Profit-Increasing Strategies Boost the value of your products and services to customers, and watch profits rise. Here are eight ways to add value.
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There are many strategies for generating sales, profitabilityand wealth in every industry. Your ability as an entrepreneur tocreate a profitable business where no business existed before isthe key to your success.
In every market, it's usually true that 20 percent of thebusinesses earn 80 percent of the profits in their industry. Somebusinesses, selling a similar product in the same market as theircompetitors, earn ten or twenty times as much as other businesses.Your goal should be to do the same.
Creating profits occurs when you produce a product or servicethat people want and need and are willing to pay for at a pricethat's in excess of your total cost of producing that productor service. The key to business success has always been the same:"Find a need and fill it." We all earn our livings byserving other people in some way. Your business goal is to find outwhat people really want and need, and then to give it to thembetter and faster than anyone else.
Hundreds of businesses have been studied to discover the secretsof market leadership. The three top secrets these companies shareare:
- Operational excellence. The company has developed theability to produce its products and services at a costsubstantially lower than its competitors.
- Customer intimacy. The company has developed a closerelationship with its customers based on an excellent knowledge oftheir customers' business.
- Technological superiority. The company offers a productor service that's superior to that of its competitors.
There are several strategies you can follow to create additionalvalue for your customers and additional profits for yourself:
- Improve your product or service in some way so that it'sbetter than that of your competitors, at the same or a lowerprice.
- Produce or deliver your product or service to your customerfaster than your competitors.
- Produce your product or service cheaper than your competitors,maintaining or increasing your level of quality.
- Offer better follow-up and support services than yourcompetitors to go along with your product or service.
- Give guarantees and warranties of satisfaction that are moreextensive than those of your competitors.
- Make your product easier to acquire and more readily availablethan those of your competitors.
- Make your prices and terms more attractive and convenient thanthose of your competitors.
- Include additional products and services with your offerings,at the same price.
The most valuable part of your business is your reputation withyour customers. Your reputation in the marketplace determines howmuch you can sell--and the prices you can charge. The friendlinessof your staff and the ease of doing business with you is also a keypart of your reputation. Your credibility with your customers--thedegree to which they see you as trustworthy and dependable--is whatwill keep customers coming back.
When selling your products or services to businesses, understandthat they're only concerned with how your product or servicewill affect their sales and profits. Businesses think in terms ofsaving time or money--or gaining time or money--by using yourproduct or service. Businesses see your product as a solution to aproblem that they have. What is it? How quickly does your productpay for itself in increased efficiencies?
Selling to individual customers requires that you focus on theimprovement that your product or service makes in their lives. Whatdoes your product achieve for your customers? What does yourproduct help your customers avoid? What does your product help yourcustomers preserve? How does your product help your customers getbetter results in their lives?
As an entrepreneur, the most important question you can ask andanswer each day is, "What can I do to increase the value of myproducts or services to my customers today?" The value of abusiness is determined by its ability to improve the life or workof its customers.
The key to creating profit has always been the same: It is toadd value. In what different ways can you add value to yourcustomers today? In what ways can you add value to your businesstoday? One good idea to add value to your existing customers, or tonew customers, can be enough to move you into the top 20 percent ofbusinesses in your industry.
The goal of every entrepreneur is to seek out profit-makingopportunities. Profit comes from adding value in some way, beforeyour competitors do it. The number of ways you can add value toyour product or service--and to your customers--is only limited byyour imagination.
Brian Tracy is the "Success Secrets" coach atEntrepreneur.com and one of America's leading authorities on entrepreneurialdevelopment. He's produced more than 300 audio and videolearning programs that cover the entire spectrum of human andcorporate performance.