Constantly reminding ourselves of the simplicity of business is an extremely powerful mindset.
Growth can be an ever-elusive secret to many business owners. Still, when you dig down to the fundamentals, there are only actually seven ways to increase your bottom line.
Understanding and focussing on each of these seven growth levers will have your business rocketing towards that J curve in no time.
The Seven Growth Levers
Number 1: Keep More Clients
Fix your churn! If you have clients on a retainer or subscription and are losing any, this should be your Number 1 priority before you even think about a marketing strategy!
You have gone to all the cost and effort of winning these clients, not doing everything in your power to keep every last one is criminal, but something I see repeatedly.
It’s not as sexy for some to talk about your impressively low churn rate compared to the number of new clients you signed up - crazy!
First, you need to ensure you are tracking your churn rate and it is monitored constantly.
Churn = number of lost (churned) clients this month/clients at the start of the month
Expressed as a %
Depending on how bad your churn is, there are a few strategies to consider:
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Client Retention Team
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Cancellation Surveys
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Loyalty Programmes
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Create a strong community
Ultimately you need to understand what your clients really want and blow their socks off with your product/service - simple, not always easy.
A quick word on Churn: Whilst the calculation is simple at first glance, it is a minefield to get the correct data and calculate a truly meaningful churn - a topic for another day.
Number 2: Convert More Leads
If you already have leads coming into your business, then how many of these are you converting to clients? Can you convert more of them?
Not maximising your conversion ratio on leads is a colossal waste.
Are you tracking your sales conversions, though? Many small businesses don’t, so they have no idea how much money they are leaving on the table.
You should start with overall conversion, i.e. how many leads convert to clients, but to really spot opportunities, you can break this down further. List the key stages in your sales pipeline and track conversion from each stage to the next. A typical pipeline might look something like this:
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Lead
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Discovery Call
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Meeting Booked
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Deal Won
If you have a sales team, track conversion rates by team members too. There could be a performance or training issue that needs addressing.
One of the biggest drivers of success for this particular lever is the systemisation of the sales process. Use automation to make this process easier but keep it personal too. Follow up regularly, not just once. Show them relevant value add content at each stage of the sales journey. This is where a system like Active Campaign or HubSpot works well.
Number 3: Increase Frequency
You have already convinced your clients that you are worth spending money on, now find a way to increase the transaction frequency.
In the eComm world, we use email marketing and discounts (bleurgh, see my previous post) to get customers to return and buy from us more regularly. A client buying from us monthly instead of once a year delivers massive growth results if achieved across your client base.
Number 4: Increase Transaction Value
Every time a client spends money with you, make sure they spend more than last time.
This statement, in isolation, can bring up all kinds of moral dilemmas, but the way to look at this is to ensure you are adding more value simultaneously.
The most obvious, quickest impactful way to grow for many businesses is to increase the price. Price increases go straight to your bottom line. Most businesses undercharge and are not aware of their true value.
Increasing your price is certainly not the only way to move this lever. You can also concentrate on selling more to the client.
In eComm, we use email marketing and checkout software to increase the Average Order Value (AOV).
In SaaS, we add features to move clients up a package level or sell more paid users to increase Average Revenue Per Account (ARPA).
In the service industry, we look to upsell other services and add more value to the client.
Number 5: Improve Efficiencies
Improving your Gross Profit Margin is an often overlooked but vital approach to increasing bottom-line profit. Perhaps it’s just because it’s often misunderstood and rarely calculated correctly.
Just a few percentage point improvements here can significantly impact net profit.
For an eComm business, this will likely be achieved by negotiating better prices for your materials and stock. This could come from volume discounts, new suppliers, or excellent negotiation skills.
For service businesses, it could be reducing your cost of sales (primarily direct labour costs) through outsourcing, for example, but it could also be about selling more without increasing wage costs - becoming more efficient.
There are many ways of driving this efficiency, but the top of the pile for me is better systems and more automation through the use of tech (chat GPT, anyone?).
Number 6: Get More Leads
Whenever I ask a room of business owners how they plan to grow, increasing marketing to generate more leads is ALWAYS the top priority.
Just because this is the obvious choice, it shouldn’t make it your top priority. In fact, this is one of the last things you should address.
It’s not to say it isn’t important, but generating brand-new leads through marketing is one of the most challenging and expensive levers to pull. Ensure every other lever works well before diverting too much effort to marketing.
A whole marketing strategy is beyond the scope of this post, but you know what is involved.
Number 7: Reduce Your Costs
Last and very least is to reduce your overheads.
This goes against every bit of a traditional accountant’s training and upbringing, but cost-cutting as a way to grow is about as enticing to me as watching an episode of Love Island.
Don’t get me wrong; if you have bloated overheads and haven’t reviewed them in a while, then you should do this regularly. My issue is the mindset that comes with this approach being prioritised. It comes from a scarcity mindset rather than an abundance one.
There is only so far you can reduce costs before causing harm, whereas there is no limit to the upside from the other growth levers.
Put it this way, when I told my wife we would need to cut back on our personal expenses or earn more money, which do you think she chose?
Every one of these levers is powerful and will deliver growth. The key to explosive growth is to work on pulling all seven levers at once. Even a marginal improvement in lever delivers a huge impact when combined and compounded.
These 7 growth levers can be grouped into just three instructions:
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Get More Clients
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Give More Value
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Control Costs
See, business is simple…
About the author
Luke Desmond
Fractional CFO for Tech, eCommerce & SaaS. CEO @Crisp_Acc provides virtual finance functions. Co-Founder @getvaulta SaaS Startup for accountants.