Would you rather spend an hour of your time with a customer that spends $200 or an hour with a customer that spends $500?
Its a fairly obvious answer isn't it? And you have just uncovered another core strategy to true business success...if you can make more money from each customer contact, you bolster your profits and vastly increase your potential for success, and beyond!
This, of course, is not a new idea and usually when it is trotted out, it comes with suggestions to try up-selling and cross-selling to get customers to buy more...you've been "super-sized" before haven't you (well maybe not you, but you know someone who has)? So while cross and up-selling are essential, for this Business Growth E-Zine, I have put together 5 often over-looked strategies...let's get outside the square for a change.
1. Raise Your Prices
Far too many businesses compete on price. Fair enough if you have pitched your business at the budget conscious as a "price buster"...
Red Dot, Price Line, The Good Guys...there is nothing wrong with that and these guys do it well, but it is a very tough market to compete and profit in.
Most businesses will achieve better margins if they focus on delivering value, and interestingly, many so called "price busters" do this as well. There has been heaps of research done that shows consumers are generally more concerned with quality, prestige or convenience than just price...you know, the emotional stuff.
But guess what, if there is nothing else to differentiate your product or service from all your competitors, customers have nothing but price to compare! So that's what they are going to negotiate.
So steer away from price and seek another differentiator such as better service or quality. Ultimately it is the perception of value that is critical. Interestingly, the idea of "you get what you pay for" still has resonance with shoppers.
Even a small increase in price can help your bottom line without dampening sales, but you need to communicate the perception of increased value. You could even target a wealthy niche within your market that is less price sensitive.
Increasing prices is worth investigating and so often overlooked, and by the way, if you feel pressured to reduce prices as a result of all the talk of recessions, try adding extra value instead.
2. Down-sell
"Hang-on" I hear, "didn't you say this topic was about boosting the size of customer transactions?"
Exactly, but sometimes, making a sale that will generate
additional sales down the track or referrals will be better than sending a customer on their way. If you're not making ground on the higher priced model, it's time to suggest the less expensive model.
Just because you down-sell doesn't mean you can't back-end or cross-sell at the same time.
Ask the down-sold client for a referral, it may lead to that better sale you were looking for!
3. The Science Of Store Layout
Have you ever studied the layout of the big supermarkets?
Its worth having a look and observing what happens...spend an hour doing some research, get some books on the subject or hire a consultant.
A badly laid out store will result in people feeling uncomfortable and they will tend to leave very quickly, often within the first 10 seconds.
Also, watch what happens when people enter a store...most people turn right. So you will often see store entrances placed on the left hand side to maximise the impact of this observation...which then leaves plenty of room to place important high margin products in that area.
Product positioning on the shelves and placement at checkouts to capture impulse buys will also help to increase sales...although this is unlikely to work for (say) an accounting practice. Having said that, accountants could strategically place brochures for add-on service or strategic alliance arrangements in much the same way...with a bit of salesmanship to assist....come on, it is worth a try.
4. Service Contracts
But this one can work for an accountant or other professional services organisation, and just about any business.
Develop a pre-paid or monthly service contract which can include some pre-arranged service calls and some included time so that the client can call on you when needed.
These contact points create great opportunities to further build the relationship with the client plus make future sales. You will also be in a better position to know when the client is ready to buy a new product or service.
Be efficient and helpful. When you help the customer to get full value from whatever else you sold them, you increase customer loyalty and satisfaction. Of course, it also creates another valuable and recurring revenue stream and while some will never use it fully, you are still paid. A side benefit is that recurring and contracted revenue streams can add a lot to your business value.
5. Introduce Choice
Because people will often push you on price, create 2 or 3 levels of service or product otpions for customers to choose from.
This allows your sales team to offer a choice to a customer with price for each option related to a varied service level, or different included accessories, or quality enhancements. This works with both service and product sales organisations and allows you to reduce the value you deliver for a reduced price rather than simply discounting the price and accepting a lower margin. Once again, selling value rather than price.
So, here are 5 strategies to get customers to buy more that you can use in your business. Are you using any of them? Are you using different ones? Why not try something different or extra?
Remember, while early stage businesses may have to spend time building market share with new clients, it is still an expensive exercise. A captured client is bought and paid for, so to speak. The importance of generating repeat sales, more sales per customer, and getting more money out of each transaction is absolutely key and essential to business and selling success.
And of course, if you use some of these strategies along with the conversion ideas outlined in the last Business Growth E-Zine (see our Blog for past editions) you stand to improve sales and profits even further...there is an exponential effect over time.
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