Straight out of the gates, let’s begin with the most basic starting point. I don’t think any business will ever grow by cutting expenses. Any company that is looking to cut expenses is not doing so because they are trying to grow, most likely they are trying to stay afloat or simply trying to cut on costs to help their profitability, both efforts are necessary in every organization at some point, but this is not business growth. We saw the perfect example of cutting costs as a way to endure tough times during the recent Covid-19 pandemic. Companies pulled up the shutters and went into hibernation mode hoping to emerge out the other side with the company remaining intact whilst avoiding closing their doors for good. Realistically, the pertinent question to answer is less about how you grow your business without cutting expenses, it is more about how to you grow your business without necessarily increasing expenses. It is important to distinguish between cutting expenses and being lean. Cutting expenses is one thing. Reducing waste and being lean is quite another thing entirely. However, that is also a very tricky thing to do, but I will provide some tips in this article on methods to potentially get it done.
At Pricefx, for more than a dozen years now we have been empowering businesses just like yours to find their own unique value-based pricingniches with the use of innovative pricing software technology. Along the way, we have assisted companies prosper through good times and bad. The more volatile markets are, the more value customers see in our solution, being able to respond rapidly to market changes while maintaining margin and market share.
Let’s dive straight into 7 simple tips to consider (instead of cutting expenses) to grow your business without increasing expenses and how specific pricing software functions can assist you in reaching your business goals.
7 Simple Tips for Growing Your Business Without Increasing Expenses
Growing a business is an exciting and challenging endeavor. While reducing expenses is a common approach to increasing profits, it is not always the best solution, particularly if you are looking to price your products for their inherent and ubiquitous value. Quite the opposite in fact, as cutting essential expenses can have negative consequences for your business in the long term.
Instead, there are several key ways to grow your business without increasing your current expenses. Let’s explore some effective strategies for growing your business without cutting expenses;
1. Grab Control of your Pricing Structure and Understand impact of Price Changes
Instead of cutting expenses, try to increase revenue by expanding your customer base, developing new products or services, adding value to the customer experience, increasing your marketing efforts, or using your pricing software solution to project your future costs.
If you have not changed your prices at least once (or possibly even more often this quarter), due to rising costs, the chances are you are missing out on plenty of profit that is being left on the table.
Focusing on changing price levels of raw materials and fuel, businesses are being required to maximize their profits by making tweaks to their prices in a more dynamic way to offset the impact of cost changes sooner rather than later. And right now (depending on your precise business model and the scale that you wish to operate), that could be as often as every week, every day, or even every hour. Predicting what your costs will be next month using an Excel spreadsheet is simply not scalable.
The ability to run price simulations can enable you to assess the business impact of an intended update of a price list before applying it to the market. While doing so, you can consider all the elements of the related price waterfall, including special price agreements, discounts, and rebates. The result will be a highly visual simulated price list change scenario showing the comparison with your current status quo, in addition to the relevant calculations to assess the impacts of the intended changes.
Learn More About Price List Simulation Here
For example, after publication of a price change make it a habit of your organization to understand the performance of that new price in the market, how it affects demand, changes in customer behavior, and discover what happened to your margins (were the gaps plugged and the money is staying with you rather than leaking way?).
Additionally, with a flexible pricing system you can then adjust those prices – either up or down depending on outcomes. You never know, you may discover that your customer’s willingness to pay is higher than you may have originally anticipated, and you can add even more margin to your bottom-line next price list update time around.
2. Improve Your Customer Experience
Customer satisfaction is one of the best ways to grow your business without cutting expenses and focusing on providing excellent customer service is key. Delighted customers are more likely to return and recommend your business to others, which can lead to increased sales and growth. By understanding your customers’ needs and addressing their concerns, you can build strong relationships and establish a loyal customer base.
Make it easier for your customers to do business with you, setup metrics that give you an idea of how long it takes one of your customers to resolve an issue they have, setup processes to reduce that time and keep your customers happy.
How quickly can they get a quote from your team today? Not only can a CPQ (Configure – Price- Quote) software solution enable you to get quotes out the door and into the hands of your customers quicker, with an electronic DocuSign eSignature process it is also faster, more secure, and more efficient for your customers too. Not to mention that you can also use the CPQ technology to suggest product combinations for upsell and cross-sell opportunities (and much more). Learn everything there is to know about CPQ software in the handy article below:
3. Build Strategic Partnerships Inside as Well as Outside Your Organization
Partnering with other businesses can help you expand your reach, tap into new markets, and share resources.
Collaborating with partners and suppliers can also assist your business in meeting your overarching business goals. You should develop strong relationships with your partners and suppliers and work together to achieve common goals.
And don’t forget about all the ways the functions within your organization can help each other, one of the main sources of inefficiency is lack of collaboration.
