Building a business can often feel quite overwhelming. One of your most important tasks is to make the business grow and it seems like there are unlimited possibilities and an endless list of tasks.
Well, I'm about to make this a lot easier for you. When you get right down to it, there are only 3 things you can do to make more money. In this post, you'll get the big-picture overview of these 3 things, so you know what to do next, no matter what your current situation is.
The 3 Big Levers
In this post, you'll discover the 3 major levers you can pull, to increase revenue in a business. For each one, I'll also provide some details as well as resources where you can learn more. In the end, you'll be able to decide which of those levers to pull, depending on where your business is currently at.
The three ways to make more money are:
- You can get more people to give you money.
- You can get the same people to give you more money.
- You can improve your product.
Let's look at those 3 in a bit more detail.
1) Get More People to Give You Money
In an online business, reaching more people means getting more traffic. And really, the first thing most people think of when it comes to increasing revenue is just that: traffic generation. If you currently get some visitors and make some money, it stands to reason that you can make more money by getting more people to your site.
This is true, although only to a certain extent. It's not just about getting more traffic, it's also about getting the right kind of traffic.
Plus, you can get money from more people without needing more traffic, at all.
How it Works
Fundamentally, there are two things you can do:
- Get more people through the door (get more traffic).
- Turn more of the people who are already coming through the door into customers (increase conversions).
Both of these are ways to get more people to give you money. The first is more important if you have very little traffic, the second becomes important once you have traffic. If you have traffic, but your conversion rates are low, getting more traffic is really quite wasteful.
Let's look at these two approaches in a bit more detail:
Get More People Through the Door
This is about getting more traffic to your site. You can also think of it as making more noise about your business, in more places. Some strategies you can consider include:
- SEO: on-site optimization and link building - this is especially useful if you have an established site and you're already ranking for some keywords. You can then optimize to rank higher for the same keywords. This is a reliable approach because it means you literally get more of the same kind and quality of traffic as you already have. Use tools like ahrefs and the Google Search Console to find SEO opportunities on your site. If you're new to SEO, check out this Thrive University course on the topic.
- Open up the taps with PPC advertising - the primary platforms for this are Google AdWords and Facebook Ads. If you have a budget and a good sales page or funnel, this can be a very reliable way to get more traffic and make more money. The downside is, of course, the cost, as well as the risk of losing money.
- Content marketing - more of a long term strategy, content marketing allows you to build an audience of avid readers and make a name for yourself as an expert in your space. It can also attract organic search and social media traffic over time.
- Social media marketing - social media marketing is suitable for some businesses and extremely unsuitable for many. If your product or service is something sharable and/or something edgy, running social media campaigns and contests can be a good approach.
- Affiliate marketing - creating an affiliate program for your business opens up opportunities for other businesses, bloggers and influencers to promote your products for you. Use platforms like Zaxaa or ClickBank.
- Outreach marketing - outreach marketing includes everything from guest posting, to affiliate recruitment to establishing business collaborations. It's anything where you try to reach valuable partners to get them to link to you, promote you, mention you on their site or similar. Use tools like BuzzStream or NinjaOutreach to organize your outreach efforts.
Traffic Generation Resources:
Backlinko - insightful blog with a relentless focus on well-researched SEO and traffic generation strategies.
Turn More People Into Customers
Generating more traffic can be a very wasteful exercise, if your site isn't doing a good job of converting visitors into leads and customers. If you're already getting 100+ visitors per day, it may be a better idea to focus on getting more of the people who are already coming to your site, to give you money.
How It Works
Here are some of the things you can try, to increase conversion rates on your site:
- Run A/B tests on your most important landing pages (homepage, sales pages, opt-in pages). Use tools like Google Optimize, VWO and Optimizely to test different designs, copy and value propositions.
- Add opt-in forms and opt-in offers to your site - this represents a lower barrier of entry, compared to having to make a purchase. The selling can then happen at a later point in time. With a tool like Thrive Leads, you can also A/B test and optimize your lead generation forms.
- User test your site - a 5-second-test can help you identify weak points in your site. If there's something unclear or confusing about your site, this is the quickest way to find out. Use platforms like UsabilityHub or TryMyUI.
- Record your site visitors' behavior - this is another way to find out what people understand and what they find confusing. Tools like Hotjar can help you identify which parts of your website to test and improve.
Conversion Optimization Resources:
ConversionXL - the blog on conversion optimization. Fair warning: a lot of their stuff is squarely aimed at CRO professionals and not very beginner friendly.
Conversion Rate Experts - arguably the OGs of conversion optimization. Their services aren't affordable for mere mortals, but they frequently post insightful case studies on their blog.
2) Get More Money from People
You may have heard that it costs about 7 times more to get a new customer, than to sell again to a return customer. Or, as noted in this study, you're 14x more likely to make a sale to an existing customer than to a new one.
That's what our second lever is all about: instead of trying to get more people through the door, we can focus on getting more money from our existing customers.
Why does this work so well?
Because once someone has made a purchase and they've had a positive experience, they'll want more! Making an initial purchase decision can be a bit agonizing. Can I trust this company? Will this be worth my money? Should I look for alternatives?
