As a business owner, it’s very easy to become fixated on sales as a means of achieving your bottom line. Unfortunately, focusing purely on sales without breaking it down further can become something of a fixation — a little like a golfer who only looks at the hole when trying to hit the ball. You can’t make Spaghetti Bolognese by putting a pot on the stove and waiting for something to appear — you need ingredients.
So what are the ingredients that make up sales?
- Foot traffic
- Average Spend
Andrew wishes to increase his store sales. He knows that he gets around 200 visitors to his store each day. Of these, around 20 make a purchase at $150 per purchase.
So what does Andrew have to do to lift his sales?
- Get more foot traffic, and/or …
- Have more of the foot traffic become buyers, and/or …
- Get the buyers to spend more
When you break it down like this, it doesn’t seem quite so intimidating. He can address each of these areas individually through marketing (foot traffic), inventory/training (more buyers) and up-selling or add-ons (spending more).
It can also work to turn around a drop in sales. If Andrew experiences a dip in sales, he can soon see the cause. He may discover that his foot traffic has dropped to 170 visitors per day, or his percentage of buyers has dropped below 10 percent, or maybe his average sale is now only $120 per customer. This makes it much easier to address issues that arise. Rather than complaining the Spaghetti Bolognese is bad, he can go back to the recipe and pinpoint which ingredient let him down.
So where do you begin? The best place to grow sales is to start with those customers who are already in front of you. You have a better chance of making an add-on sale to a customer who has just said “yes” than trying to drive more customers into your store. And it is considerably more affordable; after all, it costs nothing to ask the jewelry equivalent of, “Would you like fries with that?”
Before you start to experiment, however, determine what your numbers currently are. Install a door counter to measure your foot traffic and use this and your reports to start measuring conversion rates and average sale.
The best chefs always measure their ingredients.
This article originally appeared in the March 2018 edition of INSTORE.
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Wilkerson Steps in When It’s Time to Step Back
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