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Hoping for a Rising Average?

Boiling The Frog

Boiling The Frog,
originally uploaded by purpleslog.

Still Comfortable?

Like frogs in a pan of water with the temperature rising, our comfort with increasing sales revenue from an increase in average transaction dollars is not feeling so comfortable in recent years. Here’s why:

1. We have been selling larger plants. The transition from annuals in cell packs to flats to 4″, from quart to gallon and then 8″ perennials, and from 1 gal. to 2 gal. and then 3 gal. shrubs and grasses has provided our greatest gains in average transaction. But now that we have already been selling larger plants is there room to continue to increase sales that way?
2. Wholesale costs have increased. The result of slowly rising wholesale costs multiplied with a retail markup does increase margin dollars. At the same time the expenses those margin dollars must meet are also rising. Operating expenses have risen slowly; Wages & Wage Benefits not so slowly.

Despite our best efforts to improve merchandising and customer service our ability to generate additional dollars from each customer, and the resulting increase of products in their shopping carts and dollars at the register has not produced the kind of results many of you hoped for. As good as we may have become (individually) when we subtract transaction counts the results at the bottom line have been fairly dismal – unless low-hanging fruit was available in the form of improvements that could be made to your business. Generally the terrible can improve faster and less expensively than the terrific.

The Big Shift from Beauty to Utility

Consumers have been buying beauty, now they are buying utility. Will they find both in the same products? That is our opportunity so we had better help them with it. The economy both inside and outside of the garden industry has been inspired by the pursuit of pretty things. Bring on challenging financial times and the pursuit changes directions to practical things, or perceived practical things. While our products do serve practical purposes, (the most practical of all being improved psychology), just about everyone in our industry has been marketing pretty for pretty’s sake. Can you shift your gears and change course to the new direction fast enough?

Spring is our Allie

The battle for discretionary dollars this spring may not be so difficult with spring fever on our side. The greater challenge may occur afterward, when interest wanes down to the “normal” levels of previous years of we’re fortunate. A word to the wise – prepare a plan to extract the most benefit possible from spring.

Hand to Hand Combat

Marketing is a contact sport. Personal selling is a part of marketing. The minor role of the salesperson this spring is to help each customer they encounter to translate and understand that our products are more than just something to own and enjoy, they are something they will use and enjoy the benefit of. This is the above average effort that can produce average transactions that are above average.

Take the selling role where it needs to go.

The major role of the salesperson is to take casual customer situations and develop critical client relationships where loyalty naturally emerges as the customer understands that your staff is looking out for them. When customer transactions decline it means some of them are choosing not to come back. I bet those are the ones we have not invested the time and effort to get to know in a meaningful way.

This is all easier said than accomplished – but there is a way.

Take a serious look at the Client Advantage program, which provides a strategy for developing and refining a client base. This is the resource you need to move beyond the bigger and better size, and price increase based increase of your average sale. Image, (or even better do the math) what would happen if you could increase your average transaction by $10, $15, or even $20 this spring. And think of the lasting benefit if you can do that.

2 Responses

  1. This is a powerful article that I think sums up our issues in a straight-forward, no-holds-barred fashion. Connecting, and I mean truly connecting with a customer, in a way that is meaningful to them happens occasionally by accident. What would happen if we actually made a systematic effort to connect with every customer before we ever took a cent from them? It isn’t easy work (that’s why few actually do it) but I believe it can pay tremendous dividends for both ourselves and our customers.

  2. […] but for most companies is a low bar to reach for.  A February 15, 2009 blog posting titled ‘Hoping for a Rising Average’ shows that sales increases caused by selling larger plants, and by applying a markup to increased […]

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