How Do I Increase Sales?

There is a recent poll listing the issues that showed sales concerns have grown from less than 10% in 2000 to nearly 22% in 2011 for small and mid-sized company owners and executives.

It is usually a given that to increase sales revenue you have to increase market share. So how do you increase market share and increase sales during a down economy? First, you have to understand the Big Picture.

It is generally understood that there is a limited amount of revenue to be garnered in any market. When the economy is down the amount of money available shrinks making it more competitive and in an extended down economy the “tightening” of the market can almost be felt. Furthermore, increased sales in one company, and sometimes just maintaining sales in a poor economy … usually means loss of revenue somewhere else.

Differentiate

So how then do you increase sales in this difficult time? Is it even possible in a down economy? The right answer is to give your customer a clear and compelling reason to buy … differentiate yourself … your company. Simply ask, “with all of the goods and services available to your customers in your market why should I buy from you?”

The answer is you have to offer a Value Proposition. If you’re the same as everyone else you’re a commodity, and that means you eventually get forced to compete on price. Basically, there are four ways to increase sales in any economy, and they all center around giving your customers a reason to buy. These reasons are:

1. Lowest price
2. In-Stock Availability of Best Selection / Inventory
3. Fast Delivery or Quick Ship
4. Best Perceived Value – Value Proposition

Let’s look at these options:

No. 1. Of these lowest price is usually the go-to short-term answer. Unless you are a major player in a market with high volumes, volume based buying power and high efficiency, this isn’t usually a good business model. (It’s hard to out Wal-Mart Wal-Mart.)

No. 2. High in-stock inventory and premium selection are tied to volume, and causes you to tie up cash that could be used for something else. This demands high and quick inventory turns to compete. (Same for fast delivery / quick ship)

No. 3. This leaves us with Best Perceived Value … or Value Proposition. Most businesses don’t sell on perceived value because they haven’t taken the time to define it, they don’t understand it, and their sales people don’t understand it, so how can their customers understand it? If this is your situation, you need to address it professionally as soon as you can. Without a good Value Proposition Plan you will most likely be forced to go back to price … and it’s hard to win at that game especially in a down economy and make any profit.

When demand is high, companies can get by with a poor value proposition. However, when market demand falls off, companies without a Value Proposition Program generally lose market share. And the companies perceived to offer the best value by their customers get a larger piece of a smaller pie. Realize, even if you get the same number of pieces of the smaller pie, it is still less volume.

Do you have a Value Proposition Plan / Program?

Do you know how to implement one?

© Phil Hoffman 2012. All rights reserved

Explore posts in the same categories: Consulting, Economy, The Economy

Tags: Market share, Sales, Value proposition

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