Finance

How to grow a business on low profit margins

To remain healthy, businesses that operate on low margins, such as distribution, e-commerce and wholesale, need to scrutinise everything.

In a competitive marketplace, how do you grow and maintain profitability?

 

1. Push online sales further

It’s no longer enough to have an online sales channel. Having a ‘chat’ facility to answer sales queries and to upsell is necessary to maximise Sales. Customer experience is crucial, so it's necessary to invest in a Customer Relationship Management (CRM) System. A CRM tracks a customer throughout his or her experience with your company and their interactions with you. So, for example, if a customer calls or emails to order a product or service or requests help with a technical query, a CRM system will show you:

• When/if the items were ordered and shipped
• Previous order history
• Notes on any previous queries

By putting together all the information your company collects from the customer in one place, your business will find it easier to build relationships and quickly provide help if needed.

 

2. Harness big data for huge rewards

The supply chain sector suffers from wafer-thin margins, and that likely won't change anytime soon because of the following:

• Skills gap - An ageing haulage labour market with not enough drivers
• E-commerce growth swallowing up warehouse space
• Struggling infrastructure – congested road and rail leading to delays
• Spiralling warehouse costs – driven by a lack of land and planning permission

Supply chain industry experts recognise that the use of big data combined with specialist software has the potential to lift the industry. Both pinpoint how to streamline and fine-tune supply chains, cut warehouse costs and identify opportunities to slash the time it takes deliver items.

 

 3. Retain Customers

Businesses that run on thin profit margins depend on retaining and building their customer base. A negative fluctuation in customers can cause profits to plunge and turn into losses. Maintain a focus on keeping customers happy so they return regularly. A solid reputation attracts new customers. Instruct employees to engage customers in a friendly manner and to do whatever they can to make a customer's experience a positive one. Managers must swiftly remedy any problems that arise, even if it means apologising for a mistake an employee never made. It's always better to make a customer happy than make their bad experience even worse by continuing a dispute.