In the previous 2 posts, we have looked at two different strategies to Grow Your Business. If you would like to read these first, please click one of the links below:

Strategy 1 - Increase The Number Of The Right Types Of Customers
Strategy 2 - Increase The Transaction Frequency

Today, we’ll take the next step and turn the right types of customers, who are spending more often (Strategies 1 & 2) into customers who are spending more:

Strategy 3: Increase the value of each sale

Of all the strategies, I think this is probably the easiest to grow your business. It is also one that can quickly be tested and measured to see what works and what doesn’t. Every business is different but there are plenty of options to try to increase sales value. And if you can get a few of these going, your business won’t look back.

Here are 4 tactics you can apply to your business today to increase the value of each sale.

1. Upselling

One of the classic examples of how to increase the value of each sale is McDonalds – “Would you like fries with your order?”. This is called upselling, that is you ask the customer if they would like to add another product to their order. The key here is you have to ask.

Adding an incremental dollar value to each sale adds up over time and is a really simple way to grow your business. It is also important to train staff in how to do this in every transaction with customers until it becomes second nature (remember, it takes 21 days for a habit to form).

2. Increase Your Range

Regardless of your business, there is always something extra you can sell people, and if you don’t have anything extra, this is the next way you can add value to each sale – increase your range. It is important here to add products that make sense to your business and that customers are looking for. Is there something that your customers often ask for that you don’t stock? Then start to stock it (if it makes profitable sense too) and sales will increase.

3. Bundle Products

A third tactic for increasing the value of each sales is to bundle products together. If the bundle represents good value, customers often can’t resist and the result is a higher sale value. Some examples you may see regularly are:

- Your local coffee shop offering a ‘Coffee and Cake’ deal
- Buy 1 of Product X (or 2, or 3) and get the 2nd (3rd or 4th) for free (or half price)
- Spend $5 in store and receive an extra 2 cents/litre off your petrol

4. Bulk Purchase Discount

The final and fourth tactic which is really a subtle variation on some of the above is to offer a discount or other incentive for bulk purchasing. This is similar to upselling but instead of just one additional product, you are encouraging customers to buy in bulk. This will greatly increase the sale value, but is not suitable for all businesses and products. Again, the offering must represent enough value to the customer for it to be successful. Some examples include:

- Buy 5 reams of paper instead of 1 and get 10% off.
- Purchase $300 worth of products and get free delivery.

Utilising some or all of these four tactics in your business will lead to an increase in sales and grow your business. Try different options, test and measure to see what works best and be creative.

Until next time (and the final strategy),
Samantha

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Last time we looked at the first strategy to grow your business – increasing the right number of customers.

Now that you know who the right type of customer is, it’s time to look at the next step to grow your business:

Strategy 2: Increase the Transaction Frequency

Recently my hairdresser commented that people are not getting haircuts as frequently as they were 12 months ago. And in fact, 12 months ago they weren’t coming in as frequently as 12 months prior to that. This is a classic case of transaction frequency decreasing, that is, people are buying less often.

For my hairdresser, this means she has to keep working at finding new customers to make up the gap in sales from her existing customers. To acquire the new customers there is also an ongoing marketing cost involved. So not only are sales affected, but costs are as well.

If she could reduce the transaction frequency back to 4-6 weeks like it was 2 years ago, her business would much better positioned. At the moment, many customers are only coming in every 12-16 weeks and while they may spend a bit more at each visit, over 12 months, their average spend is down.

One solution to this is to increase the transaction frequency. Quite simply, if you encourage your customers to buy more often from you, sales will grow and so will your business. But this is not always as easy as it sounds and there are a couple of ways to do this.

1. Customer loyalty program

The first way is to develop a customer loyalty program that rewards customers for spending with you. There are plenty of examples of these in our everyday lives – airline frequent flyer programs, credit card point programs, supermarket loyalty programs. These are not just the domain of large companies and small business can also greatly benefit from loyalty programs.

