How Do I Increase Sales In My Business?

Tuesday, November 15, 2011

That’s the number one question for many small and mid-sized business owners and executives.

A poll by the National Federation of Independent Business (NFIB) listing the issues showed that sales concerns have grown from less than 10% in 2000 to nearly 20% in 2010.

 

As you can see from the table above sales and taxes followed by regulation are the top concerns.

As the saying goes “the only things certain are death and taxes,” so spending excessive time and energy on things out of your direct control aren’t really productive.

So how can you gain market share and increase sales? First you have to come to grips with understanding the problem.

Sales in most every market is a zero sum game. There is a limited amount of revenue to be had in the market. When the economy is poor the amount of money available shrinks making it even more competitive. Increased sales in one company usually means loss of revenue somewhere else.

So how then do you increase sales? Give your customer a clear and compelling reason to buy. I ask my clients to answer a simple question, “with all of the goods and services available to your customers in your market why should I buy from you?”

 The answer to that question is your value proposition. In absence of a great answer to that question you are seen in the market as the same as everyone else. If you’re the same as everyone else you’re a commodity, and that means you eventually get forced to compete on price.

There are really only a few ways to increase sales in any economy, and they all center around giving your customers a reason to buy.

• Lowest price
• Best selection / inventory
• Fastest delivery
• Best perceived value for the money

Of these lowest price is usually a short-term advantage. Unless you are a major player in a market with high volumes, volume based buying power, and high efficiency this isn’t usually a good business model.

High inventory and selection are again tied to volume; inventory sitting in your distribution chain is cash tied up that could be used for something else.

That leaves best-perceived value. The fact is most businesses don’t sell on perceived value because they haven’t taken the time to define it, they don’t understand it, and their sales people don’t understand it, so how can their customers get it?

In absence of educating your customer base why buying from you is the best decision the discussion always gets back to price.

When demand is high companies can get by with a poor value proposition, but when the market demand falls off the weaker companies lose market share, and the companies perceived by their customer base as offering high value for the investment retain a larger piece of a smaller pie.