Most businesses spend more money than they need to trying to attract new customers when they haven’t really extracted out all of the value from their current customers. So, if you’d like to do more of the later (which is less costly and yields higher results) than the former, then you’ll want to pay attention to the following list of ways to increase total customer value.
- Raise your prices. This sounds so simple, but most businesses undervalue what they offer. I remember the first time I went to a conference by Alan Weiss.
In the promotional literature there was a bulleted item, "How to double the amount you get paid per speech." At the end of the seminar Alan hadn’t addressed that question.
So I walked up to him and said, "Alan, your promo said you’d address how to double the amount you’d get paid per speech but you didn’t cover that in your presentation. So could you tell me what strategies and ideas I could use to double my rates?" He just looked at me and said, "Double them!" I did and didn’t miss a beat. In other words, don’t let fear get in the way. Charge for value.
- Increase the average order or purchase size. It would be impossible to not remember, "Would you like fries with that?" Or, "Today’s specials are . . ." However, most businesses don’t take advantage of this simple idea–at a lost of 30% to them in increased sales nationally.
- Increase the frequency with which people buy. Hair salons have figured out that if someone comes once every six weeks for a hair cut, but the salon can suggest a date in four weeks, then that client has just gone from 8 haircuts to 13 per year (for an increase of 62.5% in revenue).
- Increase the number of options – Can you add a new product or service that your customers might appreciate? Can you innovate a new solution? Can you create new or special packages or bundles for them? If you can, then you’ve probably just increased your total customer value. One note of caution: in most cases you don’t want to offer too many options (other than in retail). Why? Because a confused mind is a non-buying mind.
So as you take a look at your business, which of these four ways can you use? If you want to get the most from this, my encouragement would be for you to take out a piece of paper, write out the four ways and then brainstorm how you could use them (or do this with your executive team). In the vast majority of cases, I’m confident you’ll find that you can increase your revenues without significantly increasing your costs–which seems like a win-win to me!