How to Grow a Business

How to Grow a Business

How to Grow a Business is one of the most often asked questions of an entrepreneur.  In this article, we will discuss how to grow a business using the following topics.

1) How to Grow a Business by Getting New Customers
2) How to Grow a Business through Referral Systems
3) How to Grow a Business by Increasing Amount Customers Spend
4) How to Grow a Business by Increasing Buying Frequency
5) How to Grow a Business by Using the Internet

Lets discuss each of the above topic on how to grow a business; starting with How to Grow a Business by Getting New Customers.

1) How to Grow a Business by Getting New Customers

It may seem quite obvious but getting more customers will dramatically strengthen and grow a business. It is one of the most difficult challenges an entrepreneur will experience. If you are already in business, then you know the difficulties. Without customers your business will not survive. Yet very few entrepreneurs have a fool proof strategy to generate leads and turn those leads in to paying customers. With this said, your task is to design, test and implement strategies that will get you more customers. The following discussion will help you, as an entrepreneur or business manager, with this process.

If you are like many entrepreneurs or business managers, you probably have one method for getting new customers. If you are totally honest, the approach you use is probably the same approach your competitors are using. The method you have chosen most likely involves taking out an ad in a newspaper or an ad on the radio to inform potential customers about your business. Occasionally, you may also send out a flyer to a specific area to introduce your business to prospects and hope they become customers. Most likely the methods, currently used to acquire new customers, don't work as well as you would like. And in most cases, you probably are unable to gauge the success rate of any of your promotional campaigns. These methods of promotions generally will not help you grow the business.

Fortunately, there are countless number of ways to attract new customers so that you can grow the business. You must be creative and provide attractive offers in order to generate leads (IE potential customers). Then the task is to convert those leads into paying customers. This is one of the best kept secrets regarding how acquire new customers and  how to grow a business.

Here's an example of how a bed & breakfast entrepreneur used a little creativity to acquire a listing of potential customers and then turned many of those leads into paying customers. Regularly, the bed & breakfast owner placed 10 postcards, with a nice photo of the establishment, in each bed & breakfast room. When a guest checks in to the bed & breakfast, they are informed about the free postcards and encouraged to fill them out, drop them back to the front desk and the bed & breakfast will mail them out free of charge (IE the bed & breakfast pays for the postage). This gesture makes the guests feel special and valued and, of course, they will send all 10 postcards to their family and friends.  Furthermore, the postage and postcards are free so the guests have nothing to lose.

Here's where the magic begins. When the postcards are handed to the front desk operator, the names and addresses on the postcards are entered into the bed & breakfast computer system and referenced to the guest who is sending each postcard. Each of the 10 families are now considered prospects and since each family receiving the postcard is considered to be in the guest's "circle of influence", it is much easier to convert them into paying customers.

Knowing this, the bed & breakfast owner sends, to each new prospect, a number of promotional items such as sales letters, brochures, special room rate cards, free diner offers, and so on.  The offers within the promotional package is to entice the guest's friends and family members to the hotel the next time they plan their vacation, for example. Since the bed & breakfast  owner and staff goes over the top to ensure everyone enjoys their stay, the odds that all guests were satisfied is extremely high. And chances are, all guests have and continue to highly recommend the bed & breakfast to those they sent the postcards to; as well as others who they speak too.

As you can see, this example shows how simple it can be to acquire leads and turn those leads into customers (who eventually will refer other prospects and so on and so on...). The bed & breakfast owner created this simple system and it works time and time again.   Remember, getting new customers is one of the best ways to grow a business. 

2. How to Grow a Business through Referral Systems

Creating referral systems can be one of the most profitable ways to grow a business. Referral Systems are actually an extension of getting new customers. Referral systems can be designed with A) existing customers and B) with other businesses. Both methods of growing a business are discussed below.

A) How to Grow a Business using Referral Systems through Existing Customers:
The first type of referral system to help grow a business involves rewarding existing customers for recommending others to your business. By rewarding customers who refer others, you are actually encouraging them to send more and more people your way.  This is a great way to grow a business.

A restaurant entrepreneur may give a free meal to those existing customers who refer three people to the restaurant. A computer company may offer a 15% discount to a customer on their next visit when his/her referral leads to the purchase of a complete computer system, for instance. An aesthetician may provide a free manicure for every three people a customer refers.These are only a few examples of how to grow a business using referral systems.

