It costs much more to attract a new customer than to sell to an existing one.
When looking to increase your sales you should always look to your existing customers first, they have a relationship with you and have already shown that they like your product or service by buying from you previously.
Your customers are likely to fall into three categories:
- one off customers.
- customers who haven’t bought from you in a while.
- regular customers.
You need to keep good records so you can identify the customers in each of these groups and work out a marketing strategy for each circumstance. You should also review your prices to make sure you’re positioned correctly in the market.
Review your prices
Before making any changes to your price do a forecast to estimate how this will affect sales. If you reduce your price you may sell more but make less overall profit. If you increase your price this may reduce sales but actually increase your profit. You have to figure out where the tipping points are in your sales before you make any changes.
If you need help with this our business advisors have years of experience in doing these calculations.
Pricing your product or service properly is essential, if you set your price too low you may struggle to make enough profit to cover your costs, too high and customers won’t buy from you.
You need to establish a number of things in order to work out your price:
Other options to consider are:
- discounts: you can offer bulk or loyalty discounts to existing customers to encourage them to place larger orders or purchase more frequently.
- loyalty schemes: many companies now offer loyalty schemes, cafes often do a “purchase 9 coffees get one free” scheme. Consider whether you could offer something similar in your industry.
- what are your business costs? Not just the cost of your product but also your variable and fixed costs. Variable costs are things like utility bills, as you produce more product or work more hours to provide a service your electricity bill is likely to increase. An example of a fixed cost is rent, this remains the same regardless of your output.
- what are your competitors charging? This will give you a feeling for what price the market can stand.
- what value do your customers place on your product or service? Some businesses, such as Poundland, cater for price led customers. Others, such as Marks and Spencers cater for quality led customers. You need to decide where you sit in your market.
Don’t forget to regularly check your prices and review your customer’s buying patterns, any changes in these need reviewed and action taken to ensure your company remains profitable.