In this article, Catherine Erdly of Future Retail Consulting outlines three methods that you can track and see if you are growing your sales in every way that you can.
Ask most product entrepreneurs what their goals are for their business, and most of them will talk about growing their sales.
When asked for more details, they usually say that they want to get more customers. In other words, they want more people visiting their website, to increase their Instagram followers or see an uplift in orders from their other sales channels.
But did you know that many people are focused primarily on only one method of growing their sales (getting more customers), and overlooking two others that can make a significant difference to the profitability of their business?
As I mentioned in the introduction, this method is the one that most companies think about when they look to grow sales.
It is what they are aiming their social media efforts at, or spending money on advertising to achieve.
Getting a steady stream of new traffic onto your site or in through your doors should be a key priority, however, arguably, you should be more focused on your conversion rate.
The reason for this is that if you can improve your conversion rate, your sales will grow without the need for more followers, or the need to spend money on advertising.
Your conversion rate is calculated by taking the number of sales you have in a certain period (e.g. the last week or last month) and dividing it by the number of visitors that you had.
For example: If you sold two items in a week and had 100 visitors, you had a 2% conversion rate (2/100, expressed as a percentage).
This is something that you can calculate easily for a website, or relatively easily for a brick and mortar store.
In a physical shop, you need to keep a simple tally chart of the number of people who come into the shop each day (or use a clicker counter) and compare that to the number of sales you had in the same period.
The typical conversion rate for an e-commerce site is around 2%. A physical space will be much higher, with anywhere from 25 – 50%.
However, you should be comparing yourself not to others, but to what your current conversion rate is. If you can improve that, your sales will increase as you make better use of your existing visitors.
Any time and effort that you spend on improving your online or instore conversion rate will pay big dividends when it comes to growing your business as it allows you to get more new customers from the people who are already interested and visiting you rather than on spending money and effort to acquire new people.
Check the quality of your photography
Check how compelling your product descriptions are. Are you painting a picture for your customers of how great they are?
Do you have an about page that explains who you are and why the business is important to you?
Conversion rates in physical spaces are often about the customer service you are offering to your customers. Is each customer being greeted appropriately?
Are your best selling items placed in a prominent place so that customers can easily see them?
Is your store layout clear and easy for a customer to follow?
Keep tweaking and refining until you see the conversion rate improving.
Instead of focusing on getting more new customers, another way to drive sales that are often overlooked is measuring and increasing the ATV or average transaction value.
Calculate this by taking the total sales value of your orders and dividing it by the number of orders that were placed:
E.g. Your sales were £300 across 5 orders.
Your average transaction value (ATV) is £300/5 = £60.
If you can increase the amount spent by each customer to £66, your sales will increase by 10% without the need to get any more customers than you already have.
Monitoring your ATV on a weekly or monthly basis will help you track how you are moving this number forward.
Changing the mix of your higher price items vs lower price items. If you are mostly selling lower price items, can you promote more of your higher priced items in your marketing and social media to encourage customers to buy those instead?
Bundles – increasing your number of gift sets/putting together products into bundles at a small discount. (e.g. total price is £35, you offer it at £32). Naturally, this increases the average amount of money spent by each customer.
Suggesting additional items – you often see this online under the “You may also like” feature, or in a shop, these will be the till-point add-on purchases.
Changing your free shipping threshold. If you know that your average customer spends £45 on average, try offering free shipping over £50. It may encourage that extra purchase to push them over the limit.
As with your conversion rate, keep trying new ways to boost your average transaction value, and check it each month to see how you are progressing.
The final approach to growing your sales is to get your existing customers to buy more often.
A lot of this method is about how you nurture your customers to keep them engaged.
Are you reaching out to people who have bought from you previously to see how they felt about your products? Are you encouraging them to buy again or to take a look at your new products?
You have a much higher chance of converting a previous customer than converting someone who is coming across your brand for the first time.
Ask yourself, what are you doing to reach out and ask for that next sale? This is where email marketing is critical. Are you tagging customers when they purchase so that you can target them with a follow-up?
Also, do you know who your VIP/most frequent customers are? These are the most important group of customers you have. Do you have a unique loyalty scheme just for them? Ultimately, these are the people who pay your bills, so why not take 10 minutes to brainstorm how you can keep them happy?
Each method of growing your sales should be monitored regularly.
The most important part of increasing your sales is to keep an eye on all of these three elements every month. Keep trying and tweaking your offering until you see an improvement.
In the case of your repeat customers, keep trying different email marketing approaches to encourage repeat purchases. Keep monitoring who your VIPs are and working on ways to make them happy.
The most successful businesses do not just focus on getting more customers
Successful product businesses do not only measure how many new customers they are getting each month; they focus on growing sales through all three areas. If you do the same, you will not only increase your top line sales; your profits will improve too.
That’s because increasing your conversion rates, encouraging customers to spend more in each transaction and nurturing your existing customers are all much, much cheaper than spending the money to get brand new, cold leads through your doors.
Catherine offers an incredible 1:1 session to help you analyse your sales, identify and grow your profits. Connect with her on Instagram or contact her for a 1:1 session quoting “small and mighty”.
Catherine is the founder of Future Retail Consulting and is on a mission to help people create the life they want by growing successful product-based businesses. She helps them make money by developing a clear strategy focused on their product offering, their pricing, and their sales channels.
Catherine brings nearly twenty years of industry expertise and an inspiring passion for product businesses.