Christmas profitability tips from Arena Flowers

This is a guest post from Will Wynne at Arena Flowers.

Arena Flowers has seen significant growth in recent years which makes us very happy. But sales growth is worth nothing without profitability. Growing sales unprofitably is, frankly, easy. Growing sales and increasing profit margin… now there’s a good trick. Without further ado, here are five top tips, which hopefully cover a few interesting areas for Tamebay readers:

1) Granular PPC Bidding:

Split out different match types (“broad”, “phrase” and “exact”) in your PPC campaigns so that you can bid as hard as possible on each match type. Don’t let the effectiveness of your highly targeted “exact” keyword matches get masked by the lower converting “broad” matches. Set up campaigns for each match type and set bids accordingly. On the exacts you’ll bid harder (generating more sales) and on broad you’ll bid less (wasting less cash). Overall result: better ROI on your PPC.

TOP TIP: Go granular on your PPC for better ROI.

2) Supply Management:

One of the best cost saving measures is to cut out the middle men and go direct to the source. Look at the packaging on your products, find out who makes it and contact them direct. Be brazen. At Arena Flowers we achieved this to begin with by purchasing our flowers through “commissioners” on the biggest auction in Holland (rather than UK middle men). Then we joined the auction and began buying for ourselves (at 5am every day!), paying no commission. Then we started direct sourcing from growers, in the Netherlands, Kenya and as far afield as Thailand, cutting out the auction. In this way we got a fresher product, at a lower price.

TOP TIP: Cut out middle men.

3) Cheap Services Are Out There, If You Look For Them:

Think about what service providers you use such as telecoms and consider if you can find a cheaper deal elsewhere. For example, in telecoms: don’t use BT; use a telecoms reseller. They’re a fraction of the price and offer a better service. (We use a White Horse Telecom and they’re highly recommended). We also ditched Biffa ages ago for a company that offered the same service, for 25% of the price.

TOP TIP: Don’t be afraid to shop around for the best deals for your infrastructure.

4) Create Competitive Tension:

When considering your supply chain, always aim to have two suppliers. This leads to competitive tension and significantly better pricing, as well as giving you a backup option in case your preferred main supplier runs into unexpected difficulties. The downside protection of two suppliers is not to be underestimated; it is essential.

TOP TIP: Have more than one supplier for key supply lines.

5) Regular Cost Review:

Our final tip is to go through all your costs with a fine tooth comb, regularly; you will always find extra savings. We have halved the cost of our packaging in the last year, with no loss of quality; shame we never got round to looking at it sooner! There is always a cost that can be cut out in every part of the business. Remembering to have a regular look is the key, so you don’t wait as long as we did to find the savings we did.

TOP TIP: Run through your top 20 costs once a quarter and mull over if you can cut or optimise them.

Bonus top tip: Cross sell & upsell

If you’re sending out a parcel / driver already, every extra £1 of product you can get into the box is pure product margin, with delivery / marketing costs already covered. Being smart about cross and upselling goes straight to your bottom line so don’t miss the opportunity (just don’t be too pushy).

Good luck! Let me know any other top tips below!