Every business wants to make more money – that’s the point of being in business!
There are three ways:
- Increase the number of customers (quantity)/
- Decrease your costs (margins)
- Increase average customer spend (quality)
The first one is the most exciting and obvious.
It’s also the most costly.
The second one is also obvious, though more limited:
Once you’ve reduced your costs as low as possible you have no more room to improve.
The third one is the most overlooked, yet is the most powerful.
To increase average spend:
- Raise your prices
- Offer a wider product range (and use sales tactics such as add-ons and bundles)
- Improve customer retention – keep customers around, and paying, for longer
Most businesses ask “How do we get more customers?”.
Perhaps a better question would be “Are we maximising profit from each customer, including the ones we’ve already got?”
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