Being able to increase revenue in a small business is one of those golden tickets that business owners love to hear, am I right?
Running a business is hard work! While you’re probably not in it entirely just for the money, you probably know it’s not something you can ignore. And hey, if you were to make a little (or a lot) more revenue, that would be pretty great.
Lucky for you, I’m here to talk about just that. In this article, we’ll cover the absolute basics on increasing revenue (those questions that are too embarrassing to ask anyone other than Google), four general pillars for increasing revenue, then 10 actionable ways to increase revenue for your business.
What Does ‘Increase Revenue’ Mean?
At a basic level, increasing revenue means making the amount of money your company is bringing in through selling products and services larger. Bottom line, you’re progressively raking in the big bucks more and more.
But you may have already guessed that answer.
From a more technical standpoint, increasing revenue generally refers to growth over time and businesses typically measure it by comparing revenue from two different time periods. You can (and probably should) measure this over weeks, months, or years so you can chart whether your business is growing at the speed you want it to.
What Causes Revenue to Increase?
There can be a lot of reasons for revenue increases, as I’ll go over in this article, but some of the most common reasons for increased revenue is growing awareness of your product, continuing to scale up your business with new products, and increasing the price of your products or services.
What Factors Affect Revenue?
There can be a lot of different factors that affect your revenue from the number of products you have in stock to your marketing strategies to customer experience.
In general though, if you’re seeing your revenue drop or not increasing the way you’d expect, these are some of the main factors you’ll want to consider:
- Are There Gaps In Your Marketing Funnel – You have a customer journey map, right? (No judgment if you don’t, it’s just probably time you made one.) The customer journey and marketing funnel go together and should be your first point of contact if you’re noticing an issue with revenue.
- How Is Your Product or Service Quality – In the long run, a bad product or service is going to crash and burn. Or it’s at least not going to gain traction as well as a good product or service.
- Do You Have Market Fit – You can have the absolute best product out there, but if you’re selling to the wrong audience, that’ll affect your revenue growth. For example, selling delicious, healthy, organic cat food to dog owners just…isn’t gonna work.
- Do You Have Enough Marketing and Sales Efforts – That well-known adage of “you get what you put into it” goes with sales and marketing efforts too. You still have to be smart about it, but good marketing and sales can have a huge effect on revenue.
Is Revenue the Same as Sales?
The short answer: Yes!
According to Accounting Coach, sales are indeed the revenue you’ve earned when you sell your products and services. Accounting’s just here, trying to make things more complicated.
Is Revenue the Same as Profit?
The short answer: No, it’s not.
It’s close, but it’s not.
Revenue is all the money you’ve brought in from selling your products or services. Profit is essentially the money you’re actually taking home from your business. That typically means the total revenue, but subtracting all the expenses that come with your business (supplies, employees, building rent, shipping costs, website expenses, etc.).
4 General Ways to Increase Sales Revenue
On a general level, you’ve got four options for increasing your revenue:
- Bringing in more new customers
- Increasing customers’ average transaction size
- Getting more repeat business from existing customers
- Raising your prices
For example, let’s say you have a coffee shop. To increase how much revenue you’re making per week, you’d either have to 1) have more unique customers buying coffee, 2) sell muffins too so customers can buy a coffee AND a muffin so customers end up paying more, 3) have customers buy more coffee more often, or 4) make your coffee more expensive (and still retain the same number of customers).
Within those four general ways though, there are SO MANY different ways to increase revenue. It’s just that each idea will fit into one of those categories. The general ways should act as a starting point, so use them to get creative with how you might be able to accomplish one of them.
10 Essential Strategies to Increase Revenue for Your Business
If you’re having trouble thinkings of how to do this, don’t stress. We’ve got 10 great ways here to get you started. I’ve also included some examples of other businesses using some of these strategies so you can see what it looks like in practice, but in general there are three approaches: increasing revenue from existing customers, acquiring new customers, or raising your prices.
How to Increase Revenue From Existing Customers
1. Cross-Sell and Upsell Existing Customers (Create Repeat Business)
If a customer buys one of your products or services, and you have other offers for them, you’ll want them to get the other things as well right? Of course! (Assuming that you managed to provide a great product or service and delightful customer support, that is.)
