Revenue growth or the widely accepted term for the process of acquiring more cold, hard dollars in your organization’s bank account, is and will always be the primary goal of any business.
Yes, nonprofits with amazing goals exist but even their existence is dependent on their ability to increase in revenue every quarter.
So the golden question to answer for any business seeking success is – how to increase revenue?
Starbucks, for instance, introduced a mobile card app to boost revenue that allowed customers to order from it rather than wait in line.
Since its introduction, Starbucks’ revenue has skyrocketed as it offered convenience to users.
Currently, Starbucks’ mobile app accounts for 20% of its revenue in the United States.
There are so many ways to achieve revenue growth and we’ll be looking at 7 of them. But before that let’s understand what revenue is, the difference between sales, revenue, and profit.
To properly understand revenue you need to be able to distinguish between sales, profits, and revenue. They are commonly used interchangeably but they aren’t the same thing.
What is the Difference between Sales, Profits, and Revenue?
- Revenue: This is the total amount of money brought into an organization through the combination of all its business activities.
- Sales: Sales is the amount of money gotten through the sales of goods and services alone. If for example, you sell 400 $10 goods in a month, your sales for that month is $4000.
- Profits: Your profit is the amount remaining after you subtract taxes and expenses from Revenue.
What is Revenue Growth?
Revenue growth is the decrease or increase in an organization’s sales between two periods. Displayed as a percentage, revenue growth showcases the degree to which your organization’s revenue has shrunk or grown.
How Do I Calculate Revenue Growth?
Revenue growth rate calculates your business’ yearly growth by comparing the current period’s revenue with the previous one.
Every period you measure must be of equal length. For example, comparing the previous month to the current month, or from last year to this year.
The Formula for Calculating Revenue Growth
If you want to calculate your company’s revenue growth as a percentage, subtract the last year’s (or any equivalent period) revenue from this year’s revenue, and then divide the result by the previous year’s revenue.
So if you achieved $2 million in revenue the previous year and $4 million this year, then your growth is 100%.
(Current Period Revenue – Prior Period revenue) / Prior period revenue
You can calculate your revenue monthly, quarterly, and annually. The formula allows you to calculate both negative and positive changes in your revenue growth.
5 Ways to Increase Revenue
Now, we understand what revenue is and know how to calculate it for your business, let’s see 5 ways to increase it.
1. Know and Understand Your Goals
You have to begin the journey with a clear strategy based on your revenue goals. You must identify what success for your company looks like and create the route to achieve it.
Identifying your goals is crucial in every state of your organization’s growth.
For instance, in the start-up phase, your initial revenue goal would be to attract your target audience and be profitable. But when your business survives the danger-filled start-up phase, the next likely goal would be to increase your revenue to finance the business’ strategic growth, exceed net and gross revenue targets, as well as build reserves for your brand.
As soon as you outline your goals and know what drives revenue and sales, you can focus on activities that will aid you in accomplishing them.
The Oatmeal gives a perfect example of this with an infographic showing a restaurant’s website that isnt goal-focused with regards to their target audience. Instead of showing customers their operating hours, an online reservation system, menu, specials, Google map address, etc. They show the below:
The result is customers will simply bounce because they believe you don’t have what they’re searching for.
2. Focus on Loyal Customers
Rather than spend your resources on acquiring new customers, it’s more effective to focus on cross-selling or upselling your current/loyal customers.
This would be a lot more cost-effective and efficient as your current customers are already used to your services and products and will be more prone to do business with your brand.
Plus, it costs 5× more to acquire new customers than to retain your current ones.
How do you focus on them?
By appreciating your loyal customers, for example, through gestures such as freebies and special discounts. This will lead your past clients and customers to their next purchase. Chase gives customers that travel a lot (their target audience) perks as they use their card:
It creates the impression that you are willing to go the extra mile for them because of their value to your business.
That said, focusing on your existing customers doesn’t just bring income from them, it can also be a great way to get new customers to increase business growth.
This happens because loyal customers are prone to be advocates for the business they’re loyal to.
All you need to do is be proactive about getting them to talk about their experience with your brand by offering them a strong referral incentive.
3. Incentivize Word-of-Mouth
Customers who are satisfied with your offer or brand will naturally talk about their experience with your business on their own. But sometimes they may simply forget or get preoccupied with other things.
Why is this important? Word-of-mouth is the most trusted form of advertising. People will trust what a friend or family member recommends to them rather than a random product ad
In light of this, you have to be proactive about getting satisfied customers to talk about your business rather than leave it to chance.
Here’s how Gemelli Cafe Grill does it:
Gemelli Cafe Grill being proactive about Word-of-mouth using an incentive
You need to give your current customers an incentive to talk about your business. If your incentive is valuable to them, they won’t forget to mention your brand to a friend, family member, or colleague because they want the reward.
The trick is to make sure that your reward is both relevant and valuable to your brand’s target audience.
With the right incentive, they’ll be eager and willing to spread the word, which means more referrals and that equates to sales.
4. Analyze Your Online Presence
Just an extra second delay in the acceptable page load speed can decrease your conversions by 25%.
So it’s of utmost importance that you review your online presence often. Go through your websites and view how they are seen on different devices. Is the experience good enough for mobile, desktop, and tablet users? Think about how users interact with your website and how you present information, and personalize it. Also, what’s the speed like?
You could be losing prospect conversions because of a bad website experience. Check out your analytics to see at what point prospects leave without a purchase or where they get stuck while trying to purchase and create plans to enhance your customer’s web experience.
5. Offer Discounts
Discounts when properly marketed are an incentive for prospects to purchase your products. Paperchase’s Treat Me loyalty card offers loyal customers discounts as perks for consistently purchasing from the brand.
You can also offer discounts on limited items like quantity discounts offered on 3 or more products, discounts on every product in your store, or seasonal discounts.
Then there’s also a deferred discount or rebate, which is issued post-purchase of an item as a monetary percentage of the price.
The goal of a discount is to pull in additional sales by offering items at a reduced cost to consumers.
Existing Customers are Crucial in Boosting Revenue
An effective way for any organization to generate a boost in revenue is by investing time in their past or current customers.
You can easily get caught up in customer acquisition but in reality, it’s your current and past customers who can generate the most return on investment.
To get started with this approach you can create a list of your clients and customers alongside the services and products you offer.
Analyze the client list for opportunities for cross-selling by identifying customers that aren’t utilizing all your products and services. Next, generate a list of additional services you can offer them.
Let your customers know about these services and give them details of the related services/details that are a great fit for them.
You also have to stay in touch with existing customers by sending them reminder emails, newsletters, emails about product launches or updates, and holiday cards. After they visit your business ensure you do a follow-up.
This will keep your brand in their minds.
Boosting your revenue is no small fit but with the right approach as listed in this piece, you can easily achieve it.
The primary tip to keep in mind is that your existing customers are crucial to increasing your revenue as a business, so never neglect them. Nurture, engage and value them and watch your revenue skyrocket.