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How to increase the average value of a sale

Article written by Jannie Rossouw, Head: Sanlam Business Market

The average value per sale is one of the drivers that impacts turnover.

For starters, we need to know what the average value per sale is for our business, as well as every salesperson (if we have salespeople in service).

The calculation is straightforward:

For the business: Total sales for any given period (day/week/month/year) divided by the number of sales transactions for the chosen period of time.

For an individual salesperson: Total sales for any given period (day/week/month/year) for the individual divided by the number of sales transactions for the chosen period of time.

With these figures in hand we can start to benchmark our performance and also make plans to increase this amount and set targets.

Here are five options to consider for improving the average value per sale in your business:

1. Teach your point-of-sale and sales staff to upsell

You might choose to have ‘standard upsell’ products and services. In this way it becomes easier for your staff to remember what to offer clients. Think of McDonalds, who will always ask you if you would like to upsize your meal.

2. Advise clients to make an add-on purchase

This is a clever and value-added way to increase the value per sale. The easiest way to facilitate this is to use a checklist to help clients to make sure they have all the parts or elements to effectively use a product or service. Think about clients who have a DIY project to install a freshwater tank at their home. Apart from buying the tank, they might need pavers to secure the surface, a leave catcher, a first flush diverter, downpipe elbows, an outlet tap, fittings to decrease the outlet tap to latch on to a hosepipe, seal tape, et cetera. By doing this you are providing the clients with useful advice, saving them time and potential money by helping them to purchase the right components to implement their projects.

3. Package a deal

Take the example above. By offering a complete freshwater tank installation kit you can discount the package (receive a smaller margin, but increase the quantum of the sales value every time). It provides a client with the convenience of a turn-key solution at a discounted price.

4. Sell post sale value

Example 1: motor vehicle: Offer the client an extended warranty, or service plan, or even short-term insurance when they  purchase a vehicle.

Example 2: home maintenance: Offer the client a service contract to maintain a newly-built house (roof cleaning, painting, wood maintenance, etc.) when they take occupancy of their home.

5. Pricing strategy

We do not necessarily have to offer the cheapest product or service. Re-evaluate your current pricing strategy and look for ways to increase the perceived value you can add when increasing your prices. Remember, clients do not only purchase on price, but also on convenience, brand promise, ego value, familiarity of the product/service and package reusability, to mention a few. Also compare your prices to those of your competition.

Maybe this statement of Zig Ziglar (American author, salesman and motivational speaker) holds true: “Stop selling. Start helping.”

To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straight forward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success

Go to www.sanlamgameplan.co.za to download your free copy.

Sanlam is a proud Partner of the NSBC.