Marketing has one goal - increase revenue. There are many routes there, but in the end it all boils down to increasing revenue. Many small businesses make the mistake of thinking that marketing is all about finding new customers. This is, and should be an important part of your marketing strategy. However, if this is the only focus of your marketing, you're missing a heaping pile of money right in front of you.
There are three ways to increase revenue:
- Increase the number of your customers
- Increase the frequency that your customers buy from you
- Increase the average amount that your customers spend at each transaction
Let's run some numbers. Let's say you own a clothing boutique and you have 200 customers. An average customer shops with you once a month, and your average transaction is $100. That comes out to $240,000 in revenue per year.
Here's how to multiply your revenue:
Increase your customer base by 10% (to 220): $264,000 in revenue (10 % increase)
+Increase your average transaction amount 10% (to $110): $290,400 (21% increase)
+Increase transaction frequency to 14 times a year (+16%): $338,800 (41% increase)
With a marketing strategy designed to make small increases in all three ways of building revenue, you can multiply your results. For most small businesses gaining a 10% increase in customers every year is a reasonable target. Look for ways that you can increase customer purchasing frequency and average transaction price.
Let's take our fictitious clothing boutique again. What are a few tactics might I use to increase purchase frequency?
- Hold special sales for regular customers (might also increase average transaction amount).
- Schedule special events: in store wine tastings, clean out your closet seminars, shop with a friend day
- Keep a mailing list and send regular flyers to customers announcing new styles. I recommend email AND snail mail for marketing.
- When customers buy from you, put a coupon in the bag that is good for a short time period starting a week from that day. They have to come back in a week or two to get the discount.
Now, what are a few tactics I might use to increase the average transaction value:
- Place easy to purchase accessories near the cash register
- Train employees to help customers put together matching pieces with accessories. Train them to ask questions like, "Do you have a purse to match that?"
- Use coupons and sales to encourage larger purchases. Coupons might be 15% off all purchases over a certain amount.
- Look at price points and consider adding slightly more expensive merchandise.
These are just a few things - that cost nothing or next to nothing. The number of ways you can use marketing is limited only by your creativity.