When companies seek ways to improve their bottom line, they often focus on ways to attract more customers in order to generate sales. You don’t want to fall victim to a strategy that forces your employees to work harder to bring in more customers, however.
What you want to do is find ways that help your staff work smarter in order to grow your customer base. These tips can help you see a better bottom line by working smarter not harder.
The key to a good marketing strategy is to pay close attention to the return on investment. There is an old-school theory that says spending $100 in marketing to get a customer who spends $50 is worth the investment because that $50 customer could generate long-term business. The fact is, low-value customers rarely become return customers as they are often seeking the next best deal. A new theory, however, is not to focus on increasing sales by 20 percent but to decrease your customer acquisition costs by 20 percent. This can be accomplished by targeting existing customers, offering discounts or add-on services that improve the quality of the product or service they receive. This method can not only improve your bottom line but build loyalty among customers.
Know Your Customers
There is a lot to be learned by online companies whose growth has exploded over the past few years. Netflix has grown to more than 75 million subscribers simply by knowing what their customers like. The company uses a combination of techniques and algorithms that help them identify what their viewers like. This allows them to make suggestions based on what a customer has viewed previously. Companies like Amazon, Pandora, Goodreads and others also use customer research to promote sales. You can apply these same principles simply by creating a database of customer preferences and targeting your marketing based on those preferences. For example, if you have a regular customer who purchases the same product each time they visit, offer a discount coupon on that product through email, social media or other electronic methods. You can also entice them to purchase similar products by offering a discount on the new product when they purchase their regular item.
One of the best ways to increase your bottom line is to cut expenses, but you need to be careful where you cut those expenses. Overhead is often an area where there are unnecessary costs that can be eliminated without sacrificing service. Allow your employees to telecommute a few days each week to lower electric costs or take advantage of software that can eliminate routine tasks. There are many financial software services that can automate much of your bookkeeping tasks, like accounts payable and receivable. Software can also make it easier to balance your accounts and track collection procedures. Review your budget annually to see where you can make adjustments as well.
Customers who do not pay on time can be a serious drain on cash flow, especially in a small business. If you have several delinquent accounts each month, you may need to revise their credit terms. If you don’t charge them now, add late fees for those who pay late or charge interest. Stop extending credit to those who are chronically late until they can demonstrate an on-time payment arrangement. If you have a customer whose account has become seriously delinquent, offer them an installment plan to bring the account current. Allowing customers to continue to pay late is not financially or economically feasible and it is one area that should be addressed quickly.
Better Employee Training
If your employees are well-trained, your customers benefit. Although training employees in the past may have been a costly undertaking, with today’s technology, you can provide training at little or no cost. Podcasts and webinars are available online so that your employees can learn new skills, update skills with new information in your industry or simply give them more insight into better customer service. The videos are available online so that your staff can access them when it is convenient, such as during downtimes while at work or in the evenings or weekends on their tablet, smartphone or laptop. The use of productivity tracking software is another way to determine which employees are excelling and which may need extra help which can allow you to tailor your training to meet the needs of your staff. You can also recruit some of your excellent employees to train those who may be struggling.
These tips can help you improve your bottom line and increase your customer base with very little cost. By providing better training, learning more about your customers, mastering your financial economics skills, and building a loyalty program, your company can see a much better return on your investments.
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