“In weak companies, politics win. In strong companies, the best ideas win” Steve Jobs
When functions talk to each other it is easier to react quickly to changes in the market, supply chain disruptions, customer satisfaction requests, sales opportunities, etc.
4. Hiring and Keeping the Right Talent
Hiring the right employees can help you scale your business and increase productivity. Look for talented individuals who share your vision, have the skills, and exhibit the experience you need to help grow your business.
What’s more, investing in your employees can also be a powerful way to grow your business. By providing training and development opportunities, you can increase their skills and productivity. This can lead to improved customer service, increased sales, and a more efficient business overall.
5. Empower Sales Teams While Simultaneously Tracking Your Deal Sizes & Targets Progress
Have your ever imagined that your organization could use a tool to bring the insights and clarity to sales managers and their teams on how they are performing on their sales targets to forecast the likelihood of achieving your quarterly or annual growth targets?
If your company could get that level of early notification, (e.g., if your organization is possibly performing sluggishly against individual sales targets), then you could potentially go ahead and push your products more aggressively where and when required.
If your business suffers from poor messaging between distinct functions of the business (sales, pricing, marketing) it can lead to compensation plans that do not follow your company’s objectives.
Learn More Here About How to Make Your Sales Compensation More Effective
For many companies, their salespeople are the main drivers for bringing in deals and making money. Naturally, you want them to be well compensated. However, how can you make the sales compensation plan effective and fair so that your sales team continues to be motivated to bring in deals that grow your business?
The unique Pricefx Sales Compensationfunction is a fantastic way for your salespeople to gauge how they will make money and can serve as an indicator of how your organization will grow its revenue. The compensation plan is built to incentivize selling behavior by:
Ensuring that salespeople sell within the given guidelines
Selling larger deals
Or selling more deals depending on the needs and goals of the individual and organization
The Sales Compensation feature can empower your business to have a sole source of truth, thereby bridging the gap between the pricing and sales team and working together to achieve the company’s objectives.
When that kind of business alignment happens, everyone will be working together to achieve your organization’s unique set of business objectives.
6. Expand Your Business and/or Diversify Your Sales Channels
Expanding your business does not necessarily mean incurring expenses to reach a new demographic, many times it is a matter of understanding the market positioning of your business. Does your organization have clear visibility of the value of your products and services and, more importantly, do you know for a fact that you’ve exhausted your market reach?
One of the best ways to expand your business is to recognize that there are other market segments that you could gain access to by adjusting the value proposition of your business. This is why many companies offer versions of their products at different price points, to allow for a wider range of willingness to pay for those market segments that did not necessarily think of your company in the first place.
7. Leverage the Technology of a Holistic Pricing Solution
Pricing software technology can help businesses grow without additional investment by providing an efficient way to analyze market trends and optimize pricing strategies. By using pricing software, businesses can gain insights into customer behavior and competitor pricing, allowing them to set prices that maximize revenue and profitability. This can be particularly beneficial for businesses with complex pricing models or large product catalogs, where manual analysis can be time-consuming and error prone. By automating pricing decisions, businesses can save time and reduce the risk of costly pricing mistakes.
In addition, pricing software can help businesses increase sales and expand their customer base. By analyzing customer behavior and preferences, businesses can identify opportunities to offer personalized pricing and promotions that incentivize purchases. For example, businesses can use dynamic pricing strategies to offer discounts or bundle pricing for customers who have previously abandoned a shopping cart or shown interest in certain products.
By offering personalized pricing and promotions (seen through the prism of the insights that pricing software provides), businesses can increase customer loyalty and attract new customers, ultimately leading to increased sales and revenue growth.
Delivering On Value to Grow Your Business
Now you know that to grow your business you need to deliver value – and wherever possible, extra value – to your customers.
For example, if you offer your customers a travel coffee tumbler, you consider offering them free delivery, a free replacement if it’s broken or a free refill if they bring it back to the point of sale. It does not matter if you operate in B2B or B2C, the theory is the same – add value.
If you want to grow your business, it is not about cutting expenses. No company is going to grow by cutting expenses. You might stay afloat, but you are not going to grow. Growth is a biproduct of focusing on your product, your service, your customer experience, using quality data and pricing analytics software from a solution like Pricefx to understand where those gaps are in your offering and trying to fill them as efficiently and customer orientated as possible.
Jose is the Director of Solution Strategy at Pricefx, with more than 15 years of experience as a pricing practitioner. In his career, he has led in every aspect of pricing from analysis and optimization to pricing strategy definition and execution. His experience in driving and implementing initiatives in digital transformation has given him insight into the typical roadblocks organizations face and the best paths to release the untapped potential of pricing organizations.