any revenue in at all, and your business will fail. Thus, you should look to gain and bring in more customers all the time. The more customers you have, the more money you stand to make. It’s simple maths; making 100 sales to 100 customers is great, but 200 sales to 200 customers are even better. So, always focus on finding new customers and bringing them to your business.
Likewise, retaining customers is just as vital. In fact, this is something that often gets overlooked by a lot of small business owners. You have to retain customers to keep your customer base strong. It ensures that your new customers are worth more. Let’s explain what this means!
Imagine you get 100 new customers every month, but only 10% of them are retained. So, in month one you have 100 customers, then in month two, you have 100 customers plus 10%, which equals 110 customers. In month three, you get 100 new customers, but you only retained 10% of the new customers from month two. So, that’s 10 customers to add to the 10 you retained in month one, meaning you only have 120 customers in month three.
Now, let’s say you improve your retention rate to 50%. Instantly, you see a difference. In the second month, you have 100 new customers and 50 from the month before. In month three, you now have 100 new customers plus 100 retained customers from the previous months, giving you 200 overall. These are very basic figures, but you can see how retention helps you consistently grow your customer base.
So, how do you gain and retain your customers? Let’s find out!
Customer Gaining Tips
We’ll start with a few subtle and easy ways you can gain customers. All of these ideas are highly effective, and we’ve chosen ones that don’t cost much either. In essence, gaining customers is all about promoting your business. So, here are some of the best ways to do just that:
Using online ads is the best way to promote a business to your target audience. Here, you have far more control over who sees your ads – when compared to other traditional methods. TV or print advertising is a bit of a gamble, but online advertising lets you specifically find your target audience based on their browsing data. If you have a business that sells shoes, your ads will show for people who have been looking at shoes lately. It’s a simple and effective way of getting your business out there and reeling in new customers. Plus, when done correctly, it can yield massive profits compared to the costs.
Social media marketing
Again, this is one of the top ways to really target your main audience. Social media comes in lots of different formats, some of which might be more effective than others. Basically, it depends on your target market and what social media platforms they use. Figure this out, then work on building a social media presence. This will help you draw more people to your brand, leading to new customers. Funnily enough, this is also a great way to retain your customers. The best social strategies encourage people to follow you and stick around to see what you’re talking about. So, don’t underestimate the importance of social media when growing your business. Oh, it’s also a low-cost promotional idea, which always helps with regards to profit margins.
New customer offers
If you want to grow your company by bringing in new customers, you have to implement some new customer offers. As the name suggests, these are exclusive offers for new customers interested in your business. You’ll notice every company does things like this all the time – especially contract-based businesses. The idea is that you provide an exclusive discount or deal for a new customer to take advantage of. It lures them in, meaning you can find new customers every month. You can run the same offering all the time, or update it depending on the season. It’s entirely up to you, but you want to ensure that new customers get something extra when they make a purchase.
Customer Retention Tips
The previous three tips will help you reel in new customers and boost your sales. Now, it’s about casting your net and retaining as many of those customers as possible. Here are some tips to do that:
Customer loyalty exclusives
After talking about new customer offers, it makes sense to follow this with customer loyalty exclusives. Again, the same premise applies, only this time the deals are for customers that have already made a purchase. Simple examples include discounts on their second purchase or exclusive access to products before new customers. However, the best way to use this approach is to create a customer loyalty scheme. This scheme rewards customers for coming back time and time again. The most common example is a points system where customers get points for each purchase. The points can be used to unlock discounts to get money off future purchases. As such, the more loyal a customer is – and the more times they buy from you – the more points they get, unlocking larger discounts. This encourages loyalty as people want to gain enough points to afford something for free!
Free gifts for customers
Next, you should implement some sort of system that gives out free gifts to customers. There are loads of ways you can play this, and they’re all highly effective in more than one way. Think about things like metal badges, mugs, keyrings, and lanyards. All of these ideas are great free gifts as people can actually use them every day. They can be used for decorative purposes or for more practical reasons. Either way, the idea is you get your brand into the home of your customers. From here, it stays in their mind subconsciously, making it more likely they’ll return to you when they need to make a purchase. Imagine your business sells marketing services and you handed out a free mug as part of your service. Now, your former customer needs more marketing services, and a quick look at the branded mug reminds them of your business, and they come calling! It’s simple, and you get the added benefit of customers advertising your business for free with some of your free gifts – like bags, lanyards, badges, etc.
An excellent customer service
Lastly, the only way you will have a high customer retention rate is with excellent customer service. Make people aware of how much you care about them, and they will stay for a long time. Companies with poor customer service soon realize their customer base is like a sieve. No matter how many new customers you add, the poor level of service doesn’t encourage anyone to hang around. On the flip side, excellent customer service keeps people coming back for more as they know you look after them and provide everything they need.
Why is growing your business so important?
You’ve seen how you can grow your business through customer acquisition and retention. Why is this so important? Obviously, growing a business means you can make more money and increase your profits. As such, this is vital when it comes to determining how successful you are. Also, if you’re looking for investors, you have to show that your business is profitable. Otherwise, they won’t bother investing. A great growth strategy is the best way to do this.
All in all, every business owner should look to grow their organization over time. The only way you will do this is by increasing the size of your customer base. As we’ve mentioned, gaining customers or retaining them won’t be enough on their own. Instead, you need to combine both methods for the ultimate effect!