The top question for many business owners is: “How do I increase sales in my business?”
A poll by the National Federation of Independent Business (NFIB) showed that sales concerns have grown from less than 10 percent in 2000 to nearly 20 percent in 2010. The only issues that ranked closely to sales concerns were taxes and regulations.
As the saying goes “the only things certain are death and taxes,” so spending excessive time and energy on things out of your direct control isn’t productive. Instead, focus your efforts where you can affect positive change such as how to gain market share and increase sales.
The first step – which many skip – is fully understanding the problem.
Sales in most every market is a zero sum game. There is a limited amount of revenue to be had in the market. When the economy is poor, the amount of money available shrinks, making it even more competitive. Simply, increased sales in one company usually means loss of revenue for another.
Armed with that knowledge, what is the most effective way to increase sales? To give your current and potential customers a clear and compelling reason to buy from you rather than your competitor.
I always ask my clients to answer this question: “With all of the goods and services available to your customers in your market why should I buy from you?”
The answer to that question is your value proposition. In absence of a great answer, you are perceived as the same as everyone else in the market. If you’re the same as everyone else, you’re a commodity. That means you eventually get forced to compete on price.
There are really only a few ways to increase sales in any economy, and they all center around giving your customers a reason to buy: lowest price, best selection/inventory, fastest delivery, and best-perceived value for the money.
Of these, lowest price is usually a short-term advantage. Unless you are a major player with high volumes, volume-based buying power and high efficiency, this isn’t usually a good business model.
High inventory and selection are again tied to volume. Inventory sitting in your distribution chain is cash tied up that could be used for something else.
Fastest delivery can be a viable differentiator as long as it doesn’t result in carrying large quantities of slow moving inventory.
That leaves best-perceived value. Most businesses don’t sell on perceived value because they haven’t taken the time to define it. They don’t understand it, nor do their sales people, so how could they possibly relay this to customers? They can’t.
In the absence of educating your customer base as to why buying from you is the best decision, the discussion will normally return to price.
When demand is high, companies can get by with a poor value proposition. However, when market demand decreases, weaker companies lose market share, and the companies perceived as offering high value retain a larger piece of a smaller pie.
Martin Harshberger, founder and president of Measurable Results LLC and author of “Bottom Line Focus,” can be reached at 662-844-9088, firstname.lastname@example.org or visit www.bottomlinecoach.com.