3. Increase the Average Value of Each Sale
Increasing your average sale value makes every transaction more profitable. Since the cost of winning a new customer is already covered in the original purchase, additional sales are a plus – profit for you. There are a number of ways to do this:
- Cross Selling – Look at your major product or service and ask what else could you offer that would go with that item that would add value and help the customer make the most of their purchase. Remember the line….’Would you like fries with that?’
- Up-Selling – Educate and make suggestions. Customers often do not know about other items or services that might add to their original purchase. You need to tell them! After all, customers come to you for help and guidance. Every time you fail to explain all their options, you can be missing opportunities. Offer your product or services in three or more tiers. You can explain that one level is good, the next level is better and the third level is the best. Statistics show that most people will select the second tier item but many will also be happy to spend more for more value.
- Bundling – Packaged items or services together add value to the customer. Take a look at your full range of products and services and see if they can be packaged together. For example, a beautician might offer a discounted manicure with a facial. This practice makes purchases more attractive to customers and can increase average sales.
- Smart Merchandising – Signage, ticketing, presentation and packaging can all increase your average sale. Testimonials and brochures can help educate customers and build confidence in your business.
- Work your margins and pricing – We can assist you with looking at the direct relationship between the 4 key variables in your business – PRICE, VOLUME, FIXED COSTS and VARIABLE COSTS. If you are tempted to cut prices, think again! Sure you will probably sell more product but you will cut your profit margins and potentially dilute your brand in the process. Discounting now sends the message to your customers that they can expect even greater future discounts.
- Maximize your On-Hold Message – Your phone’s on-hold message can spark a customer’s interest in more products or services, especially if it is useful and educational. An effective message can turn down time into profits.
- Consider Raising your Prices – To increase your average sale, you must have a full understanding of your margins and what they really mean to your bottom line. Avoiding discounts and price wars is critical to maintaining and increasing your average sale. Oddly enough, sales can sometimes increase with a price increase. Your products or services may seem more valuable. This is particularly true if you create sales and marketing tools to educate customers about the value they will receive.
This completes Stage 3 of ‘ Four Ways to Grow Your Business’. Each of the above items can be substantially widened to help your business grow. We can work with you and make a plan so that it works. Call me at 416.488.1801 or drop me a line at firstname.lastname@example.org. I would be happy to show you how we can help.
As well, if you can’t wait for Stage 4 over the next month in a new blog, I would be pleased to give you a private preview addressed specifically for your business.