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Back to Basics – Increasing Sales

Markets go through predictable life cycles. Regardless of how old your market is and what degree of competition you experience, in order to turn the tables on your competition, you must first plot the location of your industry on the maturity curve.

Your location on the maturity curve determines the type and degree of competition you will encounter. It also reveals the amount of market growth, operating margins and net profits you can realistically expect.

The Three Stages of a Market

1) Introduction: This is known as the "pioneering" stage of a market. This is when new ideas and technologies are introduced and accepted or commercially abandoned. The old adage often holds true here; "a pioneer is the man with an arrow in his back."

2) Growth: "Even a one-eyed pig can find an acorn" in these markets. These are the industries where the average businessperson can make a good living and where the smart, aggressive "super servants" can become wealthy.

3) Maturity: In established mature markets there is end user saturation, fierce competition amongst few competitors and price meets its own demand.

Turn the Tables In Your Favor

After plotting your location on the maturity curve, the next step to "turning the tables" on your competition is to determine your company's location on the profit curve.

If your profits are steady or increasing, you are well positioned relative to your competition regardless of your location on the maturity curve. All things being equal, if your gross operating profits are flat or decreasing, your competition has the superior market position relative to the "S Curve." To restore profitability, you must fracture the market and reposition your company.

Correctly repositioning your company is the quickest way to turn the tables on your competition and back in your company's favor.

There are only three ways to grow a business:

1) Increase the number of customers
2) Increase the average transaction amount
3) Increase the frequency of repurchase.

Every marketing process should be measured by its ability to directly impact and improve upon each of these three factors.

Increasing only one factor will produce linear business growth. Increasing all three factors will produce geometric business growth.

1. Increase the number of customers

Increasing the total number of customers is the first step most business owners and managers take to grow their business.
Losses can occur when inexperienced sales personnel are put in charge of designing and implementing a marketing program - investing corporate resources to find more customers.
Executed correctly, marketing processes cost efficiently produce new prospects that are ready, willing and able to buy products or services. The main purpose of marketing is to give sales personnel prospects to convert into paying customers.

Rewarding existing customers for referring new ones is one easy step business owners can take to increase their total number of customers.

2. Increase the average transaction amount

Owners and managers spend most of their time operating their businesses and searching for new customers. They often overlook the customers they already have. These repeat customers are usually taken for granted and left to conduct entire transactions without any effort made to see if they might like to buy more product or service.

Complacency, expecting customers to buy a minimum amount of product or service without ever being asked to buy more, can be the undoing of a business. This attitude can eventually cause customers to spend less money. Customers who aren't continuously offered compelling reasons to keep buying more of the same products and services from one business will look for new reasons to buy from another.

Cross selling and up-selling, systematically offering customers more value via additional products or services at the point of sale, are two simple steps business owners can take to increase their average transaction amount.

3. Increase the frequency of repurchase

In an established business, an average customer-purchasing pattern develops and (like the average transaction amount) is usually taken for granted and rarely improved upon.

A customer's repeat business is earned by the company that gives the customer what it wants. Without having an organizational strategy or process for consistently offering customers more of what they want, repeat business will happen less frequently.

Consistently communicating news and offers to past and present customers via telephone or mail generally increases their rate of repurchase and is one more step owners can take to grow their business.

In today's volatile economy it is pertinent to go back to basics. Businesses affected by the slump in the economy need to go back to the drawing board, assess their current position and compose a strategy that will improve their standing. There are no shortcuts - increased sales are a direct result of a solid and well-planned strategy.

 

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