Increase the average transaction and your customer value
Too often many businesses and owners are too busy chasing new customers instead of strategically increasing the average transaction customer value. Selling more products or selling higher priced products is a savvy way of increasing your profits while growing your business. Imagine if you could multiply your business with less expenses, less hassle and a tiny bit of effort. While having more customers walk through the door is a crucial factor of success, increasing both average transactions and customer numbers can contribute to higher profit margins. For today, let’s focus on increasing the average transaction per sale.
Upselling and cross-selling
Would you like fries with that?
Even the most upscale restaurant and hospitality establishments can learn a lot from McDonald’s. If you’ve ever been asked the golden question you have experienced cross selling. Cross selling is adding additional items to create a larger average transaction. Ideas for cross selling could include offering restaurant customers the dessert menu after their meal or to offer matching wines with their food. If you own a café, a strategically placed case of muffins near the counter can prompt impulsive buying, especially if you offer it as a discount with their purchase.
Just the glass of wine, or a bottle?
Have you ever taken up a packaged meal or beverage offer because it was only a few dollars more expensive? Upselling is a marketing strategy where you can offer value to your customers by offering premium or packaged sets. This is particularly useful if you are serving a group of people who may find more value in a bottle of wine. If you sell products which your customers can use time and time again, why not offer a special when customers buy two?
Recommendations are also a great strategy where you can instil trust in your customers and add value to the product. As a waiter, if you’ve ever been asked what your favourite choice is on the menu, don’t be afraid to recommend the higher valued items.
Let’s face it, it pays to be nice. It’s much more cost effective to retain a customer than to gain new ones. A big part of loyalty is earning the respect of your customers. If your business is customer service centric, your customers will come back to you time and time again. They’ll tell their friends and family too. Keeping your customers happy is a mixture of greeting them with genuine sincerity and strategic tactics to keep them coming back.
Coffee punch cards are an example of a customer loyalty program. Offering 10 coffees for the price of 9 may seem like your lowering you’re average transaction price for each coffee, but the upside of this strategy is you’ve increased your customer lifetime value (CLV).
What’s better, a once off customer who buys one coffee and a cake for $7 or a regular who purchases a coffee every day for $4?
If you’re a small business you can get away with covering for regular customers who might be $0.10 short before pay day. And who doesn’t love it when you get a free bag of prawn chips from the local Chinese takeaway?
The simplest way to increase your average transaction value is to charge more for your products. If the thought of hiking up your prices is scary, think of ways you can add value or justify the value in your product. By charging more, you can position your business further up the market. Price is often a good reflection of quality and a higher price point may attract more sophisticated customers.
One way to justify a price rise is to analyse your product and the market. Do you think your market would be open to a higher price or do you see a market that you could potentially tap into? If you believe that charging more is a good idea for your business, only do so with just a noticeable difference between your prices so you don’t risk losing your customers.
These are only three options which you could use to increase your average transaction value. There are many other average transaction strategies that hospitality businesses can employ to see a spike in profits. If you’re not too sure where to begin, we offer a Service Excellence course. We guarantee to increase your average transaction by 10% in 2 weeks or we’ll refund you!