Do you want to become a multi-million-dollar business? Do you want to be more successful than your competitors and increase your net profit margins? Here are eight tips you can implement now that will boost your bottom line.
8 Tips to Improve Your Net Profit Margins in a Competitive World
Leads, Leads, Leads
In addition to trying to attract more customers, you need to focus on lead conversion. Lead conversion is the process by which you turn web traffic or inquiries into paying customers.
If you're not on the same page, your customers will know. Improving in these areas is sure to lead to even a small increase that adds up over time.
“Half the money I spend on advertising is wasted; the trouble is, I don't know which half.” – John Wanamaker, 1838-1922 department store magnate.
This is a critical. How much you are paying for customer acquisition? This includes the amount of money spent on marketing, hiring social media writers, sales salaries, and so on. Don’t know the total? You need to find out!
There's no definitive amount you should be spending, but answering the following two questions can help you figure out what's appropriate:
- What does it cost you to acquire a customer from each of your advertising strategies?
- What is the total lifetime (the length of time a customer continues to by from you) margin from the sales you make to that customer?
If the you are paying more to acquire a customer than your total margin from the customer you are paying too much. Keep it up and it’ll have a negative impact on your overall profit.
An increase in velocity requires you to take a closer look at all the processes at hand. What can you do to speed up the fulfillment process? Are there steps that you don't really need?
How's the Upselling Going?
So, what can you do to encourage more spending?
Can you offer frequent shopper rewards, free shipping on larger orders? Can you add additional products or services at a reduced rate? Or, could you spend time advertising items that complement one another?
Get Rid of the Jobs that Lose You Money
Whether you're operating a huge corporation or a small startup, no one wants to lose a client.
Take your financials to a CPA and find out where your money is coming from and where you're losing. Cut the clients, products, or services that don't make a positive contribution to your bottom line.
The exception would be if you're participating in a social cause or working with a client you care specifically about. Otherwise, focus your efforts elsewhere.
Work on Your Retention to Boost Net Profit Margins
Maybe that means you offer them a gift or spend more time on communication. Overall, keeping existing customers happy and ordering reduces your costs. With return orders, you're not wasting time and money courting new customers to replace the old ones and repeating the cycle.
Customer acquisition is expensive and time-consuming.
Let planned product promotions and discount strategies drive sales while your customer service team takes care of turning your existing customers into raving fans who are generating sales and sending you referrals.
Waste is Huge
Additionally, you'll need to get a better handle on forecasting.
Excess inventory can point to other issues, too. Particularly in the realms of sales and marketing. If inventory is piling up, you have to get to the root causes of the buildup. Is it an obsolete product causing the issue? Over ordering? Failing marketing strategies, a sales team problem?
Check Your Prices and Offers
Many companies rely on low prices and a barrage of expensive services and products designed to keep customers around.
On the flip side, consider what you're offering your clients to keep them around. What little things can you get rid of?
Boosting Your Margins and Growing Your Business
In the end, there are many things you can do to boost your net profit margins. It's the combination of doing all of these things right – from customer retention, lead nurturing, and velocity, to keeping track of how much money and supplies you're wasting – that make more successful than your competitors and increases your net profit margins.
For more tips and more in-depth help on improving your margins and a fresh look at how to run your business better, get in touch with me and let’s talk about your challenges and opportunities. I promise, it will be time well spent and there is no pressure or cost. USA: 877.433.6225 firstname.lastname@example.org