One of the aims of a business is to add value to clients. As a result of this value being added, businesses grow and make profits to deliver value to shareholders and investors.
Most business owners think that increasing the volume of trade to your business is a good thing! And in most cases, it is. However, if not done strategically, it can also have a negative impact on your business growth, profitability, and in extreme cases…your ability to trade. Increasing the volume of your products or services needs to be done with a careful and expert approach.
Let’s break this down a little more and explain the pros and cons of increasing volume to your business.
Pros of increasing the volume of services or products in your business
Increasing the volume of sales to your business is essential to growing your business. Failing to do this results in business stagnation and ultimately leads to decline which nobody wants.
There are multiple ways you can increase the volume of sales to your business. Most businesses focus on winning new clients and customers as their primary objective. This goes without saying. With a compelling offering and strong marketing and sales function, this objective can be achieved.
The area many seem to overlook is your existing customer base. You’ve already built relationships, they’ve bought from you already and they trust you. There is untapped potential here and the statistics speak for themselves.
The success rate of selling to a customer you already have is 60-70%, while the success rate of selling to a new customer is 5-20% (outbound engine).
Explore opportunities with each of your existing clients or customers (or even lapsed customers) to sell just one more day of consulting or one more product at checkout. Product businesses can explore automated email win-back sequences for lapsed customers. Where on your customer journey can you give more of whatever value or service you provide to your clients?
Another opportunity to increase volume is to cross-sell other products or services that you have available to clients that are not already buying from you. These combined have a significant impact on revenue growth…but it can be devastating for your business if you get it wrong. We’ll talk more about this in the Cons of increased volume.
Cons of increasing the volume of services or products in your business
We are all led to believe that business growth is good, but when looked at a little more closely this is not always the case. The best way to explore the impact of business growth is via the example of Dell in the past.
Dell was a rapidly growing personal computer company. Their marketing, price points and service all lent to a rapidly growing customer base and growing revenues. All good right? But then it went wrong.
When looked at a little more closely, the orders were coming in thick and fast. But in order to serve the customers, Dell had to increasingly spend more and more to fuel the growth. This had a massive impact on cash for the organisation and ultimately led to the organisation finding itself in a very tricky position.
Great sales and growth, but a negative impact on cash and the ultimate valuation of the company.
In our other article on the 7 Levers for Rapid Business Growth and Increased Business Valuation, we explore other levers to help prevent this.
The key question to answer when on your journey of growth is this:
“Is my business designed and tech-enabled to support my company growth?”
The scary thing is most businesses aren't as they are overly complicated in their systems and processes. In turn, increasing volume can lead to the wheels falling off.
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We work with large-scale clients who wish to transform and optimise their businesses for growth and value creation. A combination of our cost optimisation services and tech-enabled business design solutions yields outstanding results. Book a call with us to talk through the opportunities.
Why not download the full article and read up on the 7 Levers for Rapid Business Growth and Increased Business Valuation article?
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