Some programs in our local community include:

- Buy 10 cups of coffee and get the 10th cup free.
- A beauty salon that gives a free facial after 8 visits.
- The local bakery offers a loaf of free bread after spending more than $5 on 6 visits.
- Pizza shop that gives a choice of several menu items once you have saved and collected 10 vouchers from their pizza box.

These types of programs are inexpensive to setup and business owners can get quite creative in their offers and small business marketing. Once setup, ensure they are promoted and fully supported so that customers are encouraged to return again and again.

2. Remind Customers To Come Back

In my experience dentists are always great at sending reminder notices. Unfortunately, there are not many other businesses who are as efficient at it. It is a simple, yet very effective way of reminding people about your business and building a relationship.

In the case of my hairdresser, she could send people a simple reminder note 6 weeks after their last service as a reminder to book in again soon. There could also be an added offer either a discount or free product for booking by a set time. While not everyone will book in, a large enough percentage will take up the offer. The net effect is the transaction frequency starts to increase and the business grows.

3. Special Offers

Another great way to increase transaction frequency is to give your customers special offers on a consistent basis. This not only encourages them to spend more regularly, but builds loyalty and trust. The offers can be varied and don’t always have to be price based. Try giving away a ‘gift with purchase’ or some other ‘free’ service e.g. gift wrapping (with gift purchase), car wash (with car service).

The special offer can also double as a chance to showcase some other products or services you offer and encourage trial.

Using some of these tips will help to increase the frequency of transactions for your business. Not every one is suitable for all businesses. Be creative and consistent in their application and the results will show as you grow your business.

Next time, we’ll look at how to get the customers to buy more each time they transact.

Until then,
Samantha

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Finding new ways to grow your business isn’t always easy. Sometimes we can become a bit stagnant in our thinking and it becomes harder and harder to come up with new initiatives and ideas. In simple terms, there are four key ways you can grow your business and increase profits. Using these four strategies will cut right to the core of your business – customers, sales and profits. Focus on these and your business will have no option but to grow.

Today we’ll look at the the first way to grow your business:

Strategy 1: Increase the number of the right type of customers

To do this, you first need to know who the right type of customer is which requires a little bit of market research. Look closely at your best customers (the ones who spend the most money) and try to isolate common factors among them. On the most basic level you could consider things like age, gender, locality, income level and relationship status. For business to business customers, consider industry, size of business, location etc.

Knowing the basic demographics of your customers is a great start, but it does pay to dig deeper and investigate exactly why they are doing business with you. What problems are you solving for them? What makes them buy from your business and not somewhere else? Obviously, one of the easiest ways to answer these questions is to ask and always be listening to customers. This doesn’t need to be a formal survey or questionnaire. Try phoning your best customers or taking some time with them next time they contact your business and find out why they buy from you. Usually they are more than happy to oblige (and it could double as a chance to grab a testimonial).

Now that you know who your best customers are, ask yourself if they are the right type of customer for your business? It may be that your best customers are not necessarily the right ones. That is, they may be demanding, non profitable or in some other way detract from your business and actually hamper the business plans and objectives.

Consider the example of a small business with a range of health supplements that is stocked in a variety of outlets included major supermarket chains, independent supermarkets, pharmacies and specialty stores. While the major supermarkets are likely to be the best customer, often the demands and costs of doing business with them puts enormous pressure on the business. So, when analysed next to other distribution outlets, they may not be the right type of customer for the business. It may be more profitable, even if there is a sacrifice in revenue, to increase the number of other outlets.

By conducting a thorough analysis of your customer base, you will know what the right type of customer for your business is. From here, refine or develop your marketing plan and promotion mix to attract more of these customers to your business. Look at what has worked to get these customers in the past and what hasn’t. Try to have a number of marketing tools working at any given time and continually test and measure the results so improvements can be made.

Now you are increasing the right type of customers, next time we’ll look at the second strategy to grow your business - turning the right customers into buying ones.

Until next time,
Samantha

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