A Small Business Guide to Increasing Sales
We look at increasing sales in reaction to an immediate problem and a long-term plan to help you figure out your business strategy
A business may want to increase sales either to overcome a problem in the short term or as part of the planned growth of the business in the longer term.
This briefing contains tips for increasing sales in both these situations. It covers:
- diagnosing the cause of problems in the short term
- increasing sales in the medium to long term
- a range of possible solutions to increase sales
Recognising the need
There are usually two kinds of situation in which you need to increase sales.
- In the short term – you are reacting to a problem, such as the loss of one or more customers, decline in a market or the arrival of a new competitor.
- In the medium to long term – you are taking a more considered and deliberate approaches as part of planned growth of the business.
The approaches you take will be different in each of these situations. Some approaches will deliver better results over the long term but it takes more resources and time to deliver them. Other approaches are more effective in the short term. It is important to use the appropriate methods for the situation the business is facing.
Diagnosing short-term problems
In the short-term the problem is usually to generate sufficient sales to fill your existing production or operational capacity. You may be reacting to:
- Loss of one or more significant orders
- Loss of one or more customer accounts
- Failure of a new product or service to sell
- New or increased capacity coming on line
It is important to identify and understand the causes of any shortfall in sales. For example, if a major customer has not placed an order or has closed their account, try and find out why. Customers will usually explain why they have taken that decision.
Try to establish any pattern or trend there may be. The short checklist below may help to identify and diagnose causes.
Failure point – if there is a pattern or trend, where is the problem occurring? Are you failing to win, or are you losing, orders from:
- Prospective customers?
- Regular customers?
- Customers who have tried you once but are not coming back?
- Customers with a particular need?
If you can identify where the failure point is, you can start looking at the processes you are using.
- Customer perceptions – do your customers perceive lack of commitment from your business to them, to your product or market? Is a poor or negative customer perception of your business spreading by word of mouth? Is one of your competitors undertaking a ‘dirty tricks’ campaign?
- Marketing process – if you are not getting enough customers, are enough potential customers aware of your products and services? Is the price set too high for the benefits offered? Is the product specification not suitable for customers’ needs?
- Selling process – if you are getting good levels of response but not enough orders, is the follow-up poor or slow? Are you putting customers off before closure? Are your negotiators weak? Are you failing to maintain the relationship with customers once you have created it?
- Competitive threat – is there a new and strong competitive threat? Has a competitor just launched a new or improved product or service? Is a strong competitor conducting an aggressive promotional campaign or price discounting? Is one of your competitors starting a price war?
- Product/service quality – is your quality letting you down: do you have delivery problems; are your products unreliable; are they fit for your customers’ purpose; do you have slow or poor after sales service?
Once you understand the causes, you can then do something about it.
Increasing sales in the longer term
In the longer term, you will usually have the luxury of time to be able to plan your business growth and set goals, rather than reacting to an immediate problem.
The key to successful growth is understanding and matching the capabilities of your firm to the opportunities you have identified in the market. Having a clear marketing strategy is important – for further information see the business advice article on Marketing Strategy.
What to do to increase sales
Having identified the underlying reasons for needing to increase sales, you can now start looking for appropriate solutions. Below is a range of potential solutions you may wish to consider. The time taken to achieve a result and the risks involved increase as you go down the list so it pays if you can find a solution that works for you from higher up the list.
- Improve your marketing and sales processes – selling is often a numbers game: can you improve your conversion ratio (number of orders to the number of initial enquires or contacts) or do you need to increase the number of initial enquiries or contacts? Often, businesses simply do not generate enough leads.
- Offer a sales discount – can you offer a short-term discount to encourage existing users to buy more or to attract new customers? Once you have them buying, you can then use different approaches to keep them.
- Promote increased usage by existing users – can you encourage existing users or give them incentives to increase their usage by an advertising or promotional campaign?
- Increase sales volumes by reducing price – this will work only if customers are price sensitive, otherwise this may not have the desired effect and may send the wrong message. Be sure that your competitors will not respond in kind, so escalating into a price war.
- Win competitors’ business – can you identify a weakness in competitors that will enable you to use your advantage to win new business? Is there a gap in their product/service portfolio? Can you provide a consistently better service for the same or lower price?
- Convert non-users – can you persuade customers for your other products to adopt the product/service where you are experiencing a shortfall? ‘Cross-selling’ will need sales calls or some promotional activity.
- Find new non-users – can you find customers who are not yet using this type of product or service and persuade them to start using it?
- Launch improved or new products and services – be sure that it is your product or service that is letting you down before you go down this more expensive and time-consuming route. It needs careful planning.
- Enter new markets – this is usually part of a business’ planned growth, rather than a short-term reaction, so needs careful planning. For further information on selecting and entering new markets, see the Related Items section below for a link to the Factsheet: Entering new markets.
- Launch new products into new markets – this is usually an option of last resort as you are doing two things at once. The risks and potential costs of this solution are likely to be high.
Increasing sales: at a glance
- The need to increase sales is either a reaction to a short-term problem or part of the planned growth of the business.
- If your sales are under pressure, start by looking at the sources and underlying causes of that pressure, for example where things are going wrong.
- Once you have identified the causes, you can then take action to increase sales. This will usually involve more or a redirection of existing sales and promotional efforts.
- There is a range of solutions to help you increase sales, with varying degrees of impact and time taken to deliver a result.
- It is important to use a solution that is appropriate to the situation the business faces.
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