Retailers: Understanding and Increasing Your Average Sale

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Moneyball, the movie with Brad Pitt, showed how one baseball team began winning by picking players based on their averages rather than a gut feeling about how a player "could do."

As a retail consultant, I always run six financial reports when working with a new retailer. Two retail sales reports in particular detail the averages any retailer must look at to increase their sales: Your Average Sale (also known as the average check in the restaurant industry) and Your Average Number of items.

Here is why each is important and how to increase. These two metrics are most able to increase your retail sales and profitability.

Average Sale / Average Check

This report shows the value of each customer that day. If you have a lot of part-timers, they might not have the highest retail sales because they work the "off" shifts. The average sale shows you when they do help a customer and how much - on average - a customer purchases from them. This can help you spot the bright stars that might be hidden.

This is the most immediate report you can use to grow retail sales because this report measures how well your sales crew can move your products. The more people like your employees, the more trust employees can create and use to upsell each order. This is what raises your average sale.

Every business calls it a different thing, from the average ticket in a restaurant to the average daily rate in hotels.

Whatever you call it, it is the closest we can get to how many sales you receive daily. Careful Analyticals, don’t get caught thinking of exceptions that can bring your average down, like ringing up a piece of candy vs. your usual sale. Using your POS report averages everything so you have a true number of working with.

How To Increase Your Average Sale

  1. Prioritize retail sales, not stocking. In the restaurant business, there is a saying, “If you can lean, you can clean.” In the retail business, I think it should be, “If you can stock, you can sell.” Too often, we let employees think stocking the store shelves with product is more important than moving the product out the door. Displays are supposed to get messed up, and products should look almost out. Your employee training has to explain this, or your well-meaning employees will fail you.

  2. Hire more employees so there is time to upsell during busy times.

  3. Increase add-ons through impulse items displayed strategically around your store. 

  4. Raise sales of higher ticket goods using features, benefits, and add-ons through improved sales training. 

Average Number of Items

This is your total number of items sold divided by number of transactions. Tracking this is another way to measure how good a job your sales crew is doing and if your displays and signage are tempting customers to add on.

The higher you can move this, the more profit you will make. You profit from the second item, so your goal should always be an average of two.

For example, if you are having a big sale, employees should be suggesting, “Since this is such a good price, how about getting two?” That simple suggestion builds unit sales without any additional marketing costs.

When managing your retail sales crew, you must religiously utilize your computer printouts to monitor how your crew is doing, not just your merchandise. What tips do you have to increase the average sale or average number of items?