Profit is the most significant aspect of any business, for there is no point in running a business that isn’t earning profits. However, starting a business doesn’t necessarily result in immediate gains, what is important though is entrepreneurs have to constantly evolve their strategies and apply best practices to cross a bottom line.
As a budding entrepreneur, you have to keep your options open, pluck low-hanging fruits and find ways to increase profitability; while at the same time you have to manage your finances and cash flow.
How are you going to do that?
Well! In order to succeed and make it big in the marketplace, you have to think out-of-the-box. One way of doing this is to identify your key profit drivers, and developing strategies around them with minimal costs.
Here is how you can implement some effective tactics to gain profits.
#1. Increase Your Operational Excellence
Your journey of growth has a strong foundation in your operational excellence, which means different procedural steps for different industries. For some, operational excellence is achieved by lowering operating cost or reduced inventory, while for others it is increased efficiency and better quality. The point is simple – you have to incorporate a process of improvement in the business activities being conducted at the workplace.
Better operational excellence invariably ensures that all your employees are groomed in such a way that they remain positive, motivated and empowered while going about their tasks. With this continuous improvement process, there is a greater chance of sustaining operations of your business because of increased efficiency and productivity of your workforce. This approach has three distinct advantages – you are improving your product, service or process; reducing costs over time; and improving customer satisfaction.
#2. Use A Better Pricing Strategy
Using smart pricing tactics is a must to succeed in a competitive marketplace. There are many aspects to price management. The most prominent ones are – achieving the optimal price for each product or service; and managing your product mix or services to achieve the optimal price for a set of customer transactions. After segmenting your customers and understanding which ones are truly price sensitive, a basic price range will meet their needs without disrupting your full product line.
It is therefore important to offer high-end products as well as low-end ones to cover the entire range of customers. While the bulk of your sales are generating from low to middle end, the highest margins will naturally tend to be your higher priced items. For example, you want to nudge your customers to buy item A since it is giving you the highest margin. If you put a similar price of item A as the rest of items in the same category, then item A would simply not stand out. You rather price the other items very high and place them right next to the item A, and then the latter would be perceived as the best bargain.
#3. Use Social Media To Your Advantage
Today, consumer shopping behavior has changed drastically. More and more people are using mobile devices and social media to interact with brands. This has paved the way for businesses to use this opportunity to their advantage. With key social media platforms like Facebook, Twitter, Instagram etc, you can also turn the tide in your favor and boost immediate revenues. According to emarketer study, 50% of small business owners in the United States use social media as their main digital marketing tactic because it helps them connecting with new customers.
To begin with, social media efforts should be designed around your website. For that, you should create your Facebook page first. Facebook advertising today has become a highly effective strategy for acquiring new customers; while for eCommerce, Facebook Exchange is particularly effective in reducing shopping cart abandonment.
Besides Facebook, other social media channels are also catching up fast. Pinterest, for example, has introduced buyable pins; Twitter has a “Buy Now” button; Instagram has easy to sell platform via ads; while posting engaging videos in YouTube can give you huge dividends. Social media also helps you get personal with your audience and genuine engagements with them will lead to long-term relationships.
#4. Use Unique Discounting Strategies
It is a well-established fact that discounting increases sales. Not only that, discounts or loyalty offers (as some marketers like to call them) help move your stocks, attract new customers, and complete sales targets during a slow sales period. However, you need to proceed with caution if you decide to discount. In order to successfully run discounting, you should know your profit margin and breakeven point.
There are many ways by which you can use your discounting strategies. For example, discount codes and coupons can be immensely beneficial for your business. They create shopper loyalty, bring new customers, promote newly-launched products and encourage first-time product trials.
Secondly, you can give a stipulated amount of cash back offer on certain items to your customers. While many customers find this as an effective bargain, you are also encouraging them to use cash back credit cards that can provide them the simplest way in keeping their money in the bank; thus, providing the good value to their hard-earned money.
Thirdly, you can use seasonal discounts for out-of-season items. That way you are giving them the “best value” option while increasing demand and sales throughout the year because it aims to drive impulse purchases. Another type of discount specifically for eCommerce businesses is free shipping. The main advantage of free shipping is it reduces cart abandonment. However, you should make free shipping available only when the order reaches a certain amount.
#5. Use Referrals And Affiliate Programs
Referrals are increasingly becoming crucial components of a successful sales strategy. So word-of-mouth referrals are an easy, viral and effective way of increasing profits. If a customer actively talks about your product or service and brings prospects to the door that is no less than a magic referral. To that effect, magic referrals are the ones that offer instant credibility. Referrals are not automatic. Some just happen but most happen because you do something to trigger them. You have to learn to ask your customers, albeit by phrasing it in the form of some kind of help. Why so? Because people love to help other people, especially when they already know them.
Another major strategy you can use to boost sales is to utilize affiliates in your industry to promote your products. You can do this by targeting your most influential customers. Not only do affiliates market your products or services effectively, they also shield you from the competitors. If you have enough affiliates in your niche, it makes it harder for competitors to gain market share.
Being an entrepreneur, your goal is to make use of every opportunity to increase profits for your business. But out-of-the-box thinking will rather help you create opportunities for yourself to grow as well as use unique strategies to make your business thrive.