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ACCA Business Growth Q and A by The Profit Doctors

Answers to your Business Growth Questions by the Experts Incisive Edge

My business has been going for eight years and turns over £2.3m. We are well serviced in terms of expertise, with an excellent FD and experienced management team. We have been able to increase profitability by reducing costs, including some staff redundancies, over the last two quarters. However, we understand this is not a sustainable model and we are consistently competing on price. What should I be doing differently? James Peterson, CEO, Petersons Ltd

Firstly, James, congratulations on what you have achieved so far. Tough decisions have been the order of the day throughout the last few recessionary years but yours will no doubt have ensured the stability and longevity of your business, safeguarding the jobs of those still in your employ and enabling you to emerge from these dark times stronger, more focused and more profitable.

The all too common thread

Yours is a question that my colleague David and I often hear in our work with clients. It is so easy to become entangled in a self-destructive price war. But while attempting to out-discount your competition, this ever more constrictive course will inevitably bleed you dry. Price wars are unsustainable and at best are a short-term solution for any business, so you are right to be seeking alternative strategies.

Why customers buy

Despite what many in business may believe, a buyer´s decision-making process is not solely based on price. As you know, your customers are complex creatures, and alongside price they are influenced by quality, value for money, reputation, customer service and convenience. There are other factors, but it is essential that you discover which are the most important for your specific audience.

The path to long-term profitability

So first you will need to do a little research. You must uncover the specific stimulators that will encourage new and existing customers to open their wallets and willingly hand over their hard-earned money in exchange for whatever it is you are offering them. Only with this information can you formulate an effective strategy for long-term profitability.

Briefly, this strategy would usually involve one or more of the following:

1. Increasing your customer base. Finding ways to stimulate an influx of new customers, improving customer conversion rates and increasing customer retention levels.

2. Increasing your average transaction value. There are always ways to achieve this no matter what your current price point. Upselling through bundling products or services together, adding greater perceived value or enhancing your corporate image/persona will achieve this, while cross-selling treats every sale as an opportunity to promote second or third transaction prospects.

3. Increasing your repeat sales. The simplest of the three, but the least exploited by most firms. It´s all about communication, staying in touch, and being the first company they think of when they need what you´re selling.

James, I do hope this helps, even though we´ve only scratched the surface of what can be achieved.

We are a reputable financial services provider, but currently find ourselves unable to distinguish our company from other similar organisations in the marketplace. We´re lumped in with everyone else despite a recent expensive rebranding. What should we be doing to differentiate ourselves from the rest? Jessica Stirling, Director, Progressive FS

Hello, Jessica. Julia and I spend most of our time working with clients to find their USPs, to unearth the thing that makes them unique, and more importantly makes them seem so different from their competition that a defined and recognisable brand can be formed around it, so I´m glad you´ve asked this question.

It´s an upward struggle

Your business is in a heavily populated sector and one where differentiation is quite difficult to achieve. However, the purpose of a rebranding is always to leave a fresh, new and clear impression on your audience, so let´s investigate where things may have gone so awry for you.

The first thing to say is that it does not matter what your business does, how long it has been established or what people think of it currently: it is always possible to change its public persona, and, with some imaginative thinking, to set your business apart from the throng.

A little knowledge goes a long long way

Research, research, research. To enter into a rebranding programme without fully understanding your market and what encourages your target audience to purchase would be like driving with your eyes closed – sooner or later, and probably sooner, you´d realise you´ve made a very costly mistake.

Now you may be under the impression that after years serving your market you know all there is to know about it, but markets change, knowledge can quickly become outdated, and the buying patterns of your customers influenced by the economy, trends, fashion and other factors will also change. To gain a market-wide view from which you can formulate a branding strategy you need to take a step back and look at things from a customer´s perspective.

Take a fresh approach

What makes Sony TVs more desirable than Sanyo TVs? Why is Virgin a name known around the world? Why are people prepared to pay so much more for a car with the Rolls-Royce emblem on it? Branding is what elevates a company above its competitors even when what they are selling is very similar. It´s about finding that universal thing that pushes your potential buyer´s “that´s exactly what I was looking for” button and guiding them towards your checkout counter.

Now this will be different for every company. It might be about personalising the business or the product you´re selling. It might be about repackaging it or speaking to your audience in a voice they can connect with. Sometimes it´s about being more professional and sometimes it´s about relaxing by loosening your corporate image´s proverbial tie.

Rebranding is not about a website colour change; it´s not about spending a fortune on advertising or a new logo. It´s about fully and completely understanding your audience and telling them through every one of your communication tools in a uniform and clear voice that you offer them exactly what they are looking for… and having them believe you.

To discover how Incisive Edge will grow your business email growth@incisive-edge.com or call 0843 289 7884.

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