Running a business in this competitive world is not easy. In fact, according to statistics, only 50% of new businesses survive their five-year mark and the rest will fail. It is very important to market your business from day one and try to get regular clients.
In this article, we will tell you a few tips about how to make a profit in business with the help of marketing tools. We discussed the different options with Boross Ors, an online casino expert. Ors is a website manager and he knows a trick or two about marketing. Read more about him here.
Types of profit in economics
In economics, we can talk about gross, operating and net profit.
- Gross profit equals total sales minus cost of goods sold
- Operating profit is gross profit minus operating expenses
- Net profit is operating profit minus taxes and interests
Marketing costs would be included in the operating profits. If you manage to lower your marketing costs with the same amount of sales your operating profit and net profit are going to be higher. On the other hand, if your marketing efforts are working out and you can increase your revenue, you should not cut down on marketing.
How to maximize revenue
Focus on frequent customers
According to statistics, around 80% of a business’s income comes from 20% of its customers while the other 80% of customers only generate 20% of the total income. Realizing this it is obvious that businesses should concentrate on their regular customers. For example, in the online gaming business, there is fierce competition and casinos such as EnergyWin will offer special promotions and even give freebies to their regular players. This leads to deeper customer satisfaction and therefore higher customer retention.
Referral programs are incredibly effective and can be totally free or very cheap for the business. Companies like Revolut, Uber Eats and Bolt all have referral programs. This method is shown to be more effective than other marketing tools as people generally trust the opinions of their friends and family more than what they see on TV or social media being advertised. Companies usually give discounts, points or credits in exchange for a referral. For example, when a new person signs up on Uber Eats in Hungary, the referee gets a few euros off on their next order.
Encouraging public reviews
People generally trust public reviews especially if the consensus agrees on certain points. Hotel booking platforms like Booking.com or Hotels.com often offer, say 10% discount on your next booking if you review the hotel you last stayed at on their website.
Adjust the ineffective marketing campaigns
If you are using several marketing campaigns you should try to measure which ones are more and which ones are less effective. Different types of media suit different demographics. If your service or product is purchased mainly by millennials, you might be wasting your money on TV or radio commercials as the young generation doesn’t really watch TV or listen to the radio anymore. On the other hand, advertising on social media will probably be effective.
Cross-sell and up-sell
If you wonder how to maximize profits you have to look at the above two options.
Cross-selling is selling another product than what the customer originally wanted. For example, the customer would like basic virus protection from Avast but you convince them that they also need VPN.
Up-selling is selling something for a higher price. When a guest is checking in a hotel, he might be offered a suite instead of the deluxe room he booked. Netflix might convince you to subscribe to the HD package instead of their cheapest package.
Expand your market
If you have a great online business there will be no borders. Airbnb started in the United States but the idea quickly took off. A few years later they were opening head offices in European capitals and Australia. In the past few years, Airbnb listings grew exponentially in Hungary and especially in Budapest, bringing steady incomes to many who had a spare bedroom to rent out. With the coronavirus pandemic and recent changes in rental regulations, the situation is changing in Budapest but the corporation still has plenty of markets to reach.
Marketing is essential in order to reach customers and especially in the case of online businesses. You have to market towards your customer segment and give special attention to your regulars. Cross-selling and broadening your markets is also essential to stay in the business.