“The best kept secret in the global economy today is this: When your service is awesome, you get so stinking rich you have to buy new bags to carry all the money home.” Tom Peters
In our last discussion on the above topic, we did
mention that there are 3 ways to grow your small business enterprise or
professional service. Number one is to increase the numbers of your new
customers. We then discussed 10 strategies you can effectively use to achieve
that objective. Today, we will discuss
the second of the 3 ways – increasing the average transaction value per
customer. The objective is to cultivate your existing customers to buy more,
and buy your products or services more often. To achieve this objective, we
will discuss 6 different strategies.
- UPSELL AND CROSS-SELL: Up-selling means to graduate your customer to a higher and usually more costly product alternative which you are aware is capable of delivering greater benefit and better performance. Cross-selling means that you are introducing a new product in addition to the product that you have already sold to the customer. The proposition to the customer is that the customer will get even better value from their new purchases when combined with the existing product that they have bought from you. In either case, it is not a must that the customer has to take your offer, but it will help you to communicate the level of commitment you have for the customer.Practical Examples – Cross-Selling – so when next you order a plate of rice from Tasty Fried Chicken, and the cashier ask you if you’d like a bottle of coke, or salad too, cross-selling is taking place. In the same vein, Up-selling takes place when your internet service provider offers you an Unlimited Data Plan for a slightly higher price instead of the 5 Gigabytes plan that you requested for.
- POINT OF SALE PROMOTIONS: These are usually displays of complementary products that you can offer a customer who have just purchased one of your products. For instance, if a customer purchased a mobile phone from a shop, the owner of the business may offer a display of other products that go along with a mobile phone such as phone covers, earpiece, extra battery, mobile charger, memory card, or memory stick for mobile phones. When customers make such purchases, it increases the value of the sale, and total customer spending in the business during that purchase.
- PACKAGE COMPLEMENTARY PRODUCTS AND SERVICES TOGETHER: This concept is different from the point-of-sale promotion and cross-selling. It refers to an act where the business owner decides to create a bundle of products by offering 3 or 4 products together for one particular price. Rather than offering one product, and waiting to ask customers to buy complementary products when they checkout or are initiating payment, the business owner bundles together complementary products and ask for one bundle price. For example, a business owner can bundle a laptop + laptop bag + extra power bank + solar panel for one single price by adding all the individual costs together, and offering a discount as a way to boost the sales of each individual product.
- INCREASE YOUR PRICING: It may seem counter-intuitive that instead of offering discounts, you are raising prices. While this may be true, as a business owner, you cannot avoid to price your products in a way that will not enable you provide quality products, and quality service after the sale is made. Because of the brutal competitive space, most business owners try to under-cut themselves by charging lower prices and liberal discounts. This will not work very well for the businesses in the long run, as ridiculously low prices will affect product quality and services rendered. Instead, business owners should offer the market a significantly higher value for higher price. Distinguish your product or service by differentiating your offering with quality, durability and great support. Never allow your product to be commoditized by competing on price. That way, you can increase your revenue.
- CHANGE THE PROFILE OF YOUR PRODUCTS OR SERVICES TO MORE UP-MARKET: Have you ever wondered why Mr. Biggs and Chicken Republic come with great chop shops than the local bukas selling similar products? This means that you need to position your products or services at a much higher level of distinction and quality than the competition does. If you are into manufacturing, up scaling the packaging of your products may be just enough to raise the perceived value of your product especially when you have packed sufficient quality into it. If you are into professional service such as medical, legal, accounting and services profession, you could upscale the profile of your services fixing your offices so that customers have a greater sense of affinity with your business – great reception area, good pictures, magazines and books area, cable TV – are all a great way to raise the perceived value of your services. The higher the perceived value of your product or services is, the higher you are able to charge for your services.
- OFFER LARGER UNITS OF
PURCHASE: This concept serves a dual purpose –
rewarding your loyal customers, and selling more units of your products to
existing and new customers. For example, if you have a customer who buys 1 week
supply of your product, offer him 1 month or 2 or 3 months’ supply at a reduced
price per unit. If an individual or a company purchases your products all by
themselves, you can offer them an inducement through discounts on unit price if
they can come with a friend or another company. It all works for you and your
business has everything to gain. When you sell more units of your products,
resources to produce more units becomes available to you. When you produce more
units, your profits increased when you multiply your margin of profits with the
increased copies produced and sold.
This is the conclusion of the second of the 3 Ways
to grow your small business enterprise or professional practice. Hope to meet
you again at the concluding part. Keep selling, Keep sailing.
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