June 2004

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2004</I></div> <div> <I>The following article was first published in the Eastern Daily Press' 'The Business' on 22 June 2004</I></div> <bR> <div> <B>Promoting the value in your business</B></div> <bR> <div> Back in February, I despaired in this column over the way many business people seemed to analyse Norwich City's promotion chances with more fervour and interest than they did their own numbers.  Well, now that the Canaries are safely back into the Premiership, it's time to look at the final `cornerstone' of business measures that should interest any owner or manager - the average value of each sale they make.  Certainly the Carrow Road coffers will be fuller than ever next season, not simply thanks to television revenue, but also because top clubs can charge more for tickets and there will be a wider market for other merchandise.</div> <bR> <div> You'll recall, I hope, the first three cornerstones of business:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.png" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The number of leads generated by your marketing efforts;</div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.png" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The percentage of those leads you convert into business and</div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.png" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">The number of times your customers buy from you over a period of time.</div> <bR> <div> We've examined ways in which each of these can be improved, so this month I'd like to explore a few basic ways in which a business can increase the average value of each sale they make.  </div> <bR> <div> The most obvious, yet one that is often shunned, is simply to raise your prices.  Now, before you all start accusing me of encouraging inflation or screaming about how competitive your market is, bear with me for a moment.  I come across businesses every day that have resisted putting their prices up for years.  Their revenue and profit have suffered accordingly and they often resort to discounting to capture elusive sales.  </div> <bR> <div> Let's look at a simple but oft-ignored fact:  let's say you sell a product for £100 and make a 20% margin.  If you offer a 10% discount, you have to sell TWICE AS MUCH to retain the same profit.  However, with a 10% increase in price, you can LOSE A THIRD of your customers before your profits are hit.  So, if you sell excellent products or services and look after your customers properly, don't be afraid to increase your prices from time to time.  Doubling sales just to stand still sounds a far less enticing prospect than losing a few customers, but enhancing the overall profitability of a business.</div> <bR> <div> Here are just a few more ideas about increasing the average value of each sale that might suit your business:</div> <bR> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.png" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Up-sell, down-sell or cross-sell other products on the back of the original purchase;</div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.png" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Train and equip your sales team to maximise each sales opportunity;</div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.png" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Provide incentives for your customers to spend more with you (for example, vouchers or air miles);</div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.png" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Allow generous payment terms or finance arrangements;</div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.png" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Always make sure your customers know about EVERYTHING you sell;</div> <div> <IMG BORDER="0" SRC="Symb075c00b700dc00000000.png" HEIGHT="15" WIDTH="24" ALIGN="bottom" HSPACE="0" VSPACE="0">Use good point of sale materials and impulse purchase items to encourage your customers to buy more each time they visit.</div> <bR> <div> Finally, make sure your customers are provided with the best products or services and they will pay more for them than if your offering is mediocre.  To continue the football link, Norwich fans will be spending more this coming season because their team has made it to the top and will be giving spectators a product of greater value.  Remember, when keeping score for your business to include a measure of average value of sale and you'll help your profits into the Premiership.</div> </td> <td valign="top" width=180 BGCOLOR="#CC3333" TEXT="#080000"> <bR> </td> </tr></table></body>