Have you ever done the maths on your average spend per customer?
That is, how much your customers spend (on average) each time they buy from you. Simply take your total sales for any period (e.g. 12 months) and divide this by the total number of transactions or invoices for that period.
When you know your average transaction value, you’ll start to see the value of getting your customers to buy from you more frequently. If only 50% of your customers buy from you one more time per year, your sales will increase significantly.
Consider the example of a house maintenance business that does window cleaning, house washing, and gutter care. Imagine the business has 500 customers and turnover of $130,000. There are 460 invoices for the year so the average spend per transaction is $283. Some customers are vigilant about getting their house and windows washed and others leave it until the mould and leaves in the gutters are causing leaks.
If you are able to get one more transaction per customer per year, then sales will more than double (500 customers x $283 = additional turnover of $141,500). More importantly, you will be able to prevent an unmanageable flood of job requests after each rain storm!
Here are 10 ideas to increase transaction frequency:
- BAMFAM: Book A Meeting From A Meeting. When finishing a job, discuss the value of doing the job again and book it in then and there. Or tell them your business relies on referrals, and ask if they would refer you to a friend.
- Articulate the benefit of doing the additional work and the potential consequences if it’s not done.
- Follow up your customers if they don’t book in the next job when recommended. There are plenty of tools to automate this task.
- Network and attend events where your existing customers hang out.
- Create a service plan with monthly payments to lock in a commitment for repeat work.
- Offer a loyalty or frequent buyer programme.
- Surprise and delight your customers by sending them the occasional gift, e.g. especially if they refer you work.
- Widen your product offering and promote this to your customers.
- Visit, call, or send helpful content to your customers, including case studies.
- Talk to us at DLA about specific ways you can increase the transaction frequency in your business. Our business has been built on referrals.
Repeat customers become more loyal as you build your relationship with them. So, as long as you do a good job and send the right signals (that you have capacity for more work), they will buy more frequently and become your advocates. Advocates endorse what you do and give you referrals, and referrals are the cheapest way to grow.
“It’s not the customer’s job to know what they want.” – Steve Jobs
This information does not constitute financial or legal advice and is for general information purposes only. Please contact DLA Partners for specific advice relating to your particular circumstances.