Use these tactics to increase your business's average transaction size and generate more revenue.
Bigger average sales can lead to increased profits. But before you can determine the best strategy for increasing the size of your average transaction, you'll need to make sure you understand your customer base, the strengths and weaknesses of your sales team, and key financial metrics.
Begin by analyzing your sales reporting in search of potential patterns. Once you have dissected the numbers, involve your sales team in a more qualitative discovery process. What types of questions are customers asking? Do employees recognize opportunities to upsell?
"So many people who are selling jump on the immediate opportunity presented to them. When they slow down and ask questions to fully understand needs, there are almost invariably other ways they can help the buyer, and that increases average sale size," says Mike Schultz, president of RAIN Group and bestselling author of "Insight Selling."
The role of impulse purchasing
In addition to training your sales team to ask the right questions and suggest the right potential add-on items, encourage additional buying at the point of purchase by ensuring your website or store is strategically designed. "Your customers came to your shop to purchase a particular item, but if there's a reasonably-priced item in their vision, they will want to add that item. What else of value do you have in stock to increase your average transaction per customer? This is an imagination game and a placement game," says Frank Lanzkron-Tamarazo, owner of Chazzano Coffee Roasters in Ferndale, Michigan. "In my cafe, we have locally-baked toffee next to the cash register. It's impossible to pay for your coffee without seeing those bags of toffee." He adds that engaging customers at the register with "just a few words about a product's origin and other connected items" will help increase transaction sizes.
Pricing strategies
Perhaps you launched your business with extremely competitive prices to help you break into the market. If you've secured a customer base and established your unique selling points, it may be time to raise prices. Depending on the nature of your business, you could consider increased pricing for new clients only, or raising prices slowly. "In the startup days, when I wanted to add $1,000 more per month to our gross, I sometimes added a nickel, dime, or quarter to the price of our most popular items. Do the math. This is not about cheating customers, this is about creating a self-sustaining company," says Lanzkron-Tamarazo.
You can also increase average transaction size by raising the price of your minimum purchase unit and with promotions, such as bundled packages, (for example, "buy X and get Y at a discounted rate") or strategic sales, (for example, "save 10% when you spend $100, save 20% when you spend $200"). Before introducing any sort of promotion, be certain you understand your margins and that a particular deal will, in fact, increase overall revenue.
Even more important than increasing the average transaction size is making sure you turn first-time customers into loyal customers. "I know this sounds like a cliché, but when buyers say, ‘I want to buy from this particular provider because they're the best,' it's usually because they believe you'll bring more to the table," says Schultz. "Focus not on winning the sale, but on having the greatest impact, and your buyers will be less price-sensitive and more apt to choose you even if your prices—and thus transaction size—are bigger."
