My wife Margaret is average, so she says. She tells me that she’s average height, age and bone size for a woman. However, I must say as she left the house this morning with her pants riding several inches above her ankles, she didn’t look normal. I know she was thinking that her husband had below average intelligence for putting her clothes in the dryer, and shrinking them … again! But what really is average?
When we’re in business, we need to know about our average sale. That’s the total revenue for a period divided by the number of transactions. For example, if you sold $1,000 in a day and had 50 customers, your average sale would be $20. If you sold $100,000 in a month and had 10 customers, your average sale would be $10,000. Every business and every industry has a different benchmark for an average sale.
Why is average sale important? It’s one of those numbers that every business owner needs to know. Most owners are trying to grow sales. We spend so much energy, money and focus on bringing in new customers that sometimes we forget about the goldmine right in front of us. If we increased our average sale by getting customers who are already purchasing from us to buy a little more, our sales would go up with little effort or cost!
So what do we do?
First, we need to start talking about our average sale with our staff. Recently, I heard of a business owner who wanted to grow the average sale and started educating his staff about what that was and why it was so important to the business. Within a few weeks, his average sale grew by 10 per cent. Wouldn’t you love to grow your sales like that?
Usually it’s not so simple. But here are some things you can do to increase your average sale:
- Fries with that? McDonald’s made add-ons famous. Simply asking your customers if they would like something else to go along with what they’re buying can increase average sales substantially.
- Are you trying to sell the cheapest products all the time? Perhaps your customers would like something more valuable. A store selling pool tables found that if customers were taken to the most expensive product first and not the lowest, that the average sale more than doubled and customers were happy with their purchase!
- Change your offerings. A bakery owner who was frustrated with a low $5 average sale of mostly cookies added higher end cakes and soon increased the average sale to $14, almost three times higher! What could you do to change what you’re selling that would increase your average sale?
- Train your customer. Does your customer know all the great things you sell? Do they know what other customers buy from you? Educating your customer on your products can save them time by buying from you instead of going other places. A lawyer simply asked every one of his customers: “Is your will up to date?” He increased weekly revenues by $4,000.
- Bundles? What could you bundle together that would get your customer buying more and really create value for that customer? Travel agents who went to all-inclusive offerings of lodging, entertainment and transportation found their average sale jumped substantially. What could you do that would give your customer what they’re looking for that you might bundle together?
- Know how your product is used. A friend bought into a software company that was doing a couple hundred thousand dollars in business and had an average sale of $23,000. By figuring out how his customers were using the product and what their challenges were, he determined he could best help them by offering them additional support. His average sale grew to $45,000 and he took the company to over $10 million in sales in a short few years!
There’s nothing average about your average sale. Understanding the value of the average sale and working on increasing it can make a significant difference to your bottom line. By educating your staff, measuring your progress and celebrating your success, you can increase your average sale and grow in ways you haven’t imagined.
Dave Fuller, MBA, is an award winning business coach and a partner in the firm Pivotleader Inc. Comments on business at this time? Email email@example.com