In today’s volatile economic landscape, Australian retail CEOs face unprecedented challenges. However, by focusing on key areas of improvement, retailers can beat the odds – and the competition – to win loyalty that sustains business through tough economic times.
These are the most critical loyalty-building strategies to focus on if you’re looking to boost your retail performance.
The Power of Add-On Sales
The key characteristic of an add-on sale (also known as an upsell or cross-sell) is that it’s additional to the original intended purchase and typically of lower value than the main item. It should logically connect to or enhance the primary purchase in some way, providing additional value to the customer while increasing the overall transaction value for the retailer.
Some relevant examples include complementary products, upgrades, extended warranties, maintenance plans, bundled items, subscription services, and gift wrapping.
However, our data shows that in more than 1 out of every 2 customer encounters, the opportunity for an add-on sale is lost. This represents significant profit walking out the door.
Between 70% and 80% of purchases are impulse buys.
This means that 4 in every 5 customers had no intention of making a purchase when they walked into your shop. And unless they’re already staunch loyal supporters of your brand, you probably won’t see them again. Once they leave, the opportunity to maximise your sales revenue leaves with them.
Add-on sales not only increase your average transaction value but also enhance customer satisfaction by providing a more complete solution. In tough financial times, maximising every sale becomes crucial. Train your staff to identify and suggest relevant add-ons, turning a simple purchase into a comprehensive package.
Stock Management: The Retail Holy Grail
While sales and margins often get the spotlight, effective stock management is equally crucial.
Overstocking ties up capital and leads to markdowns, while understocking results in lost sales.
Addon sales effectively manage your stock levels, moving products that may not always sell as well as the main product does (for example, phone cases vs. new phones). The value-add proposition in an out-of-stock situation could be “Can I order that for you?”
Not only does this increase the overall value of the sale, but it also creates a situation where the customer has to return to your store.
The convenience you suggested improves the value of the experience, generating moments that are worth telling friends about.
Implement robust stock management systems and train your team to use them effectively. Sales is just one part of this.
The Loyalty Value of Effective Selling
In challenging economic conditions, customer retention becomes even more critical. Effective selling, including successful add-ons, creates a positive customer experience that encourages repeat visits and word-of-mouth referrals.
Satisfied customers discuss their satisfaction and shopping experiences with other potential customers.
Addon sales that increase the pleasure in an experience always have the power to turn everyday customers into brand advocates. Of course, dissatisfied customers also discuss their experiences, so building rapport and encouraging customers to enhance their product experience is a great way to minimise dissatisfaction.
Creating a Sales-Focused Culture
Australian retail CEOs must focus on holistic improvement strategies to navigate challenging economic times. By emphasising addon sales, managing stock effectively, and fostering a sales-focused culture, you can significantly boost your retail performance.
From the CEO down, everyone in your organisation should be sales-focused.
Regular communication about sales performance, clear recruitment guidelines, and a strong induction process all contribute to building this culture.
Our research shows that clear performance standards, regular coaching and feedback, and setting reward systems for excellence can contribute to a more engaged, cohesive, and motivated team that deliver an average 20% higher sales and margin improvement.
The Importance of Training in Tough Times
When budgets are tight, training is often one of the first areas to be cut. However, this is a critical mistake.
Investing in your people is more important than ever in these tough economic times.
Training is a long-term investment that translates into staff retention, boosted morale, and happier customers. What you spend today to upskill your staff sees immediate return on investment in the following ways:
• Improved Conversion Rates
The average conversion rate in specialty retail is only about 15%. By improving your staff’s selling skills, you could potentially double this rate, significantly boosting your sales without increasing foot traffic.
• Increased Average Sale Value
Well-trained staff can increase your average sale by 10% or more through effective upselling and cross-selling techniques.
• Enhanced Product Knowledge
Confident staff who understand your products’ features and benefits are more likely to close sales and suggest relevant add-ons.
• Better Customer Service
Training improves not just selling skills but also customer service, leading to increased customer satisfaction and loyalty.
Remember, your people are your greatest asset – invest in them, and they’ll invest their efforts in your business’s success.
Get a complimentary 15-minute consult and 3 key insights about your business today.
Talk to Brian Walker at Retail Doctor Group now.
☎ +61 2 9460 2882
✉ businessfitness@retaildoctor.com.au
🌐 retaildoctor.com.au
For more business and loyalty strategies like these, join our upcoming State of the Nation webinar: How to Build High-Performance Retail
➡ 𝗗𝗼𝘄𝗻𝗹𝗼𝗮𝗱 𝗥𝗗𝗚’𝘀 𝗖𝗼𝗻𝘀𝘂𝗺𝗲𝗿 𝗟𝗼𝘆𝗮𝗹𝘁𝘆 𝗪𝗵𝗶𝘁𝗲𝗽𝗮𝗽𝗲𝗿
Discover more key drivers of loyalty now:
https://retaildoctor.com.au/rdg-white-paper/2024-consumer-loyalty-whitepaper/
➡ 𝗝𝗼𝗶𝗻 𝘁𝗵𝗲 𝗖𝗼𝗻𝘃𝗲𝗿𝘀𝗮𝘁𝗶𝗼𝗻
Have a comment on the content? We’d love your feedback… Be sure to let us know in the comments below what you think!
➡ 𝗜𝗻𝘃𝗶𝘁𝗲 𝗮 𝗙𝗿𝗶𝗲𝗻𝗱
Feel free to share, send via DM, or repost to your network for more peer-reviewed commentary.