Are you stuck and unable to grow your existing business? Do you want to launch a new business, but you just don’t know if you’ll be able to scale it? If you answered “yes” to any of these questions, this article will be an eye-opener for you.
There are only 3 principles that apply to scaling any business. It could be on- or offline. It doesn’t really matter. Follow these rules to a t and you will find success.
Let’s jump straight into it.
- Grow the number of leads that come in your business
- Increase the average transaction amount
- Increase the frequency of transactions
That’s it. Might sound a little abstract at first, but let’s apply it to a virtual online business and see how it works out.
Imagine for a second that you sell a recipe book on your website. You get on average 1,000 leads every single month and out of those, 50 will buy your $40 ebook every single month. You generate on average $2,000 monthly gross revenue. The only problem here is how do you scale it up? How do you double that to $4,000 gross revenue, as fast as possible?
Of course, we’ll start by going through each principle and see how it applies to this particular business.
Principle #1 – Grow the number of leads that come in your business
If you need 1,000 leads on average to generate $2,000 it simply means you need 2,000 leads to generate $4,000.
How do you that?
If content marketing or SEO is your main lead generation technique and it works well for you, try to scale it. These are a few ideas to help you get started: hire people that will create more content, reach out to more influencers, grow your social media presence, optimize your content to get more leads from the existing traffic, create infographics and videos and distribute them, etc.
If you use paid traffic such as Adwords, look into alternative sources of traffic such as Facebook or Bing. Or you could add an affiliate program and get webmasters to send you traffic and leads in exchange for a generous front-end commission.
Out of the 3, applying principle #1 is usually the hardest for most businesses.
Principle #2 – Increase the average transaction amount
In the digital marketing world, this is called “adding an upsell”. Or an OTO (One-Time-Offer).
According to the 80/20 rules of marketing, 20% of customers will purchase a product priced 3 times higher than the initial purchase, as long as the value of the offer is equal or higher to the price you’re charging.
In other words, for our virtual business, if you were to add a different product – let’s assume it would be a series of over-the-shoulder videos where they could watch you cook the same recipes you were showcasing in the ebook – priced at $120, 10 customers should take you up on the offer.
You would add another $1,200 revenue stream into your business as soon as this second product is ready.
And you can go even further. For $500, you would offer 4 coaching sessions over Skype on how to cook like a professional chef. 2 people out of those 10 who purchased the videos will take you up on it on average every single month and you would add another $1,000 gross revenue.
Simple tweaks like that can easily grow your business.
Principle #3 – Increase the frequency of transactions
So far, the virtual business we’ve been talking about depends on getting 50 new buyers every single month. It’s usually a lot easier to continue selling to those 50 buyers who already tried your service than getting another 50 new buyers.
In the online world, increasing the frequency of transactions can be easily done by adding a subscription program.
It’s very simple really. Assume you were to create 5 new recipes for your customers every week. You would charge $20 for this service and you would offer a 30-day free trial, after which they will be automatically rolled into this continuity service unless they would want to cancel it.
If you get only 25 people every month to take you up on it, every month your business will add $500 to its revenue. In just 4 months, you would have doubled your business by doing nothing more than adding a recurring component.
I challenge you to come up with ways to apply this to your existing business. Share it with your friends and see how they are able to scale up their businesses.
Can’t wait to see you succeed with this,