To improve the quality of business decisions we need basic sales information. For the purpose of this article we require the average rand value per sale in our business. The premise is that, if we can increase the number on average, our turnover and ultimately our profits should also improve.
Upsell (think of McDonald’s “upsize” sale technique) and cross-sell (think Samsung with different products lines – laundry equipment, computers, TVs, cameras and mobile phones) are two of the most widely used methodologies to increase the monetary value of a sale. The question is – are you already applying these techniques in your business? Do you know what the profile is of clients who are more prone to going for an up or cross-sell? Client education can assist in informing clients about other products and services on offer by our business, supporting both up and cross-selling.
The future sales value, or lifetime value, of a client is another perspective worth mentioning, because the immediate sale might be low in monetary value, but understanding who the client is and what unfulfilled needs they have that can be addressed by our products/services at a future date, means that we can pro-actively engage with them to prompt a quotation and ultimately a sale. The record keeping and follow-up processes in the business would need to be streamlined to ensure that we do not miss out on future transactions. By being pro-active we can limit the impact of the competition from the sales process. Rewards for ongoing patronage (offering a discount or added value) can go far in building brand loyalty and, therefore, help to increase the rand value of transactions.
The sales value and pipeline of future business can also be improved by offering a special deal when a client upgrades to a new model/at the release of a product. The new product will carry a larger price tag, ultimately leading to a higher turnover figure – in this way we secure a future sale (or multiple sales over time), which will be worth more to our business.
Freebies with high perceived value can be added to the sale of a product of service, especially when the up- and cross-sell options are chosen. The inclusion of freebies can support the business closure process for the sale (e.g. a video explaining how best to use the product or to implement the service).
The take-home message is that, if we want to improve the current and future rand value of transactions, we need to know the current figures (average rand value per sale) and then implement a sales strategy and process which can be influenced and managed. A mere 10% increase in the average rand value per sale can lead to a >10% increase in profits, because of economies of scale and fixed overheads, which are transaction value insensitive.
To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success.
Go to www.sanlamgameplan.co.za to download your free copy.