Gaurav Sabharwal
Ultimate Guide to Objective and Key results – OKR Meaning and Examples
Do you dread setting goals for your organization as you don’t see useful results? […]
A company’s revenue may be defined as its capacity to maximize revenue while keeping expenses to a minimum. Revenue , in its most fundamental meaning, rises when sales rise and/or expenses fall.
Source: Pexels
However, boosting the revenue is a lot more complicated than it seems. Focusing too much on boosting sales might put you at danger if there is a sudden, unexpected fall in demand because sales and costs are not necessarily incremental. Using cheaper materials as a cost-cutting measure might cause you to lose consumers.
Given this, one of the most pressing concerns of business owners is how to increase reveue. Let us look at the few way that will help you in boosting the revenue of your business:
1. Assess and Reduce Operating Costs
Operating costs, or OPEX, are the costs incurred by a company in the course of its daily operations. Rent; utilities; equipment and stock; marketing; advertising; research and development; SG&A; and payroll are all examples of operating expenditures.
Production costs, which are categorized as cost of goods sold (COGS) or, for expensive products like buildings or machinery, as capital expenditures, are not included in operating expenses (OPEX).
Since OPEX is not a direct cost of production, it is typically the first area an organization looks to reduce costs when facing a financial crunch. However, OPEX reductions can have long-term detrimental repercussions on the firm if done prematurely or poorly. For example, if advertising and marketing budgets are decreased, executives need to know how it would affect sales in the following six, 12, and 18 months. Similarly, if R&D budgets are cut now, there may be no new items available for sale 12 or 24 months from now.
2. Change prices/COGS (COGS)
The term “cost of goods sold” (COGS) refers to the expenses incurred in the production or provision of a products or service, primarily the costs of materials and labor. So that goods and services may be priced effectively, it is essential that COGS be calculated precisely and maintained with as much consistency as possible.
That can only be done if businesses take the effort to determine, keep tabs on, and assign a monetary value to the man-hours and materials that will go into each construction project. Assuming you’ve standardized your manufacturing process, your COGS should be very consistent from build to build.
Although cutting costs of goods sold (COGS) by reducing labor or replacing less costly components or raw materials might have immediate effects, like with OPEX, you must also think about the long-term effects. Will there be a decrease in manufacturing time or quality?
3. Assess Your Product Lineup and Costs
Understanding the actual unit margins for each product with OKR Software in your portfolio is crucial to both of the aforementioned points.
As a general guideline, assessing what you already have on hand before expanding your product line is wise. Where do we stand with underachieving products? Do you have products that are challenging to manufacture, hence reducing your profit margins, production time, and/or budget? Will lowering the prices of your items with the greatest margins lead to more sales? However, don’t be scared to boost pricing or eliminate low-profit items from your lineup.
4. Increase, Change, and Resell
Getting new clients may be quite pricey. Instead, successful businesses recognize that upselling, cross-selling, and reselling enable them to sell more of their existing items to their existing client base.
Make sure your sales staff has been taught in upselling strategies and knows how to approach the topic without being aggressive and losing the consumer. Explain to the consumer how the premium features provide value and how they could aid them in an informative and instructional way. Consumers can learn more about the differences between the available models if they are presented in a clear comparison, such as a grid or instructive graphic.
Cross-selling is another simple strategy for boosting sales to existing customers. Think about offering a complimentary bottle of shampoo in addition to the hairspray that consumers have come to buy as a way to get them to try out other goods, especially new ones. In addition to offering discounts or promotions, a salesperson might encourage cross-purchases by suggesting complementary products to customers (for example, “I brought this top for you to try with those jeans”). Finally, think about cross-selling by recommending other products to a consumer based on what they’ve already purchased.
Finally, many businesses are increasing their product earnings through resale. Customers who are done with a piece of an item but it’s still in good shape can donate it to a resale program or sell it back to the company. This product may usually be resold after a quick cleaning and refurbishment, improving your profits and lowering waste.
5. Boost LTV (Lifetime Value of Customers)
The influence of satisfied customers should never be discounted. The most efficient method to grow a loyal customer base and attract new ones through word of mouth is to get to know your consumers on a deep level and regularly provide them with positive experiences.
Existing customers may be shown gratitude, increasing their lifetime value, bringing in new leads, and boosting revenues. How? Consider:
- As an incentive, you might send existing customers targeted ads for things they’ve already shown interest in, along with a discount ticket to give to their friends.
- Creating a referral program that pays consumers for sharing their positive experience with your business is a great way to boost sales.
- Recommendations and reviews: give people a reason to comment about your goods online. Free advertising is perhaps the most effective type of marketing.
- In order to keep their customers, modern shoppers place a premium on having a positive shopping experience. A customer’s faith in and loyalty to a company can be immediately and profoundly impacted by their interactions with the organization. In highly competitive marketplaces, expertise and connections are what separate one business from another, notwithstanding the importance of value, trustworthy service, and high-quality products.
6. Reduce Your Expenses
What you just read describes the retail sector. To what extent may manufacturing profits be increased? The most direct route to enhance profits here is to negotiate better terms with suppliers to reduce COGS. Think about economies of scale if you’re getting the same component from many sources. Is there an opportunity to save money by shifting your order size from one provider to another?
Consider you have three sources for the 21,000 bottle caps you buy each month. You order seven thousand from each to guarantee a steady supply chain. But if you buy 10,000 or more from Supplier A, you’ll get a 20% discount. You may save 10% by raising your order to Supplier A by $3,000 and lowering it to Suppliers B and C by $1,500.
Similarly, review your whole investment portfolio: Have you begun buying more from a current vendor? Have you renegotiated and requested for price reductions at each stage?
7. Motivate and involve staff members
Depending on the nature of your business, encouraging employees to assist cut down on waste might be a novel approach to get them involved. OKR management is a frugal and manageable approach to launch a corporate social responsibility initiative.
The people working with you know better than anybody the most effective methods to utilize resources like fabric cut plans. By soliciting and implementing their feedback, you may cut down on waste, make sure the right materials are utilized so that the final product is built correctly and passes quality control, benefit the environment, and make your customers happier.
Products that require disassembly and repair, or worse, disposal, result in more wasted time and materials. The more precise your constructions are, and the more sustainable your industry, the more detailed you may be about which components to employ, such as defining the bin in which each is located or having the bin light up while staff is collecting componentry. Apart from this, with OKR software once can keep an eye on performance management.
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