Revenue too low?

 

So your revenue is too low? If you've been through the earlier steps, you're getting new customers OK, and keeping your existing customers. Assuming there's not some other factor behind this question, a third option is to increase the average sale value.

 

Are there additional products you could add to your range?

 

Does your selling routine include options for:

 

Cross selling. "Would you like fries with that" is a classic example. What else could you offer to go with this item that would add value and / or help the customer get the most out of their purchase?

 

Up-selling. Encourage the customer to move from a low end item to a higher end one. Offer services in best / better / best or gold / silver / bronze. Most customers will select the second tier item when presented with these options.

 

Bundling. Putting products or services together into a single attractive package creates a high "perceived value".

 

Smart merchandising. It's no coincidence that supermarkets all follow the same general product arrangement. It's not designed for staff convenience or management likes. Things like signage, ticketing, presentation and packaging, traffic flow, point-of-sale displays, sales tools and on-hold messages can all increase (or decrease) the average sale value.

 

Working margins and pricing. You must understand your margins and how they affect your bottom line. Avoid discounting and price wars - although in the current environment, it can be difficult - as shown my retailers being taken to the Commerce Commission to regular "specials". Say your margin is 35% and you reduce price by 10%. Your sales volume must increase by 40% to create the same profit. If you raise the price by 10%, sales volume can fall by 22% without reducing your profit. Of course there are many other factors to consider - but you need to understand these figures in your business.

 

As usual, breaking the task into manageable steps is the simplest way to successfully tackle the challenge.

 

Contact us

Email results@businessacademy.nz

 

Skype PhilANZ

 

Phone 04 920 0911

 

P.O. Box 30-545, Lower Hutt 5040

Click here to learn to improve the long-term profability of your business

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