I always maintain that the quickest way to grow your business, is not by adding new customers, but by encouraging existing customers to buy more or buy more often.
Here is an example of StreetSmart thinking by one of North America’s great entrepreneurs. If you want to increase profits, trim low-profit-margin items from your product line. They may be eating up limited and valuable resources that could be better utilized elsewhere.
Tom Monaghan, the founder of Domino’s Pizza, tells a story about the early days in his first pizzeria:
“One night, most of my employees didn’t show up, and I didn’t know whether to open or not. Someone said, ‘Why don’t you just cut out the six-inch pizzas?’ We had five sizes, but most of our business was the smallest, the six-inch. It took just as long to make as the big one and just as much time to deliver but cost less.
“I decided we would try that,” said Monaghan.
“We never got busy that night, and yet we made 50% more money than we ever had. The next night I cut out the nine-inch pizza, and all the bills caught up. I learned then that keeping things simple could be more profitable.”
(Source: Fortune Small Business)
Sometimes discoveries like this are forced upon us, sometimes we are smart enough to figure it out. Which ever way it is as business owners, we must always look for ways to increase the dollar amount at the point of purchase, or offer existing customers a reason to come back more often.
If you got everyone of your customers to spend just 10% more each time they buy from you, what impact would that have on your bottom line. Go ahead do the calculations, I am sure you will be shocked.