Nothing is as easy as it sounds. The concept of sales revenue seems fairly easy to grasp. A simple sales revenue formula would be products sold multiplied by unit price, with the total being your sales revenue. But there are complexities. For example, does revenue come from selling, or do you only record it when you receive payment? And how does revenue differ from income? This article examines these nuances and suggests proven strategies to help you grow your sales.
Sales Revenue vs Income
Sales revenue refers to the money your business makes from sales. Some people refer to this as sales income. However, it could be said that revenue only equates to income after costs have been deducted. In other words, sales don’t equate to income until you have covered your costs.
Revenue vs Sales Revenue
Once again, we encounter complexity. Although most of the revenue your business brings in may come from sales, it’s very possible that other forms of revenue contribute to your business. For example, you may have investment revenue, rental revenue or earn royalties on intellectual property.
From a more customer-facing perspective, companies that sell subscription services don’t technically “sell” to their subscribers every month. Instead, the revenue would count as subscription revenue, and it would continue for as long as customers remain subscribed.
Total revenue is the most important figure for you to consider since it represents all the revenue your business has earned from various sources during the period reported.
Accrued Revenue, Timing of Revenue Recognition and Matching
Accrued revenue is revenue your business has earned but you have not yet been paid. According to accrual accounting principles, revenue is recognised at the time when it was earned, even when you have not yet received payment. Once the client has been invoiced, they become a debtor. The revenue is recorded with the amount being listed under debtors. The amount is seen as an asset.
To balance your books accurately and determine income, the costs incurred to make a sale possible are recorded during the same period as the sales they helped create. This principle is known as “matching.”
Deferred Sales Revenue
Customers may pay for goods and services that have not, as yet, been delivered. This is termed deferred revenue. Since you owe your customer either goods and services or a refund on the advance payment, it is seen as a liability (amount owed) rather than an asset.
Once you deliver the goods, the money becomes yours, is recorded as sales revenue, and becomes an asset. If people were to pay in advance for a rental or subscription, it would be recorded as revenue accordingly once the recipient receives what they have paid for.
How to Improve Sales Revenue
There are only two ways to improve revenue: one is simple, and the other is far more complex.
Increase Prices
The simplest way to improve sales revenue may be to increase prices. However, if your customers decide that your products now cost too much, they may decide to withdraw their business. This reduces demand.
The result of a price increase may be that you sell fewer units and that could reduce overall sales revenue even though the amount you receive with every sale is higher. The only way price increases can work to improve sales revenue is to keep your sales volumes up while increasing prices.
Implement Strategies to Increase Sales
Raise Awareness and Generate Leads
Increasing the number of sales you make is the best way to increase sales revenue. Regretfully, there are always costs involved when you seek to generate more sales. You may decide to spend more on marketing your products. Advertising and raising awareness add people to the top of your sales funnel.
Offering them valuable resources in exchange for their contact details may generate fresh leads you can work on. If, on investigation, you find that certain leads are just perfect for your product, there is a high likelihood of making a sale. That’s why lead generation and qualification are popular sales strategies.
Concentrate on Leads near the Bottom of Your Funnel
Alternatively, you may decide to focus your attention on people you know are on the verge of buying. They’re near the bottom of your sales funnel and are sending out buying signals. Getting them to make a purchase is likely to cost less than spreading your net far and wide with awareness marketing.
Research and Targeted Outreach
In B2B sales, you can focus some resources on researching possible clients so that you can undertake target outreach. It’s a form of outbound sales that can be very effective. You identify prospects that could benefit from supporting your business and reach out to them with all the facts they need to make a decision.
Customer Referrals
Another way to boost sales is to motivate satisfied customers to do your marketing for you. This isn’t necessarily free. The best way to get them to actively work on your behalf is to offer an incentive such as a discount on their next purchase or a free benefit.
Of course, offering your clients incredible service turns them into brand advocates even when they don’t expect a reward. But it does mean you have to invest in customer service. Remember: nobody is going to see automated and self-help options as “excellent service.” To gain this reputation, human interactions will be key.
Discounting
Offering discounts can boost sales but has a few drawbacks. You’ll make less money per sale, and to make sales and attract customers, you must invest in getting the word out. However, if your research shows that customers are hesitant to try your products because of their price and that they’re likely to remain loyal after trying them, this can be a good approach.
Reach Out to Former Customers
Past customers may only need a little reminding to start buying from you again. Your agents will have to handle a sensitive question: why did your former customers stop buying your products? There may be reasons why your products aren’t right for them anymore, or they may have experienced problems with your business. Nevertheless, it could be worth opening a discussion.
Bundle Products
You can also look at increasing sales to customers who currently support you. Bundling may offer a solution. Instead of selling only one item per customer, you can offer them a bundle of products and services that complement each other. It’s a case of maximising your sales revenue per customer as a matter of routine.
Increasing Sales With Outsourced Sales Solutions
There are many advantages to outsourcing sales and customer service. Predictable costs and reduced costs can be among these. For example, you need not undertake recruiting, equipping and training sales agents, and managing your own call centre. Instead, you can use a team of people who are already trained and equipped and are specialists in their field.
At RSVP, we have proved how effective this can be. In our work with Virgin Wines, we achieved a 25 to 35 percent daily conversion rate from contacting past customers. The benchmark is 10 percent. Overall, we re-recruited 20,000 customers for Virgin Wines, enabling them to increase their sales revenue.
Talk to us about your hopes to increase sales. Our standard process is to begin with matching what you are able to do in-house and then exceed it. We will partner with you to develop a sales plan that aligns with your goals. Our agents take it from there, and your business benefits from sales revenue growth. Invest in your business’s success with outsourced sales solutions from RSVP.