This is the fourth of a series of five steps by which business owners can increase their gross revenue and their net profitability. Visit http://strategicvisionbusiness.com/blog to read the rest of the articles in this series.
So far in this series, we have covered three steps business owners can take to increase their revenue and their profitability. We’ve taken an in-depth look at strategies for increased lead generation, increased lead conversion rate, and increased repeat orders. Today we are going to examine the fourth step, which is increased average order amounts.
When is the last time you’ve been at a McDonalds? Recall the ordering process for a moment—at some point, you heard some variation of the question “would you like to supersize this for only ninety-nine cents?” Or if you had only ordered a burger, you heard something like “would you like to add fries and a drink for only a dollar ninety-nine?” This concept of upselling isn’t unique to McDonalds. Virtually every restaurant and retail store emphasizes up-selling through one form or another. And yet, many small business owners neglect the concept of upselling altogether. Why? In most cases, because they simply never considered the idea.
To be effective, upselling requires that you put some thought into your pricing structure. You should price your products and services in such a way that upgrading to a more comprehensive service, or a better product, seems like a great deal financially. This should mean that when a customer purchases in bulk, he or she receives a lower average cost per unit. That way, your sales team can suggest that your customers maximize their value by making a larger order. It can also mean emphasizing add-on products or services. Many online retailers, such as Amazon.com and BestBuy.com do a great job of this. The next time you make a purchase on Amazon, note that they provide additional product “suggestions” that are generated based on your past purchases and the products that are often sold along with the product you are purchasing.
Once you have identified your opportunities for upselling, systemize them. Make up-selling an established part of the procedure that your sales team follows with each customer. This process will make a significant difference to your bottom line!