Five Steps for Improving Profit Margins
Improving profit margins can make or break your business. After all, if you’re putting in a lot of work, have high revenues, but low profit margins, you will still have trouble staying in business. Following these steps to improve your profit margin will go far in helping you create the business of your dreams that allows you to live your dreams too.
1. Create Systems and Processes
No matter what type of business you have, it’s imperative to have systems and processes in place for everything. Automate everything you can, outsource things that aren’t in your wheelhouse, and use the technology that is available to you to make everything simpler.
For example, having the right autoresponder plus autoresponder series is part of the process of nurturing leads, retaining customers, and educating your audience.
Creating the right filing system on your computer so you can easily find things is also part of a system. If you do things the same way each time (and yes, you can improve it as you go), it’s going to make many types of tasks faster and more effective.
2. Upsell and Cross-Sell
Using that system, add upselling and cross-selling to every single product or service that you promote. Even if you are promoting someone else’s product or service, you can still offer additional value to them for making a purchase via content upgrades, prizes, and more.
By increasing the average order total, you’ll increase your ROI exponentially. Be careful about adding too many, though. You may need to test it for your audience as each audience is different, but one or two and even three upsell offers can make a huge difference.
3. Cut Low-Margin Products/Services
Track the numbers so that you can discover what you’re doing that’s making you the most return on your investment. If you have low-margin products and services that take a lot of time, ask yourself what would happen if you spent that time on the products and services that have a higher return. More than likely you could increase profits by simply switching efforts to do more marketing for the high-return items, and less for the low-return items.
4. Nurture Your Customers
When someone buys from you, they’re much more likely to buy from you again. Therefore, set up automation to sell new products and services to the people who have bought from you that you believe they need or will like. This doesn’t even take that much work if you really know your audience, your product offerings, and are good at finding other people’s products to fill in the gaps.
5. Track Your Expenses
How many monthly fees do you pay for things that you really don’t use often? Automation and software are wonderful, but if you’re not using something, then it’s just a waste of money and an added expense that you don’t need. If you’re using it every day, and you’re seeing a good return on the investment, keep using it. Otherwise, let it go.
Plus, tracking your expenses and matching them to the products they help you promote, will ensure you don’t have expenses on the books you don’t need and which are lowering your profit margin.