Any growing business is full of smart, busy people, working hard to deliver their vision and hit targets.
But how do you work out which ideas and plans to prioritize? What’s going to deliver you the biggest, quickest wins and deliver growth?
All businesses have different growth objectives. They can be short-term or long-term, focused on profitability or on revenue. Whatever the objective, you need revenue growth. You can only improve profits so much – improving margins, buying better, creating smarter offers and cutting overheads will impact your profitability and make your business better but once you’ve done these things you still need to drive revenue in order to grow.
Revenue growth comes from:
- More new customers
- More existing customers ordering more frequently
- Greater average order/transaction value
- Greater average order frequency
To understand which activities will have the biggest impact on growth, you need to understand your current numbers for each of these metrics and the expected uplift from each activity.
I’d start with any activity that will get you more new customers.
Hopefully you also know the value of a new customer – so, based on forecast number of orderers, how much additional revenue will each activity bring in over the next 12 months? What percentage growth is this?
For most businesses, new customer activity will have the biggest impact on growth so we need to ask the core questions: which new customer activity can be scaled? By how much?
Other opportunities for growth will come from getting more existing customers to buy more often and spend more when they do. In essence, you need to make it as easy as possible for your customers to shop with you and to enjoy doing so. All your marketing activity needs to feed into and be measured by these metrics.
For example, if you’re investing in a new website, your goal should be to increase conversion rate and average order value by making it easier to shop. A reasonable assumption would be to see a 20% increase in conversion rate and a 5% increase in transaction value with a new site.
How much additional revenue will this drive?
Once you‘ve listed all your growth drivers and the revenue potential, it should be easy to sort them from high to low and use this to prioritize your time. I would also add investment to the list so you can prioritize by return on investment, particularly if you are a business with cash limitations.