In business, you invest a lot of time and money to win customers, so you want to be sure you aren’t missing out on the chance to fully engage them. Your customers have put time and effort into checking out your business, so it makes sense to encourage them to spend more with your business each purchase.
A great way to start is by better understanding your sales and to appreciate your average sale value. Your average sale can easily be extrapolated from your accounting software – it could simply be the daily sales divided by the number of sales made. For example, if you made $4,000 over 50 sales the average sale would be $80.
Some simple ways to increase your average sale include:
Cross-selling (‘Add on’ sales)
Do you want fries with that? You’ve heard it a million times – it’s called cross selling and you should be using it everyday in your business. Adding on a complimentary product or service is a quick and easy way to increase your average sale.
The key to making this strategy work is knowing which of your products/services best complement each other and educating your team on how to introduce and sell them together to customers. If the teenager at McDonalds has mastered the art of cross-selling, your staff can too, and all it takes is a little motivation and education!
Upselling involves offering your customer a way to add value to their purchase by buying a more expensive product that enhances their experience. The key here is to have products at different price levels for the customer to choose from so they have a context to perceive their different values. However, be careful of the paradox of choice where offering too many choices results in no choice being made at all.
Studies have shown that people will often go for the middle option when presented with three choices (the Goldilocks effect) and the order in which you present them can also be important. Whether you start high or low in the order can depend on your product/service.
Typically, bundling products will make them appear more attractive to customers and creates a higher perceived value. Bundling products is effectively predetermined cross-selling that offers a shopper the right range of products in one neat package. Beginners and sample packs are often a great way to introduce your customer to your goods/services and can often lead to repeat purchases.
You’ll notice customer trends in these three strategies, and in your team’s ability to communicate the options and value to your existing customers. It’s important that you educate your team, communicate your sales goals, make them accountable for sales targets and recognise and reward them when they meet those targets.
When considering the above ideas, it’s important to understand a few key notions:
- Do you know the profit margin on all of your products? Sales are great but there’s no use selling lots of a product with little to no profit! So it is vital you know how profitable all your goods/services are. Consider educating your staff on high profit products and how they could best cross sell these. Low-margin products should either be high volume or not sold at all.
- Discounting can be a dangerous area, so you need to understand if it is worthwhile and when it is effective. For example, if you have a profit margin of 30% on a product and reduce your price by just 10%, you’d then need to generate additional sales volume of 50% to make the same profit.
- When did you last review your prices? In contrast to the above, if you increase your prices by 10% on the same product, you could lose 25% of sales volume before profit is affected.
The beauty of strategies like these is that once some on the job training is done, there is no additional marketing cost; it is simply taking advantage of opportunity and making more out of what is there. Marketing spend can get people onto your website or into your store, so you need to know how to best capitalise on that opportunity.
If you’re interested in discussing profit increasing techniques like these, please contact your local Accru office.