16.02 – How To Increase Revenue

Increasing revenue is a primary goal for growing a business and improving market share. Achieving this often involves employing a variety of strategies, and one helpful framework to guide these efforts is the growth matrix developed by business expert Igor Ansoff.

Ansoff’s model includes four main elements:

Business Development: Attracting more customers similar to your existing ones and encouraging them to buy more from you.
Market Development: Entering new markets, either within your home country or internationally.
Product or Service Development: Introducing new products or extensions to existing ones. For example, a courier service adding an overnight delivery option to its existing 48-hour service.
Diversification: Venturing into entirely new areas.

The following sections explore these elements in detail and provide practical steps to increase sales.

Getting customers to buy more

Encouraging existing customers to buy more is a straightforward way to grow. Acquiring new customers can be costly and time-consuming, so maximizing sales with current customers boosts your bottom line. Use this framework to categorize your customers and ensure they stay loyal and increase their purchases:

Courtship: Before a customer makes a purchase, your goal is to secure their first order.
Engagement: After the first order, aim to get a repeat purchase, ensuring the initial experience is positive.
Honeymoon: With several repeat orders, build trust and increase sales volume, striving to become the preferred supplier.
Wedlock: Maintain a strong relationship by keeping your offerings fresh and exciting.
Deadlock: Revitalize the relationship with new products or services to prevent losing the customer.

Encouraging referrals

Referrals are a powerful marketing tool. Satisfied customers are more likely to recommend your business, and these word-of-mouth referrals can significantly boost your sales. Encourage referrals by actively asking customers for them and making it easy to refer others.

Example: Angus Thirlwell and Peter Harris, founders of Hotel Chocolat, use tasting clubs to promote their luxury chocolates. Members invite friends to taste and rate the chocolates, leading to new memberships.

To effectively use referrals:

Be specific about the type of introductions you want.
Offer sliding scale discounts for multiple referrals.
Make the referral process simple.
Follow up to inform referrers of successful introductions.
Run referral programs as time-limited campaigns to keep interest high.
Provide prompt discounts once the referred customer makes a purchase.
Research and implement referral schemes common in your sector.
Monitor the effectiveness of your referral program with a database.

Entering new market segments at home

Expanding into new market segments can provide significant growth opportunities. Two common approaches are:

Geographic Expansion: Move into new regions or cities that are similar to your current market.
Demographic Expansion: Target new customer groups within your existing area. For example, a women’s clothing retailer could start offering products for men, children, or teenagers.

Selling overseas

Expanding into international markets can significantly increase your revenue. Many UK SMEs are already exporting, and government resources are available to assist with this process.

The UK Government’s step-by-step guide to exporting goods covers the necessary rules and regulations. Programs like Help to Grow offer support and training for businesses looking to expand internationally.

Researching overseas markets

Initial research can be done online to gauge market potential:

CIA World Factbook: Provides economic, political, and demographic data on over 260 countries.
Doing Business: World Bank database that offers detailed business regulation information for 190 economies.
Kompass: A global directory of businesses that can help identify potential partners or competitors.

Finding the right way in

Starting with minimal investment is wise when entering foreign markets:

Translate your website into the local language using services like Global Voices or Motion Point.
Optimize your site for international SEO to ensure it reaches your target market.
Consider hiring a local sales agent to represent your business in the new market.

Getting government help with going global

UK Trade and Investment (UKTI) offers various support services, including:

Export Marketing Research Scheme (EMRS): Provides advice and potential grants for market research.
International Trade Teams: Offer tailored support for different industries.
Passport to Export: A program for new and inexperienced exporters.
Tradeshow Access Programme (TAP): Grants to attend trade shows overseas.

More information can be found at the UKTI website.

Adding new products or services

Innovation can drive significant growth, whether through completely new products or extensions of existing lines. Listening to customers, leveraging sales team insights, and learning from competitors can provide valuable ideas for new offerings. Trade fairs and monitoring trends in more advanced markets can also inspire new products.

Diversifying as a last resort

Diversification, moving into entirely new products or markets, carries the highest risk. Companies that succeed in diversification often do so gradually, sometimes through acquisitions, and by listening closely to customer feedback and frontline staff insights.

By employing these strategies, businesses can effectively increase revenue and market share, ensuring sustained growth and long-term success.