6 Steps to Implementing a Revenue Strategy
You never thought possible in this economy…
Education and many years of experience in the marketing industry have taught me this one simple tactic to implement for a reward strategy that will increase revenue, dramatically.
Earlier on in my marketing career, I implemented this reward strategy just as a test to one of my portfolio customers and it proved to be a highly successful tactic.
All businesses have a portfolio of customers however, not all business may have the capabilities or resources to implement strategies that will help to boost revenue. Revenue that is over and beyond the estimated and expected results. It is a desire for any business to want to see more revenue or profits from its customers. However, we know that the customer will want something in return for giving up those extra dollars that you are looking to grab. There has to be an incentive for people to react.
Depending on what business you’re in you’ll need to look at a few things first before implementing any revenue strategies. First understand what your product is currently doing in revenue for you. You’ll need to identify who is purchasing and who is not or rather, which product is performing better than others. This part is deemed segmentation. I will describe segmentation in grave detail in another article but for now, let us look at the following reward strategy and the things you can do to implement one in this economy.
Here are the Six Steps to Implementing a Reward Strategy:
- Assessment:
a) First understand what your customers are buying or who is buying versus who is not. If you’re not tracking customers per say then look at your line of products to see which ones are performing well versus which aren’t. Now, pick one of the products that isn’t performing well that you would like to see more sales coming in.
b) With product in hand, obviously, you will need a budget to implement a reward strategy to drive sales. Let’s look at how you will develop a budget. Look at the cost for producing this product and your margin of profit. Yes, basically your markup. Then look at the sales it brought in the previous three months. Let’s say it was $20,000 per month, for each month totaling $60,000. So if your cost of goods was 30% or $6,000 each month then your markup is 70% or $42,000. Of this markup figure out what discount in dollars on this product or percent you are willing to give up to drive new sales.
2. Determining Budget:
a) Let us say of the $42,000 you will be willing to give up 50% as a budget in order to increase sales on this product. That would be $7,000 from each month or $21,000 total.
b) This is your budget and do not go over the budget by more than five percent if you need to, otherwise the goal is to stay under.
3. Determine Sales Price for the Product:
a) Determine how much you’ll discount the product for. Let’s say your cost is $4.00 and your markup is $6.00 then your normal price is $10.00. You would need to sell 700 per month for three months to be back at status quo or before the budget. So let’s say you drop the cost by $2.00 and the product is now discounted at $8.00 to be back at status quo you’ll need to sell 875 pieces per month. Anything over that is where you begin to see the value of your reward strategy.
b) With any reward, sales will definitely go up above and beyond what your normal goals are.
4. Reward Tactic:
a) “Because you’re a valued customer, if you purchase X dollar amount in total sales you’ll received this discounted product for the discounted price”. Your X could be $50 or whatever total sales amount to be if they purchase 3, 4 or 5 other products.
b) “Hurry, offer is good for 7 days only” — This is your “Hook”
c) Determine a start date and an end date.
d) Implement this strategy on your product website and page to begin on a set date.
e) If 7 days start on a Monday and end on the Sunday or Start on a Monday and end on a Friday for 5 days etc. Never implement in the middle of the week as people will forget and anything too difficult will make you lose the sale.
5. Communicating the Reward Tactic:
a) Develop a reward letter with the promotional offer for this product.
b) Send it out to your email contact list letting your customers know of your upcoming promotional event.
c) Begin the event date on the same day you send the email out as that is the most impactful day because people will want to click through right away.
d) They may fill their carts but may not pay as yet, and come back later knowing they have a few days before the reward ends.
6. Results:
a) Achieving 875 sales of $8.00 gives and incremental sales of $800 on the discounted product. However, you’ve up your sales on your other products totaling to $50. You status quo results alone is $43,750 which doubles your total budget that was accounted for the next three months in only one week. This is where the real incremental revenue is generated.
b) Track your sales and see how it’s doing on a daily basis.
c) Test this strategy on any single product that you would like to see increased sales.
d) Rinse and Repeat.
Good Luck and enjoy the new sales!
