- June 27, 2011
- Posted by: Paul Foster
- Categories: Grow a Business, Increase Profits in Business, Profit Improvement Strategies for Small Businesses
As a business advisor, I often find myself contemplating the operations of a business and determining how I can use that information to help my clients.
Although you may not agree with their approach, the concept used by the Dam Helicopter Company may assist you in increasing the average transaction value in your own business.
This picture shows some interesting advertising by the Dam Helicopter Company which is very visible on the main Highway 93, about a mile from the Hoover Dam. This can be viewed as a valuable study in how to increase your revenues.
When you think about increasing your revenues, there are three ways to do it:
1) Get new customers
2) Get your existing customers to return and purchase again
3) Increase the transaction value at the time of purchase
This small business is focusing on the third approach, otherwise known as upselling.
Let’s investigate what happens. Here is some background:
– The Hoover Dam is 35 miles from Las Vegas and is a big tourist draw.
– Lake Mead is visible from the parking lot where the helicopter rides start, and is a very popular place for water sports.
– Black Canyon is the Canyon along the Colorado River, although at the time I had never heard of it.
The picture below explains what you find out when you approach the ticket booth. They actually offer three helicopter rides:
1) The Lake Mead Tour for $29 per person – minimum 3 people per ride.
2) The Dam tour for $59 per person – minimum 2 people per ride.
3) The Black Canyon Tour for $99 per person – minimum 3 people per ride.
The Black Canyon ride for $99 is only there to help you justify the less expensive choice to go see the Hoover Dam for $59. It is a proven fact if you give a potential customer the bronze, silver, gold choice they will naturally migrate to at least the silver.
In business, this is called the ‘good, better and best’ offer.
The large majority of customers pick the better or best choice when offered all three.
I would be very surprised if the Dam Helicopter Company sells many Black Canyon rides. I would bet a very high percentage of their business is the $59 ride which produces a $118 transaction value.
Do you have a good, better, best proposition for your potential customers?