There’s nothing wrong with a small business that wants to contentedly stick to their corner of the market, and continue to make a modest profit. But for those small businesses who want more, for those businesses who feel they’ve reached market saturation in their area or who feel their bottom line is stagnating – you need to figure out ways to increase profit margins, fast.
There is no shortage of advice out there. In fact, there are enough tips out there about profit-boosting to fill an entire library, and it can all feel like a patchwork of contradictory, vague and confusing prescriptions. Not only that, but much of the advice requires great effort and investment, commodities in short supply for most small businesses.
That’s why this post is aiming to simplify things. Compiled here are three easy, fast ways that you can improve your profit margins.
Focus on Customer Retention
It is far easier to retain a customer than to go find a new one, so in the interest of operational efficiency, it is preferable to focus on customer retention. If that sounds nebulous, you’re absolutely right. So, how does a business go about doing this?
Thankfully, there are a few tried and tested ways to actionably focus on existing customers, with the intention of improving profits. For starters, you can create a loyalty program, which rewards continued patronage; that’s a sure fire way to keep a customer. If you want to make the most of your existing customers, you can cross-sell and upsell by bundling some of your products together, perhaps even offering the bundles at a discounted rate to loyal customers.
Collect on Past Due Payments
If you have past-due or delinquent payments, and your only course of action is the odd email or follow-up call, then you are hurting your cash flow, and therefore your profit margins. As soon as you even suspect that a client or customer might not pay, get in touch with an experienced collection agency and have them take care of it.
Importantly, you don’t want to use a disreputable collection agency, as that could fray precious client relationships and alienate existing customers. Go with a company that can promise diplomatic collection services – that can’t be stressed enough!
Solicit Your Customers for Reviews
Increasingly, consumers are turning to Google reviews, Yelp reviews, Tripadvisor reviews, etc., to help inform their choice. It can be a far more potent attractor than an advisor, which is a bit of a double-edged sword for small businesses. On the one hand, reviews are harder to control than advertising, but on the other hand, they are far cheaper. Free, in fact.
When your customers/clients make a purchase, why not gently solicit them for a review? Nothing pushy, but you can ask that if they liked the product or service, they can leave a review – and include a link to your most important review aggregates.
It doesn’t take a full operational overhaul or a risky investment to improve your small business’ profit margins. All it takes are a few small implementations, and you should count an extra stack of money in no time.