Many entrepreneurs name their referral systems such as the "Bring a Friend Referral Program".  An aesthetician, for example, could design a program where existing customers could "bring a friend" who has never used the aesthetic service before. Both the friend and the customer could be rewarded with free samples of product. This business growth strategy has five (5) main effects which are.

- it encourages existing customers to come back sooner since the customer knows she/he will be rewarded in some fashion.
- it makes both the customer and prospect feel special and appreciated.
- it introduces the friend to the business.
- it increases sales and profits because chances are the "friend" will return as a paying customer.
- future sales and profits will increase even further since the "friend" who is now a customer will most likely take advantage of the "bring a friend referral program" and introduce others to the business.

As you can see, the above circumstances would certainly help the grow the business.

Some companies even hold a referral contest which is available to existing customers only.  A business growth contest is usually positioned as a new customer drive. Here's how a new customer drive can work for you as a method to grow your business.

For each referral, your customer is automatically entered once into a contest to win prizes the primary target market would find desirable. For two referrals, five additional ballots are entered in their name. For three referrals, 10 ballots are entered in their name, and so on. In essence, the more people existing customers refer, the better their odds of winning the prizes. These referrals are actually considered leads. When you collect all the leads, your task is to convert the leads into paying customers.  As you can see, a contest is another great example of how to grow a business using referral systems.

With referral systems, you are simply encouraging existing customers to refer their family, friends, acquaintances and "circle of influences" to your business. This ultimately improves your customer base and therefore increases sales, the bottom line and grows the business.

We finish this section with three final points relating to referral systems and growing a business.  Firstly, whatever reward system you decide upon, be sure you can accurately track the customers who are making the referral. Secondly, be sure all customers are aware of your referral system. By doing so, each customer clearly understands the rewards and benefits they can receive by referring other to your establishment.  Finally, the same rewards should be offered to those new customers who you gained through the referral campaign. As a result, these new customers will refer even more people and grow your business even further.

B) How to Grow a Business using Referral Systems through Existing Businesses
The second type of referral system to help grow a business consists of "partnering" with existing businesses or other entrepreneurs. Such refferal systems are also known as cross promotions, joint ventures or strategic alliances.  Most successful entrepreneurs use these strategies as a means to grow their business.

Joint venture marketing involves joining forces with non-competing businesses who share similar target markets. The process generally involves creating a relationship with each others customers and ultimately selling to them. Joint ventures are usually born by creating package deals, irresistible offers and contests with the intention to gain new customers and grow the business. Examples of possible joint ventures may be formed between:

- a lawyer and an accountant.
- a wedding planner and a caterer.
- a jewellery store and a wedding planner.
- a pizza shop and a video/direct TV rental business.
- an accountant and a financial planner.
- a clothing store and a dry cleaner.
- a paint store and a flooring shop.

No matter what type of business you own, you can easily form joint ventures with other existing businesses. Again, forming a joint venture is one of the best examples of how to grow a business using referral systems.

There are two methods you can use to select the companies you partner with. 1) Make a list of businesses who have complimentary products or services. 2) And make a list of non-completing businesses who share similar target markets.

Please Note: the entrepreneur you decide to partner with should share the same integrity, views on customer service and ethics as you. Furthermore, the campaigns to grow your business should be designed with a win-win-win situation in mind. In other words, your company, the partnering entity and the customer all should benefit from the joint venture campaign. There is no need to create a promotional campaign to grow your business if all parties aren’t beneficiaries.

Now lets look at an example of how a computer company can grow their business by developing a joint venture with a residential cleaning business. You might ask why would a computer store want to partner with a cleaning company. It's simple. If you think about it, during the normal cleaning duties, the cleaner knows whether a household has a relatively new computer, an old computer system or no computer system at all. The computer store could design 15% discount cards (with an expiration date) which can be used towards the purchase of a new computer system, a computer upgrade, new software, computer accessories, and so on. The discount cards would be given to the to the owner of a small cleaning company who would leave them with his/her existing customers as an appreciation for hiring their cleaning service.

That's how simple it is to create a joint venture and grow a business using referral systems. And most importantly, it's a win-win-win situation. The computer company gains new customers, and the cleaning company wins since they are growing and strengthening their relationship with their customers by giving them a special discount card (which are not available anywhere else). The customer wins since they receive a discount from the computer company.... plus the customer feels special and appreciated by the computer company and the cleaning service.

To end the section on how to grow business by using refferal systems.  Please Note:  The purpose of any joint venture is to introduce the partnering company's customers to your business and vice-a-versa. Then the objective is to convert those prospects (leads) into life long customers. By doing so, you are increasing your customer base, your sales, bottom line and you are growing your business.


