2015-03-30 00:00:17SalesEnglishIncreasing the amount of your average sale, also known as the average daily sale, is one of the easiest ways to improve profitability....https://quickbooks.intuit.com/r/us_qrc/uploads/2015/03/istock_000052190246small.jpghttps://quickbooks.intuit.com/r/sales/how-to-increase-your-average-sale-for-better-profitability/How to Increase Your Average Sale | QuickBooks

How to Increase Your Average Sale for Better Profitability

4 min read

Increasing the amount of your average sale is one of the easiest ways to increase your overall sales, and it doesn’t take a big marketing budget or significant investment to do it. We spoke to Doug Fleener, president and managing partner of Dynamic Experiences Group to learn more.

Small Business Center: What is the difference between an average sale and overall sales?

The average sale, also known as average daily sale, or ADS, is determined by taking the total sales in a day and dividing it by the total number of transactions that day.

How can retailers increase their average sale?

There are three ways to do this. You can get more people in the door, increase your conversion rate to turn more of those people into customers, or sell more to customers when they make a purchase. We use this last method to increase the average sale.

When you increase the average sale and maintain your number of transactions, sales go up. What I love about focusing on average sales is that it doesn’t require additional marketing expenses or a higher payroll.

How should retailers train their employees to increase average sales?

You’ll first need to identify the key behaviors and actions your staff take that impact your average sale. For example, it can be affected by what products the staff shows the customer first, or whether they suggest additional items after the customer makes the decision to purchase.

Next, determine what you want the staff to do differently. For example, I wouldn’t want a staff to merely ask customers, “Will there be anything else?” Instead, I want them to proactively show the customer one or two additional items. There’s almost always another product that complements the one the customer is purchasing.

Now, you have to practice that new behavior and action, and this is where most stores fall short. They tell the staff they want them to do something new or different, but they don’t work with the staff and train them enough — or at all — for it to become a new habit. So within days, they fall back to doing what they were doing before. Finally, the owner or manager needs to continue to focus on the change for at least three weeks because that’s how long it takes for a habit to set in.

How will the staff know when they’re achieving the goal?

The reason I love focusing on average sales is it gives the staff immediate feedback on how well they’re doing. For example, a staff typically doesn’t know if they had a successful sales day or not until the store closes. But with ADS they get immediate feedback. Say a store has an average sale goal of $50. If they make a sale for $70 they know they exceeded the goal on that sale. If they make a sale for $40, they know they fell short by $10, and can try to make it up on the next sale. I teach business owners how to increase their average sale in my training program.

How else can business owners increase average sales?

Training the staff has the biggest impact, but you can also use three other techniques. First, you can use bundled pricing. When you bundle two products together, it encourages the customer to purchase them in a single sale. Most bundled packages come with a discount, and while you may give up a bit of margin, you can make that up in higher incremental sales.

You can also use merchandising to increase your average sales. For instance, put impulse items at the counter, and ask your staff to show and suggest them to the customers as they are checking out. I like to choose impulse items that are easy to pick up and are eye catching.

Finally, you can merchandise complementary products together. A great example is how ice cream scoops are often displayed near the ice cream.

How does the average number of items tie into the average sale?

Obviously, when you sell the customer more items you increase the average sale. I really see this as a second metric and focus. Here’s why: I would rather the staff sell one premium priced product instead of a number of small, inexpensive items.

How can store owners train their staff to increase the number of items they sell per transaction?

They should focus on not stopping the sale. Keep suggesting and showing products until the customer indicates they are done. In our work with retailers we see that close to 85 percent of all sales are stopped by the staff after the customer chooses an item to purchase. The customer should be the one to say they are done.

What barriers can keep retail store owners from increasing their average sale?

Not sticking with it long enough for the staff to create the new habit. If you don’t have a laser focus on it for three to four weeks, it is unlikely that the staff will change its behavior.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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