Increase average spend

The Easiest Way To Increase Average Spend

Average spend is a key metric for small businesses and one of the key levers for growing a business.

My business is all about growing my clients’ businesses.

Growing their turnover and their profit.

I’m sure you’re aware that there are only 4 ways to grow your business.

  1. Increase the number of customers
  2. Increase the number of transactions by getting your customers to buy more often
  3. Increasing the average spend – getting your customers to increase their transaction values
  4. Increasing your customer lifetime – keeping your customers loyal and buying from you for longer

Sorry but that’s all there is.

Marketers seem to always focus on the winning of new customers but each of the four are equally good ways to grow your business.

Today I want to think about increasing the average spend.

One of the classic ways of doing this is bundling.

Bundling is when you package a number of your products together so instead of selling one item you’re selling 2 or 3.

Normally you will sell the bundle cheaper than you would if selling each one individually.

We’re all very used to this happening especially in the grocery market.

Classic examples are the 4 pack of Heinz beans or the mega sack of crisps.

Or even the simpler 4 for 3 offers.

So while the gross margin may fall in percentage terms, the actual cash generated is increased.

Bundling certainly isn’t restricted to grocery.

A classic example these days must be the telecoms companies.

No longer are they happy with just providing your phone instead they shoot for the “Quadplay”.

This is your landline (remember those), mobile, broadband and subscription TV.

The more elements you buy, the more advantageous the pricing and of course you also get the increased convenience.

You’ve only got to deal with one supplier, everything comes on one bill and works harmoniously together.

Well that’s the theory anyway.

Another example you see is with white goods manufacturers who will offer a bundle to new kitchen buyers.

This can include the cooker, dishwasher, washing machine and fridge.

Again the price for all four is significantly less than if you bought all four components individually.

Bundling applies to services businesses just as well as retailers.

Accountants are a good example of this.

You’ll often see accountants offering say three different services bundles at different price points.

There’ll be a basic bundle offering just the basic services and mid-range and premium bundles offering increasing numbers of services.

So the question is how can you apply this to your business and drive up your average spend?

If you need any help with the process, just give me a shout on, call 01483 200387.