You’ve already gotten the customer’s attention and started to create trust with them from your first killer product or service, so tempting them into getting something else that they need should be an easier sell.
How do you do this? Even as they’re going through the first buying process, you may want to start hinting at the idea that there may be more things they’d want. Maybe they’ll go ahead and add it to their cart right then or maybe they won’t. The key here is you’ve sowed a seed in their mind.
Once they’ve made the purchase and taken the time to enjoy the product, it’s time to chime in with email marketing or other forms of contact reminding them about the other products and services you have to offer.
Want to see an example of this in action?
The Cupcake Collection was doing so well with its cupcake sales and has become a well-known favorite. To maximize its current customer base, the company added the option for cake orders as well. Cakes cater to a slightly different need than cupcakes but are similar enough, that it’s easy to cross-sell.
2. Offer Discounts and Deals
Offering a discount or deal to your customers is a great way to bring in more revenue if you’re hitting a slump. Of course, you don’t want to simply lower prices. No, this is something you do on a time limit and you make it special.
You still want to be making a profit off the products you’re selling at a discount, but when you offer your customers an opportunity or save money, then put a time limit on it, you add more urgency for them to make a purchase.
Adding a discount can bring in new customers and act as a reward for loyal customers. While you might not be getting your full-price revenue for each product, you’ll likely bring in a greater number of sales meaning more revenue. This is also about developing a good relationship with your customers so they feel good about shopping at your business more regularly.
For example, for Peak and Valley’s second anniversary, they offered a 50% discount on all their products for 24 hours with a special promo code.
3. Create a Loyalty Program
Aside from having a FANTASTIC product or service and a knockout customer experience (which I’m sure you already have), customer loyalty programs are the best way to keep your customers coming back for more, therefore increasing revenue.
Don’t just take my word for it, a study from Accenture Interactive found that customers that are part of a loyalty program generate 12-18% more revenue than other customers.
Yeah, when customers come back to get more of your product, they get the joy of your product all over again, but it’s not new anymore. That’s why you want to add a different reason for why they’re walking into your shop instead of the new one across the street.
It’s like starting a new relationship versus being in a long-term relationship. New is exciting and fun, but the long term is trusted and consistently good. You want to be the long-term type, not the one-night stand.
There are a TON of different ways you can create a loyalty program that works. One example is Fresh Step’s Paw Points rewards program where you can earn points for your purchases, then choose from a variety of different items and rewards.
Want to see more examples of loyalty programs? Check out these five pet store loyalty programs.
How To Increase Revenue by Attracting New Customers to Your Small Business
4. Create a Referral Program
Potential new customers are going to be more likely to buy your products and services if your business comes with a personal recommendation. That’s where referral programs come in. Referral programs generally work like this: when an existing customer recommends your business and that person becomes a new customer, the existing customer (and sometimes new customer) gets a reward of some sort.
Basically, you’re putting your customer base to work for you and giving them a small commission for bringing in new business and more revenue.
One example of a ridiculously successful referral program is from DropBox.
DropBox’s referral program offered a part of their product for free to anyone who referred a friend giving a fantastic incentive to bring on friends and family. The results? The company permanently increased their signups by 60% and got 4 MILLION new users within 15 months.
Want to see more referral program examples? Read this epic list of 80 different examples!
5. Improve SEO
Do you know how much traffic search engines currently bring into your site? And do you know how much more traffic search engines could be bringing to your site? With some good SEO practices, it could probably be a lot more. And that increase in traffic can then turn into conversions, new customers, and an increase in revenue.
So how do you improve SEO? There are a lot of different ways! If you don’t have time to get into the weeds of SEO yourself, you can always hire an SEO expert, but you can also makes some simple changes to your website like making sure you have a site map, organizing your category pages, having good internal linking, targeting keywords related to your market, and producing useful content.
For example, the outdoor clothing brand Patagonia does a great job with organizing its products in a way that makes sense both to the customer and to search engines. Patagonia has a bunch of products but categorizes them out so it’s easy to get to each type of product directly from the homepage making it easier for Google to understand the site (and easier for customers to get to the exact product they’re looking for quickly).
