Finding Value
For better or worse, I am somewhat of a regular at the local casino. I don’t have TOO many vices, and I’m always extremely responsible. I have a pre-set limit of how much I’ll allow myself to spend per visit and have only exceeded it on a handful of special occasions. Many people I know spend much more on bar tabs or shopping sprees in a day than I spend in two weeks at the casino, and none of them will have a chance at striking it rich…but that’s enough of me trying to justify a bad habit of mine.
Each time go, I’m struck by the “favouritism” shown to the high rollers who saunter in only three or four times a year. I may know the dealers by name, given how often I’m there, but I’m not spending enough for the casino to see any value in enticing me to return. It’s a business, after all. And like any business, they need to pay close attention to the serious customers and encourage them to come back. Free meals and the odd free night will do just that.
What small business owners can do to encourage customers to spend more each visit
While regular customers are a good sign for your business and are absolutely worth your time to cultivate, at the end of the day you’re running a business. You need money to keep your doors open, and the more money somebody spends at your place of business, the more valuable they are to your success.
With that in mind, here are a few suggestions to consider in order to increase customer spending per visit:
1. Build Loyalty (You can read other entries on how to gain loyal followers, but our focus with this entry is how to increase customer spending per visit.)
You’ve no doubt heard us bang the drum on the importance of loyalty. That’s no coincidence.
In today’s world of retail e-commerce competition is higher than ever. Interested shoppers can search online for what they’re after to find the best price and free shipping. You want them to keep coming back to YOU. You’ve already earned their trust. Now you have to build loyalty. Consider having them try out a new premium, high-priced item. Let them know they are part of an elite “membership” with exclusive access. Not only will this make them feel special and a valued part of your business (which they are), you will also establish the perfect control group to test this new product or service you’re about to debut. It’s also worth keeping in mind that loyal customers are far less sensitive to higher prices than infrequent or completely new customers.
2. Package Your Goods
“Would you like fries with that?” represents the quintessential package deal. Burger purveyors realized long ago the value of bundling their goods, which is why you would be hard pressed to find a fast food chain that didn’t offer some semblance of a value meal. Burger, fries and a drink may not be what you’re selling, but don’t overlook this tried-and-true mechanism of increasing your customer’s spending.
Some packages just make sense, plain and simple. If your business is in the hiking/backpacking trade, you probably sell your fair share of sleeping bags and tents. You also probably sell a considerable number of backpacks, water purifiers and hiking poles. Many of your customers are probably purchasing an item or two for a backpacking trip. Why not combine them and offer a slight discount on a bundle? If your customer buys a winter-rated sleeping bag, why not offer to throw in a set of hiking poles for 25% off? They may be in the market for the poles as well, and a small discount certainly won’t break your bank.
Another tactic to consider when it comes to bundling is to offer deep discounts on items that you’re struggling to move off the shelf. If you have an overflow of mosquito netting that you just can’t seem to offload, try offering it for 75% off with any purchase over a certain dollar amount. You may not be making as much (or any) money off the netting, but at least you’re reducing your inventory and making shelf space for something that will (hopefully) be a stronger seller.
3. Raise Prices
This is often seen as tremendously scary territory for small business owners – after all, consumers can be notoriously sensitive to increased prices and rightly so. But instead of viewing it as simply raising prices without cause, try and think about what kind of value and results you are providing, in addition to your goods and services. It may be wise to try and match your prices to be in line or under what your competition is offering. After all, don’t you feel your offerings are superior to theirs?
Test the waters with small increases – something as little as one to five percent on a basic or entry level item that you know to be popular. Give it a few months, then compare this data to your previous, lower price. Were customers disgruntled by the increase in price? Odds are, they were not, and with measurable data you’ll be able to see if the increase was worth it. Experiment with different prices for a reasonable amount of time and you’ll find that the market will dictate the pricing sweet spot for you.
Happy and comfortable customers spend more. Use that to your advantage.
In addition to some of the more straightforward tactics mentioned above,
there are a few seemingly non-traditional ones that are worth mentioning:
4. Follow Your Nose
If you run a bakery, cologne shop, or potpourri emporium, you can skip right over this – but for other small business owners, do not overlook the importance of a fragrant storefront. Studies by marketing services company DMX and the Smell and Taste Research Foundation have both shown that customers are not only more likely to make purchases in a pleasant-smelling environment, but are also willing to spend more money for the same item. The most popular fragrances to open up the ol’ wallet? Coconuts, flowers, and tropical gardens.
5. Let The Sunshine In
People tend to be happier in sunshine, and when people are in a better mood, they tend to spend more. A study conducted by the University of Alberta found strong empirical evidence that customers who shopped in an area with more natural light were more likely to make a purchase and spent more per visit – in some cases, as much as 56% more. Take advantage of sunny days and consider splurging on one-time upgrades such as skylights or additional windows.
6. Chill Out
According to a study conducted by Virginia and Houston universities, people spend less when they are hot. Whether we realize it or not, when we’re warmer (due to stress or weather), we are perceptibly less likely to make complex decisions (such as decide if something is a good deal or not) than we are when we’re cooler and generally more comfortable. So, when the hotter months roll around, don’t be a miser and try to skimp on the AC. Your higher utility bill may very well be offset by increased spending by your cool customers.
You can’t expect to convert all of your patrons into “high rollers”. Consider these tips as ways to turn somebody who typically purchases three items for $20 into someone who will regularly purchase four or five items for $25 or $30. It may not seem like much at the time, but it all adds up and more importantly, adds to your bottom line.
Here is one business we’ve worked with to go mobile. Watch this video about Denim Industries:
Interested in getting your own retail mobile app? Click here for a free demo.