Birding Business April 2015: $5 Per Transaction

$5 Per Transaction

BY HANK WEBER | Contributing Editor

“YOU KNOW” SAID NANCY, my new part time helper, “if we could add just $5.00 to every sale it would amount to a lot of money by the end of the year.”
Nancy is smart, and in this case very perceptive.  $5.00 extra on every sale would translate into more than ten thousand dollars in a year.  She got me thinking.  What could I do to increase the value of each transaction?  Would it even be possible to increase every single sale?  Probably not, but maybe I could increase the total amount on some transactions.  That would be a way to increase total revenue even without attracting any new customers.
After some research, we identified several potential ways to increase the average sale amount: 

(a)  One classic retail approach is to promote impulse items near checkout.  Maybe one in every four or five customers might give in to their impulse.   
(b)  Another approach is to stress accessories with every feeder or pole system you sell.  
(c)  Or you could just add one additional item to every transaction by asking simple questions. 
(d)  A price increase, even a small one, would impact revenues.  
Or, best of all, try all of these techniques.

A) Impulse Items

Visit any major chain store and you will find a variety of impulse items located near every checkout station.  It is the classic retail approach to increasing the value of a sale.  While waiting to complete the checkout process customers scan the area and notice an item they just have to buy.  The impulse item often has no relation to the store’s primary business.  You might find candy bars near the register in a hardware store.  Candy is also a common impulse item at checkout in a grocery store but you may also find an array of paperback books or greeting cards.   You can pick up lip balm at clothing stores.

Impulse items seem to have similar characteristics.  First, they are relatively low in price, so price isn’t a major obstacle.  In fact the price is often slightly more expensive than if purchased elsewhere.  Customers consider the item to be minor and not worth a special trip to purchase it.   The item appeals to all ages and both sexes.  They often appeal to strong human impulses:  a sweet tooth, the desire to look good, or to feel positive about oneself.

Potential impulse products for a bird and nature store might include organic chocolate, shade grown coffee, natural lip balm and insect repellent, playing cards, eco-friendly items.  I find displaying a new field guide near checkout spurs sales as customers flip through it while waiting.

B) Add Accessories
Every time you sell a feeder you also have the opportunity to add an accessory, such as a tray, to the sale.  The customer is already in a buying mood.  There is no reason to be to be pushy or aggressive.  Merely inform your customer that a tray can be added to the bottom of the feeder.  Then explain the benefits of a tray – it prevents seed and shells from falling to the ground and provides a flat feeding surface for ground feeding birds such as cardinals.   Adding one accessory increases the dollar value of that sale.

Whenever you sell a feeder always ask if the customer has seed to fill it.  You will be surprised how many first time buyers don’t think about seed.  Do they need a hook to hang it from a branch?  Pose these questions in a way to be helpful; you only want to be sure the customer has everything needed to enjoy their new feeder.  And at the same time you will be increasing the value of that sale.

Ask about accessories for other product lines as well.   If you are selling a pole system, does the customer need a squirrel baffle or a way to make it easier to get the pole into the ground?   Do they need nectar for the new hummingbird feeder?  Or an ant guard?   Do they need a bracket to mount the new nesting box?  A cleaning brush for a bird bath?  All you need to do is ask. 

Don’t expect to sell an accessory with every sale.  However, if you never ask you won’t sell any at all.

C)  One Other Thing
Sales training professionals always remark that new sales people are often reluctant to ask for the order.  They don’t want to seem too pushy or are afraid the customer will say “no”.   Never be afraid to ask.   The way you phrase your question can convert it from being overly aggressive and pushy to being helpful.   It is easy.  As you ring up a transaction, simply ask “While you are here, do you need any seed today?  Save another trip.”  Or “How is your supply of suet cakes?”  Rather than becoming upset, customers actually appreciate the fact that you ask.  But don’t overdo it or you can be seen as pushy.

D)  Very Minor Price Increase
Obviously if you raised the price of everything in the store, the value of your average transaction would go up.  However, you may not have as many transactions. Pricing is tricky.

You probably adhere to some version of the classic retail pricing strategy that keeps your posted retail prices just below the even dollar amount.  An item will be priced at $19.95, not $20.00.  Although your customer really knows the price is almost $20.00, psychologically it seems lower.  I’m not suggesting that you increase your prices to $21.00 or $22.00.  Sure, you would have added revenue.  But, if you lose just one sale, the small extra revenue you get on other sales may not be worth it.

However if you increased the price just four cents, from $19.95 to $19.99, you would still be below the magic $20.00 threshold.   Most customers would not even notice.

Why bother?  It is only four cents.  But little things add up.  Consider an additional four cents revenue on merchandise that you sell in larger quantities, such as bags of seeds or cakes of suet.  Think of four cents extra per bag times a hundreds of bags times twelve months in a year.  The pennies add up.  And you are still below the psychological barrier.

Nancy’s suggestion to add $5.00 to every sales transaction is a laudable goal.  I don’t know if you can actually reach that goal, but if you don’t try you can be sure your average sale amount will stay fairly constant.  In that case, the only way to increase revenue is to increase the number of transactions.  That means attracting new customers which requires spending on costly advertising and marketing. 

Why not try one of these techniques to increase your average sale amount?  If you can achieve that and also add new customers, your overall sales revenues will grow nicely.