In spite of the long age advise to use advertisement to increase revenue, most businesses keep having their valuable cash drained through advertising expenditure. It is surprising that advertising is one of the areas where businesses keep spending money for little or no return. Ineffective advertising is one of the major causes of loses and failure in business.
You don’t have to spend on advertising to make money in business. You may be losing your money if you do. The good news is that your business can be richer with cost cutting in advertisement. Before you even pay for advertising you should consider it as an investment. Like other investments, such as financial investment, advertising must bring return. The decision rule is “invest if the return is positive or reject if the return is negative.” And you must be sure that it will increase your revenue quicker than the other revenue increasing methods. Businesses always get seduced and rush to pay for unprofitable advertisement- despite that there are other profitable marketing options available to make return on their money. My goal of writing this article is to help you know and apply alternative revenue increasing strategies and, cut your advertising cost.
Before you buy advertising space, explore other strategies first. They are cheaper and less risky than advertising. Five strategies that are more effective than increasing advertising include:
1. Adding value or creating a new USP
2. Raising your prices
3. Increasing customer loyalty and repeat purchases
4. Increasing your product range
5. Increasing the value of what you sell.
Adding value or creating a new Unique Selling Proposition (USP)
Your customers will always feel happy when you serve them beyond their expectations. When the service you render to your customers exceed what they have paid for you have added value. Usually, adding value make customers want to buy from you again and again. They become your free and powerful means of advertising by telling three or four people. A Barbing Salon adds value to its customers by washing their head after a haircut, a service that competitors in the same vicinity are not rendering.
Raising your prices
You can raise your prices and make millions in profit. If your added value is perceived by your customers as important, you will attract new many customers who will be happy to pay your price. You can comfortably increase your price by more than 12% without increase in cost. All the extra money goes into your profit and makes your business richer. Customers know that the cheapest product is not always the best product. It’s true to say that many customers are looking for best value, not best quality. In business we know that VALUE = QUALITY + PRICE. If you want to make your business richer by raising your prices, make it your duty to educate your customers about the unique quality and services they will get.
Increasing customer loyalty and repeat purchases
In business one of the money making rules is that you must attract and retain customers more than you lose them. You will lose some customers. But let them be the unprofitable ones. You must retain your customers for a long time and make them want to buy from you more to guarantee your success. Increasing customer loyalty is about retaining customers and making them happy for a long time. Achieving extra sales from existing customers costs far lesser than acquiring new customers with advertisement. Existing customers purchase repeatedly- buy again and again. If you know your customers and, their frequency of buying, you will be able to satisfy them whenever they call. Your profit will sour!
Increasing your product range
Often, customers buy in sequence- the purchase of one product leads to the need for another product. For instance, customers who buy shoes need polish. When they buy polish another need arises for brush. If you know your customers, you will identify sequences in their purchase behavior. Use this knowledge to create a range of secondary products and services that your customers want but are not presently on your shelves. The extra revenue from this strategy over a period of one year will intrigue you.
Increasing the value of what you sell
Increasing the value of what you sell happens when you offer your customers a product with little difference from the product they have in mind. When the higher value product meets the expectation of the customer and is more profitable for you, your business will be richer even without extra cost. Here is an example of how a computer engineer increased the value of service he rendered to me. I called in his office with a new Laptop for software installation which costs $2. After a check he told me that the hardwares were inactive and suggested activation and upgrade of Window OS. I agreed because I needed the hardwares and a new Window OS to come alive on my Laptop. I paid $11 for the higher value service.
It’s important to say that in an attempt to increase the value of what you sell don’t push your customers to buy what they don’t want. Make sure you know what they want and honestly give them what will meet their expectation.
Advertising can be dangerous to your business. Before you spend a dime on advertising explore the benefits of the other 5 strategies of adding value, raising your prices, increasing customer loyalty and repeat purchases, increasing your product range, and increasing the value of what you sell. Your business will be richer!
You are in business to create wealth, so your strategies should cost less than the sales they generate annually. You can only achieve this when the business activities, including Marketing, of your organization are performed at low cost and at the same time increase your sales significantly.