With 2018 now in the rearview mirror, and Q1 of 2019 in full swing, the race to hit your store's ambitious revenue goals has begun. Having a strong first quarter across your organization positions you and your team to take calculated risks and amplify your early-year momentum.
While it’s tempting to experiment with the latest sales and marketing tactics and trends to increase your company’s revenue, successful and profitable organizations make the most of the tried-and-true principles to improve sales.
Though there is no secret formula for improving your sales overnight, here are a few time tested strategies to get the most from your stores and team and start the year strong out of the gate.
Serve, don’t sell
Customers prefer doing business with companies that implement a service-first sales approach: According to Lauren Freedman, president of the E-Tailing Group, “Stellar service should be non-negotiable and merchants shouldn't hide behind self-service tools and technology when it comes to knowing their products and taking care of their customers.” The less your customer feels sold, and the more they feel they are being helped, the more likely they are to do business at your store.
Employing overly aggressive sales tactics may help boost sales in the short term, but it almost always comes at the cost of diminished customer retention and poor customer experience. By placing too much emphasis on landing the sale, you can often cause the customer to feel unappreciated, which according to recent statistics, is one of the top reasons customers switch away from products and services.
Additionally, with more options to choose from than ever before, customers won’t think twice about taking their business (and wallet) to where they feel both valued and respected. In fact, after one negative experience, 51 percent of customers will never do business with that company again.
One of the easiest ways to incorporate a service-first sales mentality in your locations is by aiming to hire employees who are passionate and knowledgeable about the products and services you provide. Instead of a shoe recommendation coming off as too salesy, an authentic employee recommendation can work to build trust with your customers.
One retailer who does an excellent job of putting the customer first is direct-to-consumer brand Glossier. Forbes retail contributor Veronika Sonsev writes, “Everything from Glossier’s products to their marketing was essentially co-created with the customer.”
Empowering your store managers and sales reps to ask insightful questions, listen to the customer’s specific needs and make genuine recommendations are great ways to demonstrate that you put the customer first. Investing in a service-first sales approach across your stores sets your locations up for years of success.
Angela Ahrendts, senior vice president of retail at Apple astutely once shared, “I don’t want to be sold to when I walk into a store. I want to be welcomed.”
Double down on cross-selling and upselling
One of the most effective ways to increase sales at your locations is emphasizing cross-selling and upselling throughout your sales process.
Cross-selling is a sales technique to get a customer to purchase additional and related products or accessories before and during a sale. Barnes and Noble does an excellent job at cross-selling with their yearly membership Barnes and Noble card.
The card not only unlocks discounts when you purchase books from their store, but many times gives exclusive access to local talks and events from notable authors. For those who enjoy reading, the yearly membership card can be a great way to encourage repeat customers to shop at the store, aims to add additional value to the original purchase.
To effectively cross-sell your customers, it’s important that the recommendations are relevant to the original product being purchased and add value to your customers.
Offering a phone case to go along with a newly purchased phone is clearly relevant and helpful, but suggesting your customers buy a brand new TV after buying a new phone will likely miss the mark.
While upselling is a more straightforward sales technique of getting your customer to purchase a bigger-ticket item, it can also be a great way to generate an uptick in sales.
Bonobos is known for their natural approach to upselling their higher-quality items after their customers discover a specific style and fit of clothing they like through their in-store fitting and style consultation. The key to effective upselling, is to demonstrate you are listening to your customer's needs rather than just trying to get them to purchase a more expensive product.
Encourage your employees to learn a handful of products that compliment other larger purchases your customers might choose so that they can cross-sell as often as possible when the situation is right. Additionally, consider which of your products make the most sense to upsell where a small increase in price may be justified by the added value of the higher priced item.
To achieve company wide buy-in, consider implementing an organizational competition to see which stores can increase their upsell and cross selling percentages the most.
Leverage the anchor effect
How you display the pricing of your products throughout your locations and online can have a significant impact on the overall perception of your products value, and brand reputation as a whole.
There’s actually a term for this: The “anchor effect” is a psychological principle that asserts that we have a tendency to overly rely on the first piece of information we are offered when we make a decision. As you might suspect, the anchor effect heavily affects how consumers think about pricing.
As J. C. Penney unfortunately learned, the anchor effect in retail is very real. Soon after they made the decision to move from their signature coupon offerings to “everyday low prices”, they saw a significant decrease in sales.
Experimenting with various in-store sales and showcasing higher-priced options at the front of your stores can help you determine the best way to leverage the anchor effect across your locations. Given that the anchor effect affects the purchase decisions of your average customer, experimenting with your pricing and store design can be a very profitable decision.
Use the 80/20 rule to guide decisions
Also known as the Pareto principle, the 80/20 rule is a common heuristic used to help make better decisions both personally and professionally. First used used in the field of macroeconomics to describe the distribution of wealth in the early 20th century, the concept has since been applied and tested in a variety of industries and fields of study. Joseph Juran, a prominent figure in the study of management techniques and principles, expanded the 80-20 rule to apply to business production methods.
In the world of retail, the 80/20 rule refers to the idea that 80 percent of your profits will come from 20 percent of your customers.
But the rule can be used to gain even further valuable insight into the performance of your products and stores.
If 80 percent percent of your sales came from 20 percent of your products, how can you improve your best selling products?
If 80 percent of your customers are only interested in 20 percent of your products, how can you more effectively sell to those who are likely to be a buyer?
If 80 percent of your store space is used on only 20 percent of your products, are you making the most of what your store is displaying?
While the rule of thumb is far from perfect, and doesn’t apply to all business metrics and performance, it is helpful when used as a guide to determine where you can double down on your efforts.
As you continue to plan for the year ahead, use the 80/20 rule to help you make better business decisions. Experiment with the 80/20 principle when launching your first sale of Q1 or during the remodeling of your store's displays.
Upgrade your loyalty program
Another effective way to improve store sales is by investing in your loyalty program. Working to encourage current customers to spend more is often significantly cheaper than acquiring new customers. According to the Harvard Business Review, acquiring new customers is anywhere from five to 25 times more expensive than retaining new ones, depending on your industry.
Further, loyalty programs can often help build trust with your customers, which can ultimately lead to more purchases: After building a relationship, customer spend grows alongside trust. Eventually, loyal customers spend 67 percent more than new ones.
Why are loyalty programs so often successful? According to the “endowed progress” effect, when people are provided with artificial advancement towards a goal, they display greater persistence in achieving the final outcome. There’s a reason why so many customers will go out of their way to make five purchases to unlock a free item with their next purchase.
More promising research from the Nielsen Institute on loyalty programs concluded that when done well, loyalty programs can help drive more frequent visits and bigger purchases. More than seven in 10 respondents agreed that if all other factors were equal, they’d buy from a retailer with a loyalty program over one without.
Loyalty programs can not only drive sales, but they also help you build trust with your customers long-term, which can lead to increased customer retention. And with the latest research from Frederick Reichheld of Bain & Company showing that an increase retention rate of just 5 percent can increase profits by 25 percent to 95 percent, a well-executed loyalty program could be just what you need to hit your sales goals.
Ultimately, improving your locations sales begins with investing in truly understanding your customers and listening to the votes they cast with their feet.