Introduction

For a business to succeed or scale, it's crucial to invest in various areas, such as a great marketing strategy, cool branding, smooth logistics and many more. However, aiming for profitability is essential to ensure the business's sustainability and should be the ultimate target.

Today, we are sharing some tips with you to help you increase your profit margin!

What is a Profit Margin?

Profit margin is a key metric that indicates a company's profitability. It represents the difference between the business's earnings and its operating costs.

Basically, it shows the amount of profit generated for every pound of sales. There are three kinds of profit margins:

Methods to boost profit margins

To enhance your business's profitability, there are several methods to augment your revenue while reducing costs. Here are our recommendations:

→ Improve Branding to Lower Customer Acquisition Costs

Branding fosters a trustful relationship with customers and ensures business sustainability. The aim is to establish a recognisable, reliable, and consistent image that distinguishes you from competitors and makes a lasting impression on customers.

A strong brand with a clear message and value proposition attracts potential customers who identify with the brand, improving the conversion rate of other advertising and eCommerce marketing efforts. A recognisable brand also encourages customer loyalty and repeat purchases, which is more cost-effective than acquiring new customers. Customer acquisition can cost five times more than retention. The best way to describe branding according to Theo, co-founder of Incard, is "to ask yourself what people will remember once you have left the room.”

Customers that have a positive experience with a brand are more likely to make word-of-mouth referrals, bringing your acquisition costs to zero.

→ Increase Average Order Value and Capitalise on Existing Customers

Generating more revenue doesn't always require new customers. Given that new customers often have a high CAC and a lengthy payback period, you should be looking to your existing customers to boost revenue. By maximising the value you derive from current customers, you can enhance your profits with minimal expense.

Average order value measures the average spend by a customer on a single transaction and this can be boosted by following the following strategies:

• Design your product pages to be appealing
• Emphasise trending products
• Provide social proof
• Customise the shopping experience
• Establish a free shipping threshold
• Incorporate product discounts
• Develop special offers for new customers
• Bundle products that complement each other
• Establish a loyalty program
• Cross-sell and upsell items
• Down-sell add-ons
• Provide quality customer support
• Make offers that are time-sensitive
• Implement a flexible returns policy

→ Reduce Operating Costs to Save in the Long-Term

Operating costs in an eCommerce business are the day-to-day expenses of keeping things up and running. It is therefore not always easy to cut these but here are some tips:

• Automation of routine tasks: Specialised tools can be used to save time and money and avoid mistakes:

  • Verticalised business account, such as Incard.co
  • Inventory management systems, such as Monday.com, Sortly.com, Cin7.com or Zoho.com
  • Email marketing platforms like ConvertKit.com, GetResponse.com or Mailchimp.com
  • Customer service platforms like Zendesk, Freshdesk, and Hootsuite
  • Ecommerce CRMs such as HubSpot, Salesforce, and Klaviyo

• Outsource non-essential business functions: To excel, concentrate on your strengths and collaborate with experts in areas you're less familiar with. Delegating tasks such as inventory, sales, human resources, and website design can be a practical method to optimise your investment. This strategy prevents wasted resources and potential for growth. Work with professionals who are up-to-date with the latest trends, excel in their fields, are proficient in data visualisation, and are skilled at interpreting trends.

• Monitor your SaaS spend: All the above SaaS help you save time, but it’s worth monitoring the subscription cost and number of seats you're actually using. It is easy to be overwhelmed, so be sure to only pay for what you use.

→ Track KPIs to Take Better Business Strategic Decisions

Business owners must comprehensively understand their operations to make strategic decisions that increase profitability. For ecommerce owners, managing multiple online stores and using various SaaS can make data difficult to track. They need a centralised view of all their expenses and revenues and to monitor key KPIs. Incard can assist here by providing a live, consolidated, and pre-analysed view of the company.

“With a consolidated and pre-analysed view of the company in the Incard dashboard, business owners can finally make better decisions for their business.”

— Soraya Tribouillois, Co-founder and CFO @Incard