Good price management can stop revenue lossesMany small businesses operate on a very tight cash flow and profit margin making pricing management an essential tool in helping them to maximise operations and performance. Through effective price management, small business owners stay in touch with the amount that customers are willing to pay for the products and services offered and thereby reduce the risk of revenue loss through under or overpricing.Keep in touch with the needs of your customer in an ever-changing market Since pricing is heavily connected to consumer demand, small businesses need to be aware of the current consumer and industry trends. This information is invaluable to running a small business where success is often determined by the ability to establish a niche market and quickly cater to changes in consumer demand. It is essential that small business owners carry out on-going market research and feed it back down through their organisation so every team member understands their part to play in determining the future success of the business.
Instil customer loyalty to customers Customer expectation has risen dramatically over the years, due to an abundantly free market offering wider choices and competitive pricing making customer retention that much harder to achieve. Coupled with the economic recession it is imperative that small businesses put strategies in place to ensure that they will survive. There are a number of ways they can do this. Customer satisfaction surveys, face to face feedback, opinion polls, mystery shoppers, loyalty schemes (recommend a friend, discounts, loyalty cards etc) and market research on competitors will provide invaluable insight in ways to improve products and services. It will help retain customers, encourage word-of-mouth and improve revenue income.Exceptional customer service from staff On-going training of staff in customer service is an integral part of any small business’s long-term success. An excellent way of getting staff on board is to get them to mystery shop a competitor and to feedback the good and the bad to the rest of the team, then get the team to come up with a strategy whereby you exceed you competitors
Understand the true value of your products and servicesIt is vital that you understand how strong your product lines or services really are. The value of your products goes way beyond the raw materials and labour that was used to create them. Concentrate on the lines that make you money and ditch the ones that don’t.
It is important to remember that convenience, added value, customer service, quality products/services, free or immediate shipping, location and brand name, all add to the value and will affect how much a customer is willing to pay for your products or services.Reduce wastageImprove revenue loss through reducing your operating costs. You can do this by reducing staff overhead by improving processes and avoiding duplication, and looking at ways to improve productivity. Look at the option of outsourcing work to virtual administrators to alleviate pressure on existing staff or stop constant call interruptions with virtual call answering so staff can concentrate on growing the business rather than fire fighting.
Look at existing suppliers – see if you can negotiate with your existing supplier first and foremost on a more competitive price. If this doesn’t work then look at alternative suppliers; do some research first, check out the company’s reputation, delivery times and expectations and get the lowdown from their existing customers (get feedback before you make your decision).
Look at ways to tap into undiscovered revenueCustomer analysis and buying behaviour is a great way to identify what drives your customers to buy from you. It also highlights what they are motivated by and their current needs and requirements. In the service industry, repeat bookings need to be instilled into staff by setting targets i.e. 80 per cent customer re-booking, backed up with role play and staff incentives. Cross selling is vital, too, but the soft sell is by far the best strategy – identifying a customer need and then providing help and advice, then a subtle recommendation of an additional product or service you offer to satisfy that need. Providing samples for customers to try before they buy is a good way to cross sell but it must be followed up at the next meeting to be effective and delivered in a helpful, soft sell way so the customer will not feel too pressurised.
Case studies are a great way of cross selling a product or service to existing or potential customers in a specialised industry; it provides credibility and a way that a customer can identify a problem they may share with a solution you provide.
If your business supports annual servicing or maintenance to your customers, it is important to stay on top of this. Find undiscovered revenue. A plumber could use SMS reminders to customers to keep on top of annual boiler maintenance. It’s a cheap and easy way to ensure they have steady flow of income throughout the year. The same goes with any industry that supports maintenance. Always be one step ahead and have your customers re-booked otherwise you could lose them the next year – nothing is guaranteed these days.