There are really only 4 ways to grow your business:
1) Increase the number of customers (of the type you want)
2) Increase the average transaction value of each sale
3) Increase the number of times your customers transact with you
4) Increase the efficiency of your business to handle the growth
With respect to the first way, it is important to focus on increasing the customer base with your preferred A-type customer. All new customers are not equal. There are good customers and bad customers. If you’re not focusing on attracting good customers then you are likely attracting bad customers. The required skill is learning and knowing when to say ‘no‘.
Increase the average transaction value
Increasing the average transaction value can be accomplished in a number of ways: It can be a price increase or it could be done by packaging products and services together. A well-designed package offering can create more value and convenience for the customer as well as increase your revenues.
Once a customer has enjoyed dealing with your business, it is more convenient and easier for them to do business with you again. All you need to do is stay in touch with them by email, phone, direct mail, thank you cards or customer appreciation events.
Don’t assume
Don’t assume that these existing customers know everything that you offer and won’t purchase anything else from you.
Businesses that are proactive in staying in touch with their loyal customers are always rewarded for doing so and the customers love the good service!
Increasing your business efficiency is about building systems. Michael Gerber, the author of The E-Myth Revisited, says,
Systems help ordinary employees accomplish extraordinary things. An important part of implementing a new system is to be happy if the employee performs the new systematize task 80% as well as you at first. If you expect everything to be done 100% as well as you the first time you will end up doing more tasks yourself – your choice.
Would you like fries with that?
The classic example of a system that an ordinary employee uses to increase the average transaction value is McDonald’s. If your order doesn’t include fries, the employee is required to ask, “Would you like fries with that?”. Did you know that question can result in up to 33% of the customers agreeing to order fries! And since fries are one of the highest profit margin items on the menu, that system alone often performed by ‘ordinary’ high school students makes millions of dollars.
I am willing to bet there is a simple little system you could implement in your business to increase your average transaction value.
Have you experienced growth in your business by increasing your average transaction value? We’d love to hear from you, please leave a comment below.
