Finn Custom
1 Bowl of Soup = $14,000: the Importance of Add on Sales
When I coach clients on improving their profits, I work on 5 specific areas- the most overlooked (and my favorite) is “increasing the average $ sale.”
You see this in action every time you dine out. Here’s how…
Restaurant owner Kevin has an average check at of $10 per person.
He gets 100 people in his restaurant, on average, each night.
So his current dinner revenue is 100 customers x $10 average ticket = $1000 per night.
Kevin wanted to increase his revenues as cheaply as possible.
(Another area to increase your profits is “Increasing Leads” which can cost a lot.). So without spending any money on advertising, he gathered his waitresses and got them to begin asking each customer “do you want a cup of our homemade soup?”. The cup of soup sold for $1.00. Kevin got excited. What would his revenue look like if every single person ordered soup? 100 customer x the new higher average counting the $1 soup is $11 = $1,100. $100 more per day, or $35,000 for the 350 days he’s open.
Wow. Now he knew that not all 100 customers would take him up on his offer for soup (sometimes the waitresses would forget to ask, or some people weren’t that hungry, and maybe a few had some kind of issue with soup) so he pessimistically estimated that only 25% would say yes. 25 of the 100 said YES, so their average $ sale was $11 which resulted in $25 more per night. Ho Hum, but that means $9,000 more year. Hmm. Not bad.
Many small business owners overlook this easy (and cheap) strategy. Here’s an industry that I would be hard pressed to advise “how to increase their average transaction”: kennel owners. Lancaster County Pennsylvania is known for small family run kennels that probably have the most humane treatment of puppies anywhere. Because these folks don’t run “puppy mills”, they have to maximize each of the small number of high quality dogs they sell. These folks use a service called Puppy2go, which will deliver the puppies to buyers out of the area. Decked out in a Lincoln Town care, these pooches are delivered in style to their new owners. The Puppy2go folks charge on average $220-depending on where they deliver. Puppy2go gives 5% commission back to kennel owners. Average kennel sells 20 puppies/month. So let’s say they only get ½ of these buyers to use the service. 10 Puppy2go deliveries at $400 average charge is $4000; kennel owner get 5% commission or $200 a month, $2400 a year. Not bad just for saying “do you want to drive 5 hours to come back and get your dog or do you want it delivered to your door in a limousine?” And they didn’t have to make soup.
2 fast examples. Now what if Kevin or the Kennel owner came up with 3…just 3 strategies that were easy and cheap like this? Do you see the extra revenue they could bring in a month/a year?
So look around your business for small ad-on’s you can suggest to your customers in a low pressure way and watch your revenue creep up.
About the Author
Coach Thom is a humble small business coach who specializes in revenue growth. He was recently awarded “2nd Runner Up:North American Coach of the Year”. After the ceremony he hockey checked the winner and let the air out of his tires.
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