4 Ways to Grow Revenue in a Downturn

With fundraising all but out of the question, businesses must turn to their profits to fuel growth. 

Photo: Getty Images

As the stock market continues to plummet and experts predict a recession that could last longer than average, fundraising is no longer a viable way to fuel growth for many startups. Instead, it’s becoming increasingly critical that startups use their own profits to grow.

Operating a business that can generate profits is easier said than done, especially during a downturn. For example, consumer behavior may shift and sales may slow. So what’s a business leader to do?

Here are four foolproof strategies for growing revenue during a downturn.

 

Deepen Your Offering for Current Customers

Current customers who already know and love your product are much easier to sell to than brand new customers. Now is the time to double down on them. Are there services or products of yours they could benefit from that they aren’t currently buying? Can you build additional products or services to meet their needs?

 

The best way to start is by talking to your current customers. When you talk to customers, understand both how they use your product and other pain points in the customer’s business. Use this information to identify ways your product could be extended to meet their needs.

You can also present ideas for new products or features to your customers. Even before building anything new, it’s useful to understand if your current customers would be willing to pay for them. This helps save time and money spent developing something that no one will buy.

 

Become ROI Positive for Customers

Is your product or service a return on investment? In other words, are you helping your customers make more money? During a downturn, people may cut back on nice-to-haves but if something is making them money or saving them money, it’s essential.

 

Becoming ROI positive may be as simple as changing how you market your product. Instead of framing the value in terms of quality of life improvements like saving time or improving outcomes, frame the value in terms of money saved or earned through use of the product. For other products it may not be as simple. Some industries are simply not as recession resistant as others, so it’s important to know where you stand.

 

Optimize Your Prices

It is often easier to raise your prices than to try to reduce your costs. If you have a product that people are willing to pay for, then are they willing to pay 10% more for it? Another alternative to just raising prices across the board is to only do so for new customers. This allows you to test new prices without upsetting current customers who are so valuable to your business. You can also add a higher tier of service, or deprecate your lowest priced tier. Most importantly, don’t leave money on the table!

 

Drive Repeat Usage

Whether it’s repeat purchase behavior or a subscription that your customers keep running, the important thing to optimize for is ensuring your customers keep coming back. When you can count on repeat customers, your revenue is more predictable.

 

For example, at our child care marketplace Winnie, we rolled out a subscription offering to our daycare customers. A subscription incentivizes us to build something that customers use long term. There are not an infinite number of daycares in the world, so it’s important that we keep driving repeat usage from our current customers, rather than always looking for new customers.

 

Whether you are building into your existing customer base, improving your product, or charging differently, all companies should now be thinking about how to to drive more revenue and reduce costs as their own profits are likely the best source of capital.

 

Are you and your customers on the same track? Are you talking with your regular customers, who already love you, but not asking the hard questions of those customers who have had an average experience?  Even more so, are your associates turning your customers into advocates or assigns. We can give you insight into your customer’s experience and expectations. We can even provide you with your competitors service experience as it relates to yours. Ready to learn more? We’re here to help so give us a call.

BY SARA MAUSKOPF AND CARL PHILLIPS