When a customer makes the leap and buys, you can win their trust by giving them a great product and great experience. And in my experience, the result isn't only that these customers are more open to buying from you again, they will actively want to buy more from you.
One of the top 3 mistakes businesses make in their products and pricing is not giving people the opportunity to give them more money. This is where our second lever, getting more money from the same people, needs to be applied.
How It Works
Broadly speaking, applying this lever is about increasing customer lifetime value (CLV). Here are some of the methods you can apply:
- Upsell - the classic approach here is that you make an offer for a second product or an upgrade to the product someone just purchased, right after they've made the first purchase.
- Sell more than one product - this is the simplest approach. Simply have more than one product available. If people buy one of them and like it, they're more likely to buy another. Make sure to use follow-up marketing to make customers aware of the fact that there's more than one product for them to buy.
- Scaling pricing/multiple packages - typical examples of this would be to have per-user pricing for SaaS or have different pricing depending on storage and bandwidth for hosting services.
- Sell more access - an example of this would be selling an information product, offering a community where people can interact with you online (more access) and offering 1 on 1 coaching (even more access).
- Sell a subscription service - a straight-forward way to turn customers into return customers is to offer something on a subscription basis.
- Improve retention, reduce churn - if you sell a subscription product, reducing churn (the rate at which customers cancel their subscription) is a major factor in customer lifetime value.
Customer Lifetime Value Resources:
80/20 Sales and Marketing by Perry Marshall - this book is more about big picture strategy than nitty-gritty tactics. But it's an excellent read for tuning your mind into the right kind of thinking for maximizing customer lifetime value.
sixteenventures - great blog on everything relating to reducing churn rates and increasing customer success (and thus, lifetime value). Written for SaaS businesses, but a useful resource for any business owner.
3) Improve Your Product
Whatever it is that you're selling, you can increase its value and that will help increase revenue to some extent. In the long term, investing in the quality of your product can be one of the most important pillars of your strategy.
This is a
BIG, FAT WARNING!
I hope that got your attention because this is really important: you have to understand when this strategy works and when it doesn't. This is where most entrepreneurs get it wrong.
Improving the quality of your product is a viable strategy once your business is already running. That means you're past the initial Hustle Mode phase. To be very specific, it means that:
- You already have an audience.
- You're already getting a good amount of traffic to your site.
- You already have a regular stream of customers.
- Your business is already generating revenue.
- That revenue is already growing.
If any of the above points doesn't apply to your business then improving your product is the wrong strategy!
Improving your product is not a viable way to increase your revenue when you're still in pre-launch mode. That's when you need to create a minimum viable product.
The second thing you need to understand is that improving your product does affect your bottom line, but it does so slooooooowly. It's a long term strategy.
How it Works
A better product generates more of its own momentum. A better product leads to more word-of-mouth recommendations and all the forms word-of-mouth has taken in the online world.
There's a certain tipping point you can reach where everyone in your target market knows about your product and it becomes the go-to solution - always the first to be recommended. It takes a lot to reach this point and if you don't have a top notch product, it's very difficult and extremely expensive to reach such a position in the marketplace.
It's easier to reach this tipping point if you have a product that serves a very specific need in a very specific niche. If you do manage to reach this tipping point, the quality of your product and service becomes one of the most important levers for generating more revenue.
Specifically how you can improve your product to this point mainly comes down to understanding your customers and their needs in great detail. Some recommendations to that end are:
- User testing tools such as UsabilityHub, Usertesting and Validately. These help you understand how people use your product and let you improve the user experience.
- Survey tools like PollDaddy, TypeForm and Google Forms. These let you gather input from your users, as well as answers to specific questions.
- Interview your customers - get on a call with customers and ask them about their experience, problems and favorite tools.
- Gather customer suggestions - using tools like Uservoice or GetSatisfaction, you can allow users to make feature suggestions and vote on them.
Resources for Building a Better Product:
The Lean Startup by Eric Ries - this book is as popular as it is for a reason. Reading it gives you a strong foundation for building and improving products based on your users' needs.
Lean Customer Development by Cindy Alvarez - "customer development", or the process of talking to customers one on one, is an incredibly powerful business tool. And this book is the best one I've read, on how to use it.
How to Use the 3 Levers
Now you know the 3 main levers you can manipulate to get more money. Each one is important in launching and growing a successful business.
Here's something important to keep in mind: it's better to work on one of these levers at a time.
In fact, that's one of the most valuable things I hope you take away from this post. The worst thing to do is to constantly do a little bit of everything, without making real progress on anything.
What you should do instead is take a look at your business, take a look at the 3 levers and decide which one you want to focus on right now. Then, work only on that until you get a result. And only once you've gotten a result, reevaluate and decide whether you want to keep working on the same lever or switch focus to a different one.
Slow and steady, working on one at a time, will get your business growing at a much faster rate than if you constantly jump back and forth between three levers and a dozen tactics.
With that said: what's the most important lever for you to work on, right now? What other resources can you recommend? And what questions do you have, about increasing revenue in your business?
Let me know by leaving a comment below!