Profitability is a measure of a company's ability to maximize profit while incurring minimal costs, says Jaian Cuttari. Increasing sales and/or reducing costs are the most common ways to increase profit.
Profitability is far from simple, however. Because sales and costs are not necessarily incremental, focusing too much on increasing sales will put you at risk should a sudden, unforeseen decline in demand occur. And cutting costs by substituting lower-quality materials could cost you your customers.
The question that business owners have, therefore, is: how do you maximize profitability?
Convert One-Time Clients Into Recurring Clients
There are numerous reasons why transforming your patrons into repeat shoppers can fast enhance your profitability. Recurring customers are more likely to purchase more frequently and spend more money than new ones.
According to one study, "engaged customers," which are satisfied repeat buyers who advocate for a brand, are the most valuable customers a business can have. They not only spend 300% more than typical customers, but they are also twice as likely to buy upsells and six times more likely to try new products from your company.
Negotiate Hard
Creating a competition for your dollars, creating a list of concessions you want, as well as extras you would like to trade-off, and researching the market are all tips that will help you negotiate effectively.
The ROI on your negotiation work can be enormous if the asset you're buying for your business is large enough, says Jaian Cuttari. You might even want to hire an experienced negotiator to help you make the best possible deal.
Eliminate Costly Services And Activities
The majority of companies get into a routine or rhythm of offering expensive services to their customers that they could easily discontinue without losing customers.
What little services do you offer to your customers? Could anything be reduced or discontinued?
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