3. How to Grow a Business by Increasing the Amount Customers Spend

Another method to increase sales and grow a business is to get customers to make larger purchases per visit. In other words, encourage customers to spend more each time they purchase from you. This is probably the easiest and most profitable method to grow a business. How can you get customers to buy more when they are at your place of business?

Look at the fast food industry and how they mastered the method to get more money from us each time we purchase. When we order a beverage and a sandwich, the employee asks "would you like an apple pie or fries with that". This is called a cross sell and it is a highly effective method to grow a business.  Another technique the fast food industry uses is called an "up-sell". When you order a combo meal, for instance, the employee asks "would you like to up-size your fries and beverage for only 59 cents".

These methods used to increase the amount a customer spends during their purchase actually costs the fast food company nothing in terms of promotions (just words and phases said by the front line staff). Moreover, the customer is already purchasing something so they are already in the purchase mode. The worst a customer can say, when presented with a up-sell or cross sell, is no. But interesting enough, many say yes to the question and therefore, more money is collected from the customer during each of their visits.  In most cases, the only reason why customers says yes to the "up-sell" or "cross-sell" is because a suggestion has been made to them. It's that simple.

So if you are aware of something your customers might want, but not ask for, you can dramatically grow your business and increase sales by simply making a suggestion or making an additional offer.  Besides the cost of the actual product/service, there are no additional costs to you... so it's complete profit (IE there are no acquisition costs or marketing costs).

Another technique used by the fast food industry is called bundling.  Bundling is another great example of how to grow a business.  Think about the 'Happy Meal" which consists of a burger, fries, beverage and perhaps a toy or free gift. What types of products or services can you bundle so that the customer buys the bundle opposed to one or two separate products? I am sure you can think of many ideas.  When you create a bundle, you'll find it will immediately increase sales and effectively grow your business.

It's really amazing how many businesses spend so much time and money trying to get more customers and neglect to consider the technique of increasing the dollar amount of the customer's order or purchase. When you think about it, the only reason why entrepreneurs promote is to get customers to spend money at  their establishment. So why not devote a portion of your time to create up-sells, bundles, and cross sells that will entice your existing customers to spend more on each visit.  When you have solid strategies to attract new customers and tactics to entice all customers to purchase more each time they buy from you, then sales will increase, profits will increase and the business will grow.

4. How to Grow a Business by Increasing Buying Frequency

The fourth method on how to grow a business involves increasing the number of transaction a customer has with you. In other words, you must design strategies and techniques that will increase the frequency in which customers do business with you.  Give them reasons to do business with you.  Provide offers that customers cannot pass up.  Continuously inform and remind them of the exceptional business you have and how they can benefit by taking you up on your offers.  In addition, constantly build and nurture your relationship with customers so that they keep coming back over and over again.  All these approaches will help increase sales and grow a business.

Some methods to increase the number of purchases customers have with you is to offer a frequency buyer card, a reward card, a free gift on their next visit, a discount sale, a "buy one get one free offer", a sale around special occasions, a contest, a free trial membership, a customer appreciation event, and the list goes on and on.  These incentives and marketing materials can dramatically increase sales and be responsible for the growth of a business.  A restaurant, for example, might present a customer with a free dessert coupon which can be redeemed on their next visit. This entices the customer back to the restaurant sooner rather then later.

A system which tends to work well is to first encourage the customer into your place of business by offering something free such as gift. When the customer comes to pick up the free gift, they are informed of other specials or products which they might (should) find desirable. For example, a computer company might give a free spindle of 25 DVDs to their valued customers. The DVD’s can be picked up during the customers next visit, at which time, the computer company would inform the customer about the remarkable sale on a new line of printers that just arrived.  You can probably see how this simple gesture or business strategy could lead to the growth of a business.

Service based businesses, who do not have a store front, such as a mobile plumbing company, may offer existing customers a free inspection on all plumbing fixtures, for instance. During the inspection, the plumber may discover a number problem areas with the prospect's plumbing system/pipes. In this case, the free inspection will increase the sales for the plumbing company and the customer will be happy since the plumbing problems are resolved.
The above is just a simple example of how a plumber can grow their business.  But it shouldn’t stop there.  The smart plumber would go the extra mile to ensure the customer calls him the next time a plumbing problem occurs. To do this, the plumber must strengthen the trust and relationship between him and the customer.  This is key when learning how to grow a business. For instance, the plumber may make a follow-up call (out of the blue) to ensure everything is working properly. Alternative, he may send the customer some valuable information on how to avoid the top 10 plumbing problems. He may also send the customer a genuine letter, thanking them for their business.  Of course, the smart plumber would place a sticker or two on the customer's furnace and other plumbing fixtures, depicting the name and telephone number of his company.  By doing so, the customer never has to search through the phone book to find the telephone number of a plumbing company should a problem arise.  See how easy it can be to grow a business.

