What if I told you that you can increase your business revenue by at least 2X without having to 2X the work?
Interested? Keep reading – as I reveal to you 3 revenue optimization models that you can apply right now, to increase your business revenue.
1 – Increase # of customers.
Most businesses operate this way.
The more customers you have, the more revenue you’ll have. But acquiring and closing new customers is difficult.
But acquiring customers is an expensive activity, not to mention it can burn you out as well – from having to constantly look for new customers.
2 – Increase AOV (Average Order Value).
What if there is a way to increase the amount a typical customer pays you? Sure, this is easier said than done – but definitely possible.
Let’s look at an example:
Peter runs a small coffee truck business. He receives around 100 customers a day. The typical customer buys a latte that costs RM10.
Total revenue: RM1000
To increase the average order per customer, Peter decided to offer a value-add-on, where customers can get a sandwich on top of their latte for just RM4 extra. Out of 100 customers, 50 of them decided to get the sandwich.
Total revenue: (RM10 X 50) + (RM14 X 50) = RM1,200
That’s an additional RM200 with the same amount of customers!
Of course, Peter would have to add value to his customers. He did that by offering the sandwich add-on.
3 – Increase purchase frequency.
The third way to increase revenue is to get your customers to increase the frequency of their purchases. Let’s see how Peter can do this.
To get his customers to come back, Peter decided to introduce weekend coffee specials – where he brings in rare, exotic coffees that are only available once a week.
By doing this, he manages to increase the frequency of his customers visiting his cafe from twice a week to three times a week.
Let’s look at the numbers:
Before optimizing his revenue:
- Customers: 100
- AOV: RM10 average per order
- Frequency: 2 times a week
- Total revenue per month (4 weeks): RM8,000
After optimizing his revenue:
- Customers: 100
- AOV: RM12 average per order
- Frequency: 3 times a week
- Total revenue per month (4 weeks): RM14,400
That’s a cool extra of RM6,400 – with the same amount of customers. All Peter did was optimize his revenue model, by increasing the value a customer receives and the frequency of their visit.
How to implement the 3 revenue multipliers for your business.
Here are the 3 revenue multipliers again:
- Increase # of customers.
- Increase average order value.
- Increase purchase frequency.
Increasing one of them is powerful. But increasing all of them will give you a multiplier effect.
Most business owners think they need more clients. But what they really need is more revenue. Here are some tips to help you increase them in your business.
How to increase average order value (AOV)
To increase the order size per customer, you have to increase the value they receive. Essentially, this is what sales funnels are designed to do – to upsell.
Upselling does not have to be a negative thing. It only becomes negative when we upsell, without giving enough value for our customers.
Here’s an upsell example from Exabytes:
On the checkout page, customers buying a domain can choose from several upgrades to build their website.
Upsells do not have to just be at the point of purchase (POP) only. Be sure to also upsell upon purchase or project completion, depending on the type of business you run.
The bottom line is to think about what additional value you can provide for a customer. Here are some examples, for different businesses.
- A photographer could provide album printing as an add-on service.
- A software company (SaaS) could offer to provide customized service on top of a software subscription.
- A clothing store can provide more value by upselling bundle deals.
- A designer who designs logos can add value by offering rebranding services.
How to increase purchase frequency
One of the hardest things in business is to turn 1-off customers into repeat business.
Customer churn can be very expensive for a business, considering the time, effort, and cost taken to acquire a customer. Getting repeat business is the best way to move from being an unpredictable business to a stable, well-oiled, predictable business.
Most businesses can apply a retainer model. But it takes creativity and confidence.
Consider these examples:
- A marketing consultant can offer a RM1,000 support access, after completing a one-off project.
- A web designer can offer a RM500 retainer fee to maintain and keep a client’s website updated.
- A supermarket (like Costco), can offer a membership for their customers to get better deals.
What is a recurring need of your customers? Identify it, and then build a solution for it.
Just like how students in our digital marketing course are prompted at the end of each lesson, now it’s your turn.
How will you be applying the three revenue multiplier in your business? Share your responses in the comments below.