Many businesses have implemented some type of tracking or software device into their facility to learn more about their customers and many of those businesses have also installed software to analyze the data that they’re collecting but many of those same businesses don’t know how to take that next step to actually increase revenue. Running Promotions & Upselling When management receives facility information and are able to see that traffic is steady and is pairing fairly equally with the number of sales they’re receiving but they’re still not coming away with the revenue that they’re looking for they can turn to two things to help out, promotions and upselling. By increasing either of these factors a store could see a significant change in revenue. Before changing either of these factors management will want to take a look at their current numbers and figure out their average revenue. To do this they can follow this simple equation:
Traffic x Conversion Ratio x Average Sale = Average Revenue
For this example, we’ll say on an average week the store traffic is 1,000 customers, conversion ratio 30% and the average sale per customer is $50. If we enter this information into the above equation it will look like the following:
1,000 x 30% x $50 = $15,000
To demonstrate how this would work management could change one of these factors, to start we’ll look at upselling or running a promotion which would change the conversion ratio. Converting an existing sale to a slightly higher purchase can be easy if done correctly. This can mean running a promotion or management can teach staff how to upsell to customers by seeming helpful rather than pushy. The increased sale might be minor per individual sale but over the course of the day or the week it will add up. We can see how the revenue might increase by making a small change to our equation above and increasing the average sale to $60 this time and keeping the rest of the equation constant:
1,000 x 30% x $60 = $18,000
By increasing the average sale an extra $10 we were able to increase the weekly revenue by $3,000. Target Existing Customers Now let’s look at existing customers, they have already visited with you previously and like what you have to offer but haven’t been in the store for a while. You want to make sure you retain existing customers, to do so you will need to create a marketing strategy to keep them coming back. In Jerry Osteryoung’s recent article, “Expand sales by going to existing customers first” he stated, “…focusing on selling to your existing customers will produce sizeable sales increases.” To see these sizeable increases we will change another factor in our equation, this time it will be the traffic. We will up our weekly traffic by an additional 250 people representing those repeat customers that we drove in with our marketing campaign.
1,250 x 30% x $50 = $18,750
By increasing our traffic by 250 a week we can see that we have increased our revenue for the week by nearly $4,000. Now we can combine our efforts and run a marketing campaign to target our existing customers while also teaching staff to upsell and ultimately increase revenue by an extra $7,500 a week.
1,250 x 30% x $60 = $22,500
Now imagine the possibilities if you implement these strategies AND promote visitors to make a purchase increasing your conversion rate too! Good information and data is key to beginning your market plan. Each facilities goals and plans may be different but by understanding your customers and store traffic, management is able to easily and quickly increase their revenue stream by making just a few minor changes to their daily practices.
See how other facilities are using people counting and analytic data to help their business grow and increase revenue in these other articles:
Predicting Retail Traffic Patterns A Complete Location-Based Interior Analytics Package for Retailers Are Restaurants Attracting Millennials By Utilizing Technology?