Every time you get a customer or client into your business you’ve probably spent hundreds of pounds to get them there (by the time you add up all the costs of marketing, advertising and so on).
So why not leverage that investment and increase the value of their average transaction with you? If they are going to spend something, why not add value and have them spend more than they originally intended? That increases the return on your investment and usually gives them a better service.
Often people will come to your business with a need of some sort, thinking a certain product or service will solve that need. Many times though you will have an add-on product or service that could bring them even better results when combined with the original. Given that, and given the value it adds to them and the impact it can have on the growth of your business, you need to be considering strategies to increase your average sale.
First things first. Find out what your current average sale is.
Take your total sales and divide that by the number of transactions or invoices for example. That figure represents your average sale.
From there look at how you could ‘cross-sell’. Cross selling, where customers are offered an additional product or service that complements their initial choice, can be very effective. In fact customers are often very receptive to this.
Probably the most famous example of cross selling comes from McDonald’s. Every time you’ve heard the term ‘would you like fries or a drink with that?’ you’re seeing cross selling in action and it nets McDonald’s millions. It is so important to them that their performance standards ensure it is asked each and every time.
Now before you think ‘I couldn’t do that with my customers, they’re sophisticated buyers’, think again. Isn’t it true that people enjoy their burgers more with fries? The same could be true for your business.
The key to increasing the average value of each sale is to sit down with your team and do three things.
Firstly, write a list of all of your products and services. Secondly, go to each item in turn and identify which other products or services from the list complement that particular item. Thirdly, agree as a team to suggest those complementary products or services each and every time you are dealing with a customer or client.
Packaging is another strategy that works well. Depending upon the nature of your business, packaging different products or services together and offering that ‘package’ at a better price can increase your customer’s average spend. Why not use the cross selling list to identify which items would match well as part of a package.
Why not simply increase your price?
Of course, the simplest option available to you to increase the average value of a sale is to increase your prices! Interestingly, sellers have more of a problem with the price than the buyers do. Often people only ask ‘how much is it?’ because they don’t know what else to ask and because we promote a product or service with a price.
Consider this. If your gross profit margin is 20% and you were to increase your prices by 10%, you would have to lose 1 in 3 of your customers before you would be any worse off.
Alternatively, if you had a gross profit margin of 20% and you were to discount your prices by 10%, you would need to double your sales to maintain your current profit level.
Why not carry out the cross selling exercise, consider packaging options and look at the possibility of increasing your prices. Get them spending more with you.