Running a successful business depends on the bottom line – profit. With the global marketplace more competitive than ever, and value for money at the top of consumers’ expectations, profit margins have naturally dropped. For this reason, many companies are constantly searching for creative ways to keep costs down, without sacrificing the quality of their product or the level of personalized customer service that is demanded of a modern business.
eCommerce used to represent the least expensive option for consumers and retailers. But with competition from massive online marketplaces such as Amazon, as well as the increasing affordability of brick-and-mortar products, now is the time to slash costs. Here’s how.
Customer Retention
Attracting customers is both difficult and costly, and that’s why most businesses focus on retaining their customer base. Repeat orders and loyalty is at a premium given the amount of choice and information consumers now have, so it’s no surprise that areas such as customer service are in the spotlight. Responding to queries and complaints quickly, with highly personalized service, is one of the things consumers now demand. Social media is the perfect tool for this, and many companies now employ a full-time social media manager. Keeping customers engaged with your brand is also crucial to retention and loyalty, and newsletters, emails, promotions and gifts will foster happy customers who may promote your company with word-of-mouth or online reviews.
Financial Planning
It’s important to make and update a realistic and accurate budget for your business. Looking to the future is also important, and while not everything can be predicted, the more informed and accurate your forecasting, the better. An ongoing budget is also an invaluable tool when it comes to cutting costs as it gives you an overview of expenditure, and insight into where savings can be made, as well as the total impact the cut will have on your business’s finances.
Manufacturing Costs
For businesses that offer physical products, making savings on manufacturing can seem like a bit of a tightrope. There are some areas where you cannot compromise on cost – you mustn’t sacrifice the quality of a product if you want to retain customers and avoid negative reviews. But there are some areas where cuts can be made. Shopping around for packaging solutions can pay dividends, and if you can bring some elements in-house, such as printing your own labels, or find more cost-effective shipping materials then you will make a noticeable saving.
Effective Marketing
Marketing your products or services effectively is essential to the success of your business, but you may be allocating funds in less effective areas. Identifying and analyzing your target market can help you streamline your marketing efforts, focusing on more likely areas to generate leads and sales. This will also help you identify the best channels to focus on – digital channels are overwhelmingly the most widely used, but printed materials and posted items can also be effective. If you can’t stretch your budget to billboards or commercials, guerrilla marketing tactics offer a creative low-cost, high-impact alternative.
Build Supplier Relationships
Just as you need a strong relationship with your customer base, you also need to foster relations with your suppliers. Building a rapport with suppliers means they’re more likely to give you reduced rates – especially if you’re offering them regular repeat business. Remember that you are their customer too, and they’ll be happy to accommodate you where possible in the hope of retaining your loyalty to their business. Even if you’re not a regular customer, you may be able to lower prices by offering early payment, or by buying in bulk. You should also aim to improve your negotiation skills.
Quality Investments
They say you have to spend money to make money. When it comes to investments in your eCommerce business you only want to pay once. That’s why when paying for professional services such as web design it’s better to invest rather than search for a low-budget, low-quality option. Areas such as marketing and development can often be done on the cheap, but you’ll find that more often than not, you get what you pay for.
There are many ways for an eCommerce business to save money. The ideas above should put your company in good stead to cut costs and boost profits.
