5 clever ways to increase profits and retain customers

When big businesses are tasked with increasing their profit margins, one of the quickest ways they create an increase is by cutting costs. In many cases, however, small businesses don’t have much fat to trim, so they need to be smart about how they maintain a profitable enterprise.

Here are five ways to increase profits and retain customers while keeping costs low.

  1. Upsell where possible

Once you make a sale, the cost of making another sale to that customer starts to go down. The classic ‘would you like fries with that?’ prompt at McDonald’s works on this principle. Spend some time considering what other products or services customers would be interested in adding to their order to increase your profits per transaction.


  1. Develop a loyalty program

Running a loyalty program is a popular way to retain customers without requiring significant overhead costs. This method is particularly good for businesses that want to encourage regular purchasing that wouldn’t otherwise be steady or guaranteed, for example buying coffee from a café (‘buy five coffees and get one free’) rather than the standard annual visit to a mechanic for an auto checkup.

Your loyalty program should encourage repeat business by giving the customer an attractive incentive to return as well as maintain your margins. Be careful how you structure the bonuses to ensure you’re still earning money in addition to making sure the customer perceives value in being loyal.

  1. Send service or re-order reminders

Another way to prompt repeat business is to keep track of how frequently your customers require your products or services and issue a reminder. A hairdresser, for example, could send an automatic reminder recommending a haircut once six weeks have elapsed since the last appointment.

  1. Set up payments in advance

Cash flow is as important as profitability and if you consistently struggle with your customers paying late then set up a direct debit system. Direct debit plans also make it easy for customers to provide constant revenue as they do not need to put effort in to completing the payment transactions with each order. Many businesses also offer incentives if customers pay for multiple months or orders in advance, for example magazine subscriptions have significant discounts off the cover price for subscribers, preferring regularity of readership over margin.

  1. Offer bonuses

Value-adds may be preferable to discounts in some situations, either because the added extra is more attractive than the saving to the customer or the bonus costs less than a discount for the business. It also means you are not devaluing your offering by discounting it. Skincare brands, for example, often have ‘free gift with purchase’ bonuses where the gift is often a sample-sized bottle of a product that costs little to produce but retails for a higher price, making it an attractive offer for customers.

You can think outside the square with value-adds. For example, we have helped some of our clients secure free value-adds to offer customers that come from a complimentary brand that appreciate the opportunity to get in front of the right audience.

Introducing profitable incentives

Let’s look at how you can introduce these tactics into your business. Say you run a lawn mowing service. Instead of just cutting grass, you have an opportunity to upsell, for example offering weeding services or lawn care, such as spraying bindii or re-seeding the grass. You have already incurred the overhead cost of getting there to cut the lawn so for a little extra work you can make that visit more profitable.

You could also set up a regular service with an incentive for customers to pay in advance for a monthly trim or a number of visits, or start a loyalty program where for every X number of sessions purchased, the lawn gets a free cut. Or, knowing how fast it takes for grass to grow, set up a text reminder that prompts previous customers to call you as soon as you believe their lawn will start to get out of hand. For your best customers, perhaps offer a bonus of a free weeding once a year.

Increasing the frequency of patronage by encouraging consistent, repeat business not only benefits your cash flow, it is a relatively small and easy way to boost your profits.

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