Once you find the magic key to growing profits, you become bulletproof. Service businesses are generally low-margin, especially today. That's why having more clients doesn't always bring more money: it costs a lot to attract the leads. Here’s 5 steps to a higher margin:
1. Raise your service price Founders don't like to hike prices, but in fact, it's the fastest way to grow margins. Don't hesitate to boost your average check. Even if some clients leave, you'll earn the same money, but you'll free up sources to test more points on this list.
2. To increase margins, improve the managers' efficiency You have to teach them to test marketing hypotheses: to form a hypothesis, test it, collect data, get the main points, and go back to square one. So, they'll stay focused, which means they'll do more per unit of time.
3. Develop new products within your business These hypotheses most often come from your clients’ requests, so you can test them with your current audience. The margin for these products might be higher than usual. Also, you could have a good case and new clients.
4. Select target clients Include customer segmentation in your workflow and rank them every few months. It's important to eliminate those who don't generate income but take up a huge team effort. Then you'll keep your perfect clients, knowing what they're buying from you.
5. Help your clients grow and grow with them Many agencies go into consulting because marketing is a tool, but clients come for growth. In other cases, it also works: if you sell growth, you bring more value to the client. Consulting can be quite profitable.