Reach your goals faster and with fewer clients by increasing your average transaction value
Growing your business by increasing your number of clients alone, as most businesses do, is the most expensive, demanding and time consuming option available to you. The cost of selling them more is inconsequential in comparison.
Increasing both your number of clients and the average amount each client spends on each transaction they do with you, using some of the techniques listed here, is the fastest and easiest shortcut available to you to reach your goals.
These techniques can instantly multiply the results of everything else you do and can give you geometric growth and dramatically better profitability for very little extra workload … or it means you can reach your goals faster, with fewer customers, using less effort and expense and with less hassle.
1. Up-Sell and Cross Sell
Offering extra value or a better deal right at the point of sale, when your customers are at their most receptive, is one of the easiest and most effective ways of instantly improving the size and profitability of your sales. Up-selling is getting your customers to buy a better, more expensive, or more sophisticated product that genuinely adds value to their transaction. Cross-selling is getting your customers to buy an additional product or service that will give them a superior outcome. If you make a worthwhile offer to your customers, 30-50% will normally say yes, and virtually every penny of the extra profit goes right to your bottom line because it requires no more time and effort, and there is no additional cost of sale to reach the customer.
2. Packaging products or services
Combining a group of individually desirable products or services that naturally compliment each other and offering the complete package for a single fixed price that represents almost irresistible value to your customers, compared to buying the components separately. This can dramatically increase your incremental profits and also allows you to sell complete solutions that lock the customer into the use of those products. This is definitely a win-win situation for both you and your customers. They get a simplified purchasing process and a discount on a complete solution, while you increase your sales and can often own your market. This technique has transformed the fortunes of many organisations.
3. Offer larger units of purchase
Increasing the size of your minimum purchase unit is a powerful and remarkably easy way for you to increase your average transaction value. If people buy a one week supply, you can offer them monthly, quarterly or annual consumption units at an attractive and advantageous price. Your customers will appreciate the extra value, the tremendous savings and the extra convenience of buying in bulk, while your average unit of sale will be increased substantially and you’re also locking your customers in for longer. As an added bonus, a lot of people who say no to the offer, and would never otherwise have bought at all, will will now buy your smaller units.
4. Increase your pricing and margins
There’s no law that says your product or service has to be a commodity that’s merely bought on price. People will willingly pay more for most products or services as long as they believe they’re getting better value. The more distinctive you make your product or service, and the better you educate your customers, the more valuable your marketplace will perceive you to be. Raising your prices typically means that you can afford to service your customers better, work with them better, include additional products or services in the transaction, and do more than your competitors. This will set you and your business apart in a favourable way in the eyes and minds of your customers and will allow you to charge what you’re really worth.
5. Positioning yourself further up-market
If you’re good at what you do, moving your products or services further upmarket and positioning your business at a higher level of distinction or quality than your competition can improve your business dramatically. By repackaging your product or service to appeal to more sophisticated or affluent buyers in parts of the market beyond those you currently cater to, you can often command higher prices in the marketplace and leave behind the type of business that gives you all your headaches. The more you raise your market positioning, the more your existing customers are likely to respect and appreciate what you do, which frequently results in even more loyalty and referrals.
6. Point of sale promotions
Offering additional products or services to every customer right at the point of sale is one of the simplest, most instant and predictable techniques for increasing your average unit of sale. You can grab their attention by displaying “impulse” items, or by using signage, literature and displays. You can also make appealing offers at trade shows or seminars, or offer inducements for a first time sale. If you do that before your customers leave, or take delivery, or sign the final documents, or when they place an order by phone or on your website, 30-60 percent will purchase the additional product or service. This can add tremendously to your profit per transaction for no extra time, effort, or incremental cost.
7. Increase your horizontal penetration
If your customers are unaware of the full range of products or services you offer, they’re also unlikely to think of you when a problem arises that could be solved by your product or service. Educating them to use your full range of products and services using a simple yet powerful matrix will immediately allow you to focus on the penetration of each of your products or services into your existing customer base. It will also identify all the opportunities for increasing your product or service penetration, for strategic alliance opportunities, for blocking your competitors and increasing both your average unit of sale and your profits.
8. Increase your vertical penetration
Similar to above, but instead of focusing on the penetration of your products and services into your customer base, this technique uses a simple but powerful matrix and a two-step implementation process that helps you to focus on the penetration of your products/services by customer.
By mid-2009 Marketing Wizdom’s knowledgebase contained more than 1.1 million words in 3,282 documents relating to 9 individual strategies for increasing transaction value. That’s equivalent to nearly 4,000 pages, or 15 full sized books.
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