Main Idea
Do you know how many customers you have, how often they deal with you and how much they spend? When was the last time you met with your sales or customer service representatives and focused on increasing how much your customers spend with you? Do you know what percent of your customer’s wallet you have?
Expansion of Idea
A key part of growing your business is to increase the average value of each sale. A good starting point is to look at your prices. Are you charging the right prices? Everyone looks to cut prices to increase sales but you are just giving away margins. (Yes, there are times to cut prices. However, they are not as often as most people think.) Maybe there are specific items or services that you are selling below your competitors. Raising prices on those items will fall through to your bottom line. A good example is a convenience store. They may have to be competitive with the price of gas and maybe cigarettes. Everything else is priced significantly above a grocery store.
The other part of increasing the average value is to make sure that you are capturing more of your customer’s wallet for the items that you sell. Almost all of us have competitors that deal with our customers. Rarely does any firm capture 100% of its customers business. I could argue that, even if I do a client’s tax return but do not do the tax returns for their kids, then I have not captured 100% of the family business. A car dealer may sell a car to a family, but then it does not do all of the maintenance. A wholesaler may have a good customer which purchases one product line direct from the manufacturer or from a competitor. All of us have situations where we can increase the amount of sales by expanding our definition of our customer, by inquiring how we can provide additional services, or by just providing great service.
Suggested Areas to Start
Get baseline measurements of the average value of your sales.
Pick one customer and brainstorm how to increase the value of the sale.
Question your Questions.