Alan Gayle is a sales and marketing consultant specialising in the construction industry. In this column he offers advice on how to make an impact in the market. This time he asks: Would you like a drink with your meal, sir?

There a basically three ways to grow your business while increasing your profits. You can:

1. increase your customer-base and sell to more customers

2. increase your margins

3. increase the amount you sell to your existing customers

Option 1 may seem appealing but don’t be fooled, this is the most costly and time-consuming way to add to your bottom line.

Unfortunately, many companies make the mistake of trying to increase their customer-base before they maximise the sales potential with their existing customers. If your primary concern is profit, not turnover, this is like putting the cart before the horse.

Option 2 is also appealing but in the current market raising your margins while maintaining your market-share may prove difficult. Now don’t get me wrong, I never have been an advocate of cost leadership marketing strategies (ie selling at the lowest price in the market), even though it clearly works well for companies like RyanAir, Asda and Primark. But, as I’m sure you’re all aware, with more contractors chasing less work our customers have more choice than ever, so we need to be realistic with our pricing policies.

Which leads us on to Option 3. This is by far the most cost-effective way to build your business and raise profits.

Actually, this is two options rolled into one because there are two ways to increase the amount you sell to existing customers.

You can increase the typical invoice value (this assumes you already know your average invoice value to your best customers – and if you don’t, perhaps you should).

Alternatively you can increase the frequency you invoice your best customers. Of course, if you’re really clever you can do both!

In marketing terms, increasing the amount you sell to each customer is called ‘up-selling’. When you’re in a fast food restaurant and they ask if you’d like a drink with your meal, that’s up-selling. Whereas increasing the frequency you sell to your customers is based on diversification, such as when a food retailer starts selling insurance services.

Both ideas are closely linked and while this article has introduced the ideas, the two that follow will cover both up-selling and diversification in more detail.

Alan Gayle is a sales and marketing consultant specialising in the construction industry. He spent 19 years with some of the UK’s leading building product manufacturers and has worked in the stone sector for the past eight years. Alan now runs Gayle Associates, which provides a range of sales and marketing services for small and medium sized contractors and suppliers. His clients are seeking growth but the management are too busy to do it themselves and they don’t want the commitment of a full-time employee.