The Four Ways to Grow A Business

If you have a customer whose business is stagnating and can't seem to maintain a consistent growth rate, this article will help them and, as a result, help you add value to your relationship with them. Dugan & Lopatka prides itself in helping companies grow. If we can help a customer of yours, please give us a call.

"How do I grow my business?" Basically there are four ways.

1. Win more customers (of the type you want)

2. Get your customers to come back again and again

3. Get them to spend more each time they do

4. Improve the processes within your business to enhance competitive advantage and profits

Most business owners, focus on just one way to grow their businesses—winning more customers. However, to leverage their investment in marketing, generate the best results, and ensure the profitability and longevity of their business, they must integrate all four—creating synergy. Doing anything less means they’re missing out on invaluable opportunities to grow their business.

Let’s say they have a customer base of 1,000, and that they can increase the number of inquiries (and therefore the number of new customers) by 10%. That would mean their customer base would increase to 1,100. Now, imagine if they also increased the number of times their customers dealt with them during their lifetime by 10% (say from one to 1.1 times). Next they are able to increase their average sale or “transaction value” by 10% as well, taking it from $100 to $110. If they were to put all of these factors together, and assuming everything else was equal, it would make sense to say that the overall business would grow by 10%. Right?………..Wrong! Common sense would say that, but in fact something completely different happens. Something that could mean the difference between a profit or a loss for their business.

The following formula shows the numbers before any increase, and multiplies them to estimate turnover (increase or decrease in profit).

Number of customers x Number of dealings x Average $ Sale = Turnover

1,000 x 1 x $100 = $100,000

Look at what happens to turnover when just one area—winning new customers, for example—is increased by 10%.

1,100 x 1 x $100 = $110,000

The same happens when either the number of times their customers deal with them, or the average transaction value is increased by 10%.

1,000 x 1.1 x $100 = $110,000

Now calculate for them what happens when EACH area is increased by 10% at the same time.

1,100 x 1.1 x $110 = $133,100

That’s right, increasing each area at the same time has a multiplier effect of increasing turnover NOT by 10% as they might assume, but by a staggering 33.3%! An increase of $33,100 in turnover for doing nothing else except improving EACH area at once, rather than concentrating on just one area at a time. This multiplier effect is caused by the combination—the synergy—of all 3 areas working together. Each complimenting the others. The increase should surprise, impress, and excite your customers.

Review which of the 4 ways to grow your customers are focused on right now. Is it just one, two, three, or is it all four? Are they using the power of synergy to achieve maximum results for their business?