No matter what type of company you own, you can come up with strategies to increase the frequency in which the customer does business with you. If you don't already have measures in place to increase the number of times customers visit your place of business, then it's safe to say that you are losing out on major profits.   Hint: The longer your customers go between purchases with you, the more likely they will shop at your competitors.

But remember, it has to be a win-win situation for you and your customer. You benefit by increasing sales and growing your business, while the customer benefits by receiving exceptional products, services and solutions.  When developing strategies on how to grow a business, never manipulate the customer or prospect in any way, shape or form.  The best policy is to provide the customer will an honest opinion and utmost customer service.  By doing so, you’ll discover sales will increase, profits will improve and your business will grow dramatically.  It's all about creating a respectful, trusting relationship!

5. How to Grow a Business by Using the Internet

As you mostly likely heard over and over again, it's so important for you to take advantage of the power of the internet in order to increase sales and grow your business.  It doesn’t matter what type of business you own, the Internet has the potential to amazingly increase the profitability of your business to unbelievable levels.  Most people just don't realize how important the internet is to the stability and growth of a business.  Below is a simple example of how an entrepreneur can use the Internet to grow a business and increase sales.

Let's assume an owner of a Hair Salon in a small county wants to know how to use the internet to grow their business.  In this case, the owner of the hair salon would cater to a local market and not a global market, which the internet is mistakenly known for.  The question is... how can you increase sales, improve your chances of staying in business and grow your business by using the internet.  Great question and here's the simpliest way.

Every time a customer enters the salon to get their hair colored, for instance, the smart entrepreneur would acquire their email address.  The email address can be asked for when the customer is paying for their purchase.  How can you obtain the customer’s email address?  Although there are thousands of strategies, the easiest way is to hold a contest and get the customer to fill out a ballot requesting their name, address, phone number and email address.  The contest prize could be a gift basket filled with a variety of shampoos, moisturisers, soaps, and so on.  Now that you have the customer’s email address, write on the ballot the date the customer used the salon and what service he/she received on that date.  So what can you do with this information?

Well, in three weeks, or when business is slow, the smart entrepreneur would send an email to the customer that might say something like this.....

Dear (customer's name here):

I just wanted to send you a short note to Thank You for visiting our hair salon to get your hair coloured on September 9. I truly appreciate your business!  I also wanted to let you know that we are offering a special 15% discount to ONLY our valued customers from October 4 through October 10.  To qualify for this special discount, you must book your appointment within the next 48 hours.  This will guarantee a time and date that best suits your schedule.

Once again, thank you for your business and I look forward to seeing you between October 4 through October 10.

Kind Regards,

(Your Name)
(The Name of the Hair Salon)

That's it.... Now in the next 48 hours, do you think the phone will be ringing?  Of course it will because you would have sent this email to ALL your "valued" customers.  This is just a simple example of how to grow a business using the internet.  There literally hundreds of strategies which you can implement in order to grow your business by using basic internet technologies.

Think about it, these new sales would not have been made by the hair salon without the use of the internet.  And most importantly, this approach doesn't cost a red cent.  Furthermore, the hair salon entrepreneur wouldn't have to place an expensive ad in the newspaper or on the radio in order to generate these new sales.

This example illustrates only one of hundreds of ways to use the internet to grow a business and increase sales.  In later articles, the team at Business Plan Hut will be developing additional content to show how the internet can be used to grow a business.  To ensure you have an opportunity to read these internet articles as well as other business articles, be sure to sign up for our free newsletter. 

This concludes our discussion on "How to Grow a Business".  Below summaries the topics addressed in our discussion on how to increase sales, profits and how to grow a business.

1) How to Grow a Business by Getting New Customers
2) How to Grow a Business through Referral Systems
3) How to Grow a Business by Increasing the Amount Customers Spend
4) How to Grow a Business by Increasing Buying Frequency
5) How to Grow a Business by Using the Internet

Categories: Marketing