6. Improve Social Media and Email Marketing
Social media and email marketing are both great ways to increase revenue by bringing in new customers. You can drive up brand awareness, develop a following through social media followers and email subscribers, and eventually convert that audience into loyal customers.
This can be especially valuable for small businesses, because anyone can create a social media account or start an email marketing newsletter. You may find you’ll increase revenue more if you bring on an expert in social media or email marketing, but even doing it yourself can produce results.
For example, the brand Best Life Organics runs a monthly newsletter and has an Instagram following of over 1,200. For signing up for its newsletter, Best Life Organics also offers a 20% discount as an incentive, doubling up on both discounts and email marketing.
Thinking of hiring a marketing agency for your small business? Check out our guide on how to find the right one for you.
7. Offer a Free Trial
If your business runs on a subscription base, offering a free trial is a great way to bring new customers in. With a free trial, potential customers can try out your product risk-free without having to worry about paying right away.
Then, once the customer has tried the product and fallen in love with it, they’ll be more inclined to continue the paid subscription. And voila! You have a new customer and an increase in revenue.
Need an example? We offer a 30-day free trial for our standard Candy Bar service so medium and small businesses can try the service out first and make sure it’s a good fit for their growing business before committing to the extra expense.
Raising Your Prices
8. Create a Clear Pricing Strategy
Deciding on prices is a perpetual struggle for small businesses (and any size business). You want to be making a profit, but you don’t want to scare potential customers off with too high a price tag and you still want to make it worth the cost for customers.
If you can find that sweet spot between making a good profit off each product or service while still being budget-friendly enough that your target audience wants to pay for it, then you’re in for some wicked revenue growth.
Need some more guidance on how to accurately price your products or raise your prices? Check out this article.
9. Offer Different Payment Options
If your product comes with a hefty price tag or you know your target audience struggles with on-demand payments, you may want to consider offering payment plans for customers to pay in multiple smaller installments.
This way, if your current price might normally price some of your target audience out of being able to afford your product or service, they may now be able to afford it.
Take the brand Smartwool for example – Smartwool charges a pretty penny for its clothing, which could easily turn some shoppers off because they simply can’t afford to pay $180 for a jacket. However, 4 $45 payments over time? That might sound more possible for folks.
10. Create a Tiered Pricing structure
If your business is based on services and you find your customers wanting more than what you’re currently offering, you may consider adding a higher payment tier that provides more.
Having a tiered pricing structure does two things:
- Provides your customers with more options so they can feel in control of the amount they pay.
- Gives the option to raise your rates so you increase revenue from those wanting additional benefits without scaring away the people that want to pay less.
Many membership business schemes use this technique to offer different levels of memberships. One example is from the American Alpine Club. The AAC offers its members four different levels of membership with escalating prices and benefits. This way, the company can include people with different budgets.
How Much Should Revenue Increase Each Year?
According to Entrepreneur, anaverage revenue increase per year for small businesses in the first five years is around 2-3%.
A few caveats with that though. First, while that’s an average, companies can end up making wildly different levels of revenue growth and it’s not entirely uncommon to see increases of 15% to even 50 or 100% especially when you’re just starting.
Second, that number is a cross-industry average and that’ll vary hugely between industries and even just from company to company. According to Forbes, these are a few industry-specific average annual revenue growth percentages measured from 2011 to 2016:
- Street vendors average around 3.7% revenue increase or growth.
- Corporate wellness services saw a 9.8% annual revenue growth.
- Online survey software averaged 9.6% annual revenue growth.
Bottom line: if you’re hitting somewhere between a 2 to 3% revenue increase in your business, you’re doing pretty solid in the eyes of the economy. Beyond that goal, how much you want your business to be growing is something you can ask yourself as a business owner depending on what your own aspirations are (just don’t beat yourself up if you don’t end up seeing a 20% revenue increase year over year).
If you’re interested in boosting your word-of-mouth marketing strategy, check out ReferralCandy and InfluencerCandy!