The COVID-19 pandemic has led to more businesses focusing on online selling than ever before. The shift means greater competition in the ecommerce arena, and pulling away from the pack is suddenly all about improving profitability in order to open up new opportunities for growth moving forwards.
Making your business more profitable doesn’t have to involve immediate large-scale structural changes to your operations. Without the right resources (and good timing), this can be next to impossible to pull off. If your business is looking to find new ways to improve its profitability, taking a few smaller, easily actionable steps to gradually build momentum in the right direction is the best way to go.
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Business Profitability Tips
A profitable business strategy typically accounts for various avenues to scale up operations, while also considering how to avoid common pitfalls along the way. Getting to a point where scalability is actually on the table might take years, if not decades. If you and your business are in it for the long haul, the best way to improve profitability is to make well thought out, simple changes. Here are a few ideas to help get the ball rolling:
Invest in email marketing
A broader digital marketing strategy requires a lot of moving parts. If you’re only just getting set up with the right resources to promote your online store, email marketing might not have even been put on the to-do list yet. Effective email marketing management requires up-to-date distribution lists divided into highly targeted audience segments. It also requires doing a somewhat delicate dance between consistent outreach and crossing the line into spam territory.
Automating as much of the email marketing process as possible is an easy way to free up time and resources so you can focus on new ways to boost profitability. Investing in a marketing automation software can also be a game changer in terms of upping conversion rates over time. Software allows you to learn something about your customers or target audience from every campaign. Some providers, like Sendlane, up the ante even further, offering SMS marketing functionality and deep-data integration within subscriptions.
Set clear targets for new lead numbers
All businesses want to bring in new customers, but many don’t have a clear strategy that details how many hot leads they want to bring in from one period to the next. A good foundation for long-term profitability requires setting clear new leads targets and tracking performance changes weekly, monthly or quarterly. A lot of businesses opt for a target of 10% growth in new lead numbers from the current month of operations in comparison to the same month of the year before. Startups might aim for a higher number, as they typically need to scale up quicker to gain access to new rounds of investor funding.
By setting a clear target for new leads, your team will have something tangible to work towards all year round. Incentivising these targets will motivate the team to do whatever they can to get the desired result every time. By tracking all new lead data – be it from PPC, email marketing or social media campaigns – you will eventually have a clearer picture of what your ideal customer looks like. This will allow you to make improvements to future campaigns, leading to better sales over time.
Don’t skip annual price increases
Although the last two years have been economically challenging for everyone, being tempted to give your customers a “break” and not increasing your prices annually can have a detrimental effect on the long-term profitability of your operations. General inflation means that your products or services will immediately be worth less than they were the year before. Suppliers or vendors that don’t skip their price increases will lower your profit margins instantly too.
A price increase of as little as 3% can do the trick to drive more profit per conversion. If financially viable, this increase also isn’t big enough to attract too much attention, unlike a 15% increase might. Decreasing your direct costs can help to increase your profit margins even further, so don’t be shy about asking your suppliers if they have any wiggle room with their prices going into the new year.
Equipped with three easy-to-implement ways to make your business more profitable, you’re now all set to start building new momentum in the right direction. Over time, better profit margins can lead to extra wiggle room to explore opportunities to scale up operations. Before you know it, you might even be talking to a new group of investors or starting to think about expanding your business into a new location or an exciting new territory.
About Carson Derrow
