Golden rule

The Pareto principle - often referred to as the 80/20 rule - says that 80 per cent of your success in any given field is often due to 20 per cent of your effort.

You can use the idea as a starting point to analyse how you can sell more to existing customers. For example, if a small number of your products and services account for most of your profit, can you sell more of the less profitable products to your customers? Or if your higher-margin products or services are only being sold to a small percentage of your customers, how can you raise that percentage?.

Selling more to existing customers

It's often easier and more effective to sell more to existing customers than it is to acquire new ones. Once you understand why your existing customers buy from you, you can examine ways of getting them to buy more or more frequently.

Get customers to spend more

Where appropriate, encourage customers to buy a premium product or service that better meets their needs and provides a superior return for you. This is known as "trading up".

You could also offer purchase incentives and price promotions on items that they usually buy from competitors, such as "buy one get one free" or "buy for ten months and get two free".

It's also useful to focus on selling complementary products. For example, hairdressing outlets sell hair care products for customers to use in their own homes.

Use other channels to market

You may be able to increase your sales and market share significantly by using different and/or additional sales methods. You can also use other business' customer bases in some circumstances, eg wholesalers and distributors.

Choose the right channels

Your choice of additional channels to market will depend on your product or service type and how your customers choose to buy. The key areas to consider are:

·      Selling direct. You may be able to set up a direct sales operation so customers don't need to go through a third party, such as a retailer or wholesaler. This can be good for your margins as you don't have to pay commission. But you should consider the impact this would have on any third parties that already sell your product or service - they may react badly to your "going into competition" with them.

·      Using wholesalers or distributors. If you are selling direct, you can consider broadening your base by using wholesalers or distributors. This will mean you are effectively "piggybacking" on their customer bases. However, you may need to consider pricing carefully as intermediaries will need to make a profit.

·      Agents. If you wish to expand into other geographical areas at minimal risk, consider appointing an agent. This can provide representation in areas that would otherwise be difficult to reach. However, you will have to spend time managing the relationship.

·      Online and e-commerce. Setting up an e-commerce operation can break down geographical barriers. You will need to make some form of investment in getting it up and running and pay careful attention to servicing remote customers.

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