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An important tactic for increasing revenue is improving your average basket spend, also known as average transaction value (ATV).
Making the most of every customer that comes into your store can have a profound impact on your bottom line. If each person spent 15% more, then your sales would increase by 15% with no additional footfall needed.
What makes up the average transaction value?
Your ATV can be calculated as the units per transaction (UPT) multiplied by your average selling price (ASP). So if you sell three items per transaction on average, and your average selling price is £10, your ATV will be £30 (three multiplied by 10).
Units per transaction is an average of the number of items purchased in each sale, so if you sold 40 items across five transactions, your units per transaction would be eight (40 divided by five).
One of the keys to driving units per transaction is excellent customer service. Proactively making suggestions to customers about ways that they can pair food items is a simple way to drive your UPT. Do you have recipe suggestions that introduce new and exciting products to customers, and also encourage them to purchase more items?
Store display has a role to play in growing UPT. For example, putting crackers next to cheese on a display encourages additional purchases. If you are offering in-store samples, try putting multiple items together so that the customer is encouraged to buy not just the main item but the accompaniments as well.
Till points and queue lines are also important when it comes to building UPT because this is where you can maximise any last minute pickups. Consider alternating what is on your till point according to the season and try to find the item that the customer is most likely to pick up. Even if each customer buys one extra item that is just £1, over time this incremental improvement will have a major impact on your bottom line.
The other key element that has a major impact on your ATV is the average selling price or ASP. For example, if you generated £500 across five transactions that included 10 items then your average selling price would be £50 (£500 divided by 10).
Customer service again comes into play. Higher priced items often will require more input in order to sell them. For example, fine wine may need an explanation from a knowledgeable staff member to help with the sale. Ensure that your staff are fully trained and confident with selling higher priced items.
Think also about the information that you have in the shop to allow the customer the confidence to buy some of the more expensive items by themselves. Do they have enough information about the features and benefits of those products? Are there signs, or other ways you could convey product information in store to encourage the purchase?
Bundling products together is a powerful way to grow your ATV. For example, putting together a lunch hamper that pulls together multiple items and is easily purchased by the customer.
When deciding on the types of bundles you want to offer, it is important to start with the customer in mind. Focusing on this type of offer from a place of service ensures that they work well for your customers and make their lives easier. Bundles work well for gifting – people are often time-poor, so if you’ve pulled together a selection of items that they can easily gift then that will be highly appreciated.
Bundles can be linked to money off, for example offering all of the items needed to make up a certain recipe with a 10% discount off the cost of the items purchased separately. However, bundle offers don’t always have to be based around discounts – especially when they are about ease of shopping for the customer.
Other elements that impact ATV
Returning customers spend more than new, and people who shop with you across multiple channels, for example your website and your store, will also spend more. Part of your drive to increase your average transaction value should focus on increasing the loyalty and the number of customers who come back and buy from you more frequently. Do you have a loyalty program or an email newsletter to encourage repeat purchases?
You can also trial promotions that target ATV growth, such as a gift with purchase over a certain amount, discounts for buying multiple items, free shipping in your online store, or a “bounceback” voucher where spending over a certain amount means a voucher to spend in store next time you visit. It’s worth trying these to see what helps push the ATV, but don’t feel like promotions are the only way to grow this number.
Once you’ve made the decision to grow your ATV, decide where to start and then monitor the ATV, UPT and ASP on a monthly basis. It can take time to see progress, but keep experimenting and over time your business will reap the rewards.