"Please, sir may I have some more please?"

The art of growing your business in the current climate relies on knowing where to find more; more margin and more spend from customers. Smart business operators know that not all customers are equal, with some customers regularly purchasing high margin products, some being easy to deal with, some paying your invoices on time and so on. But can we really ask customers to spend even more, particularly at the moment?

The answer is yes if the customer has ‘headroom’. Headroom is the difference between the total amount a customer could spend on a specific category, product, or service and what s/he currently spends at your business. This metric provides key insights into how to grow your business and more importantly, how to do it cost effectively.

How do you calculate headroom? Some categories are measured through syndicated data, where a third party collates all purchases e.g. supermarket store cards or benchmarking studies. Other categories use surrogate data such as the number of people in a household which is then correlated to disposable income. A third technique uses customer research where customers are asked directly how much they spend on a category.

Once you have defined the headroom available to spend, you will know whether potential growth should come from inducing switching (from a competitor), increasing consumption (buy more, more frequently, across more product variants) or finding more valuable customers.

Across most products and services, whether you are business to business or business to consumer, all three strategies can be achieved by getting people on the ‘value ladder’ – taking that first step to trial part of your products, services or experience. In financial services, you might be invited to a complimentary workshop or seminar. In retail, you might get given a free sample of a product you haven’t tried before. In the online world, you might get a trial of some software for a short period of time. These are all techniques to get the customer to interact with your business.

If the idea of calculating headroom is a barrier, why not test different approaches starting by mapping out your own ‘value ladder’. What is the first offer or exposure to your brand that adds value? Try it with your existing customers. What is the next? Measure the results and finetune your approach. You may just get some more.