Three Ways to Increase Turnover

There are three key statistics you should know if you want to increase turnover and grow any business -

1. How many clients do you have at present?
2. What is their average spend per sale?
3. How many times do they buy from you per year?

Increase any of these while keeping the others at their current level will increase turnover. Increase all of these while keeping costs.

So many of the books mentioned above focus on increasing profit by reducing costs – it’s much more rare to find books that focus on how to increase turnover while keeping costs at a constant level. While in theory, reducing costs is an option, in practice, most businesses have already cut costs to the bone. In  addition, cutting costs often leads to compromising on quality. It’s saner to keep costs steady and increase turnover.

Another way to increase turnover but keep sane is to categorise your clients. In many industries, clients can be segmented as follows:

4 Client Types to Consider when you want to Increase Turnover

1. Don’t understand or want added the value. they buy on price and if you’re the cheapest today, they’ll buy from you. Tomorrow, they’ll buy from someone else. This is inevitable but you won’t increase turnover by trying to prevent this churn from happening.

2. Prepared to pay for some added value. These are the people you want to spend more time with if you want to increase turnover, building their perception of the value you provide, getting them to accept your expertise and trying to move them to…

3. Preferred supplier. You are on a list of their preferred suppliers and they will include you in any buying decision.

4. Sole supplier. Can be a goldmine but can equally be a huge headache; resource intensive for both sided and from your side, fear of losing them can be a huge monkey on your back and lead you to do the opposite of what is required to increase turnover. You can be manipulated into “doing just one more favour for free”. Be careful, you can end up throwing away a lot of income that way!

You’ll waste your time trying to avoid the high turnover of customers in group 1 and you’ll waste money trying to tempt them with added value. That’s not what they’re looking for.What you can do to increase turnover is to have a “pile em high and sell em cheap” offer targetting these customers but be careful that you don’t cheapen your brand image along the way.

Group 4 customers are initially attractive but you can only cope with a very few such relationships at any one time and they are extremely resource intensive. If you want to increase turnover, focus on group 2 and group 3 customers.

In a recession, it’s important to focus on ways to increase turnover. You can’t stand still!

In conclusion, the above are just a few things to think about. What tips would you give an organisation that wishes to increase turnover?