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  • How Sales Information Can Increase Profits

    You know you need to increase sales.
    You need money to buy new inventory.
    To pay your staff. Or invest in new equipment.

    How much more money do you want to make?
    Let’s pull a number out of a hat.
    Let’s say you want to increase your sales by $50,000.

    How are you going to do that?

    Imagine you’ve decided to run a marathon
    You know you need to train and practice running before you can run an entire marathon. You go get some new running shoes. And go for a run. You run until you’re tired, then head home. The next day you do it again.

    What’s wrong with this picture?

    You aren’t measuring how you’re doing. You haven’t set any real goals. How far are you going to run each day? How long are you going to run? When will you run the marathon? There’s no plan, and no way to keep track of progress.

    Saying you want to increase sales is a lot like saying you’ll run a marathon someday. You won’t achieve that goal unless you use some specific methods of measuring your progress.

    A runner tracks progress by measuring the time spent running, or the distance covered. He sets small incremental goals to gradually increase how far and how fast he can run.

    How do you measure your progress?

    You can measure sales with three basic types of information. You might already use some of this information. But maybe you don’t use it in your planning and tracking as often as you could. The more you use this information to set goals and track progress carefully, the more successful you’ll be.

    What are the three basic types of sales information?
    1) Sales Dollars
    2) Average Sale
    3) Units Per Transaction

    Let’s look at each of these in more detail.

    1) Sales Dollars

    You probably already know how much you sell in a year. Or a month. Or a week. Probably even each day.

    But are you setting goals to increase this number steadily? What would happen to your sales if you set a goal to sell $50, $100 or $150 more each day? Just $140 each day would increase your sales by $50,000 this year.

    For a small store with slow traffic, that might be a big challenge. You can break that $140 goal down even further. Can you sell an extra $20 per hour? Instead of assuming it’s too hard, imagine it might be possible. Brainstorm how you might be able to sell an extra $20 more each hour.

    The next two types of sales tracking information can help you reach that goal.

    2) Average Sale

    The average sale is the total sales for the day divided by the number of sales transactions that day. If you are using a computerized point-of-sale system, it probably calculates this for you. If not, you can calculate it by hand fairly quickly, or enter the information into a simple spreadsheet.

    Why is the size of the average sale important?

    The average sale tells you how much customers tend to buy at one time. One of the easiest ways to increase sales is to increase how much each customer buys. It is easier and less costly to increase the amount you sell to one customer, than to sell to more customers.

    The size of the average sale goes hand in hand with the number of items sold.

    3) Units per Transaction

    One of the easiest ways to increase the size of each sale is to increase the number of items in each sale. As a rule of thumb, set a goal to sell three items to every customer. All you have to do is suggest coordinating items to the customer. A top and belt to go with a pair of pants. An ottoman and a throw with a chair or sofa. Often these are items the customer would want, but doesn’t think of, or notice in your store.

    Another easy way to increase the number of items sold, is simply to display coordinating merchandise together. For example, if you sell laptops, put one on display with a laptop stand, a set of speakers and a mouse.

    Once you get in the habit of suggesting and displaying coordinating merchandise, it becomes easier to increase sales. When your sales increase, hopefully your profit will too.

    A runner whose sights are set on finishing a marathon, sets incremental goals and measures his progress. By measuring and tracking your sales dollars, average sales and the number units sold in each transaction, you move towards your goals in the same way. Before you know it, you’ll have achieved that sales increase, and are ready for a new goal.

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