Entrepreneurship can be a tricky endeavour to take on, it carries many risks and comes with a lot of unanswered questions. One of those is how to grow your business and keep it growing.
While ‘growth’ may be a complex topic, it can be achieved by implementing a simple but powerful principle called ‘the 10% rule’.
In this post, we’re sharing how you can achieve business growth by applying the 10% rule in the 3 key areas.
But first, what is the 10% Rule Exactly?
The 10% rule is a business growth strategy centred on creating year-on-year growth by increasing different areas of your business by just 10%, using different marketing tactics and techniques. The key to this strategy is consistency.
The 3 Main Areas You Can Apply the 10% Rule to Increase Your Business:
1. Upsell and cross sell
Upselling is when you entice a customer to ‘upgrade’ their purchase by adding more to their package, thereby increasing the deal size – for example, by offering a reduced rate on a bigger order size. Cross-selling on the other hand, is the art of diversification. Where instead of selling one item, you sell multiple items by grouping like or related products – such as products with similar uses, complementary uses or better yet, co-dependent uses. For example, selling a bottle of wine, paired with a corkscrew and perhaps throw in a bottle-sealer/stopper.
Both these techniques are a sure-fire way to increase business by that 10% margin.
2. Grow your client base
In any business, growth is directly tied to the number of clients or customers you have. Maintaining your current numbers is not enough, because the average business loses 20% of its clients every year – so you need to have a consistent flow of new clients.
There are numerous ways to solicit new clients. These include digital paid advertising, jumping onto social media, trying email marketing, employing SEO tactics or even hiring a dedicated sales force. The key here is determining what’s most relevant for your business given your target market and consistently tracking your lead sources to see what brings in your best clients.
3. Repeat business
This is the ultimate gold mine and most cost-effective way to achieve growth. These clients already love your product/service and trust you, therefore they are more open to trying anything else you have to offer. Of importance here is nurturing and strategically maintaining these customer relationships, so that they aren’t just happy clients, they’re raving fans (bonus: raving fans also become advocates for your business and will tell their friends about it. No form of marketing beats word-of-mouth marketing! As Executive Chairman of Amazon, Jeff Bezos, said: “If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.”)
Why Choose the 10% Rule?
These 10% shifts ultimately translate to a 33,1% increase in your business overall.
Here’s a simple example of how it works:
Let’s say, in a year your business sells wine to 2 000 customers per month, with them spending R1 000 at a time.
2 000 × R1 000 × 12 = R24-million
Now let’s add on the 10% increase you make in each area:
– 200 new customers
– R100 extra per deal
– 13,2 transactions per year
Look at how this unfolds:
2 200 × 1 100 × 13,2 = R31 944 000 (R 7 944 000 = 33.1% return)
You can agree implementing this strategy and effecting 10% increase in each area is a small ‘price’ to pay for such great returns.