4 Ways To Grow A Business

4 Ways To Grow A Business - How To Increase The Average Sale Value

In prior editions of the Business Accelerator Magazine we examined the first two ways to grow your business:

  1. Increase the Number of Customers (of the type you want)
  2. Increase the Number of Times Customers Come Back

In this edition we will look at the third way to grow a business, increase the average sale value of each transaction.

Your customers have come to you for assistance and guidance and it’s logical that you make them aware of your full product range. They might have bought a single product from you but there could be other complementary ‘add on’ products they would buy if they knew they were available. Remember, you’ve probably invested time and money to win them as a customer so it makes good business sense to get them to spend more with you before they leave your shop or website.

Before you launch any of the strategies listed below it’s important that you know your numbers. To calculate the dollar value of your average sale you simply divide your total sales for the day by the number of customers who bought your products or services. For example, if your daily sales were $2000 and you made 20 sales on the day the average sale value would be $100. Depending on the type of business you operate you might also want to calculate your average hourly sale, average sale for each day of the week, average sale for each employee or average sale per marketing campaign. You can then devise a strategy to lift the results. For example, if Monday is your slowest trading day you could plan a special offer for just Mondays.

There are several ways we recommend to increase the average sale or transaction value including:

Cross Selling or the Add-On Sale

McDonald’s are the master of the add-on sale. How many times have you been asked the question, "Would you like fries with that?" It’s the classic example of a cross sell but the same approach works for almost any business. A solicitor could ask their clients, “Is your Will up-to-date?” I’m sure that could drive some more business from their existing clients and increase the average dollar value of each invoice.

A great way to generate add-on sales is to create a list of related products. For example, a hardware store could have a ‘Paint Job Checklist’ on display to remind customers to make sure they also get paint brushes, drop sheets and paint trays.

Do you have a core product or service? Think about what you can add on to increase the average sale value and overall profit margin. It could be a tie with a business shirt, a golf accessory with a set of clubs or a wheel alignment with a car service. Sit down and compile a checklist of items that you could cross sell and help your sales team ‘sell’.

With your website and shopping cart, think about making product recommendations using terminology like ‘Customers who bought this product also viewed these’. This works particularly well in the fashion industry and by profiling products that other customers purchased you can increase average order values.


A great way to up-sell your customers from a lower priced product to a more expensive product is to have products at different price points. They could be marketed as gold, silver and bronze or budget, standard and deluxe models. Your base product might target the budget conscious buyer while the standard offering could be the option that most customers buy. The deluxe or top of the range offering could target the small percentage of customers who are looking for extra value and higher quality. Again, it’s important to train your sales team to outline the features and benefits of the three options to your customers and typically most customers will opt for the product or service in the middle.

Batching or Bundling

Batching or bundling several products together in a package deal is a way to make your products and services appear more attractive and create extra value for the customer. Essentially you are offering bundles of products that cost less than if they were purchased individually. For example, a beauty therapist might package up a facial with a massage or a clothing retailer might include 2 shirts with every suit. The products should be complementary and we suggest you sit down and examine your product range to identify any opportunities to bundle them together to make an even more attractive offer to your customers.

For service providers, you can also bundle your time. A physiotherapist might sell appointments in blocks of five half hour appointments. In the process they might yield a higher average sale and guarantee repeat business. It might also help your cash flow by being prepaid for the services.

Prominent Merchandising

You can potentially increase your average sale if your signage, presentation and point-of-sale displays are strategically placed around your business. Supermarkets are specialists with this strategy and typically they display specials in the checkout area to trigger impulse sales. You can also use testimonials, brochures or product samples to raise interest and get customers to buy that extra item.

Pricing, Margins and Discounts

Of course, before you cross sell or bundle products together to increase your average sale value you need to know your profit margin on every single product in your range. It could be time to add a new product to your shelves that has a higher ticket price and profit margin. The good news is you don’t have to sell as many of these items because of the increased profit margin. On the other hand, it could be time to stop carrying low priced, low margin items.

Be careful with discounting. For example, if your current profit margin on an item is 35% and you reduce your prices by 10%, to generate the same profit your volume of sales must increase by 40%. By contrast, if your current profit margin on a product is 35% and you increase your price by just 10%, your sales of this product can drop by 22% before your overall profit will fall below the original level. (Refer to the table)

Of course, simply increasing your prices will potentially increase your average sale value but you need to make sure you are competitive and you don’t lose customers and sales because of the price hike.

Set Minimum Order for Free Shipping or Bonus

You can potentially increase your average order value by providing customers with an incentive when they spend a minimum amount at your store. Consider setting a minimum order amount for free shipping or give them a free gift or bonus when they spend a certain amount. Any incentive to spend a bit more will lift your average sale value.

Create a Customer Loyalty Program

If you sell consumable products (that customers need to replace at regular intervals) like stationery, take away coffee or razors, then you might contemplate starting a customer loyalty or rewards program. Loyalty programs are a customer retention strategy designed to keep your customers loyal to your brand and increase the average order value. By providing an incentive for your customers to earn points under your loyalty program, you can expect to see them increase their average order value.

If you’re looking to grow your business talk to us today and if you need to learn more about the four ways to grow your business, visit the blog section of our website.

Click HERE to download the full edition of The Business Accelerator Magazine for March 2016

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IMPORTANT DISCLAIMER:This newsletter is issued as a guide to clients and for their private information. This newsletter does not constitute advice. Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of these areas.