In recent years, you may have heard that brick-and-mortar stores are a thing of the past, with online shopping taking its place as the king of consumerism. And while e-commerce sales continue to rise rapidly, the death of in-store shopping has been greatly exaggerated.
In fact, 64% of UK consumers prefer shopping on high streets, and retail sales in the US were valued at $1.47 trillion, compared to $206.6 billion for e-commerce.
This can be partly attributed to the fact that the average consumer spends significantly more in store than online.
Now is not the time to put all of your eggs in the online basket. Retail remains incredibly valuable, and retailers should look to optimize their stores by increasing their Average Transaction Value.
Keep reading to find out exactly what an Average Transaction Value (ATV) is, how to calculate it, and proven strategies that help increase your ATV.
What is Average Transaction Value?
Average Transaction Value is the average amount a customer spends on a single purchase.
Calculating ATV is really simple. You calculate your total revenue for a given period and divide it by the total number of transactions during the same period.
Why does this matter in retail? Analyzing your Average Transaction Value helps you better understand how your customers interact with your product. Which products sell well? Which items are typically bought together? Are your in-store displays having the desired impact? Your ATV can shed some light on these important questions and provide even more data to help you optimize your store.
How to Increase your Store's Average Transaction Value
1. Encourage Upselling and Cross-selling
An increase in your Average Transaction Value is a natural result of successful upselling and cross-selling—two tried-and-tested techniques that persuade your consumers to purchase upgrades and add-ons. In fact, upselling increases revenue by 10-30% on average, making it a strategy retailers can’t ignore.
Provide your workforce with upselling and cross-selling training and techniques that empower them to drive your sales profits. Focusing on understanding each consumer will help your staff better understand which upgrades and add-ons to recommend.
Supplement your well-trained workforce by displaying complimentary items throughout the store. Grouping related items in close proximity increases the chances of customers bundling items together, such as putting phone cases next to phone chargers.
2. Set Goals
In retail, your Average Transaction Value is almost entirely dependent on the skill and motivation of your staff. If you want your ATV to increase, setting goals and fostering motivation among your workforce is a great way to achieve this.
Try setting a target for your staff to reach so they know what they’re working towards. If your goals aren’t clear from the start, you’ll have a hard time reaching them. These can take the form of individual goals, team goals, weekly goals—you get the idea. Find what works for your workforce and implement it accordingly.
Additionally, consider gamifying your goals and creating a little friendly competition among staff. The desire to finish first will help push staff even further. This could be something as simple as adding a leaderboard displaying the number of sales each team member has made.
Supplement this intrinsic motivation with some extrinsic motivation in the form of incentives. This could be shift preferences for staff who upsell the most, or maybe a financial incentive if this is possible within your business model. Incentives remain incredibly popular with the global workforce, with 88% of employees stating it’s important that employers reward their staff for great work.
3. Leverage Promotions
Promotions are an effective way to motivate consumers to purchase items. When used correctly, they dissolve the hurdle that may prevent a customer from purchasing the item they desire. For example, 89% of customers listed price as the primary factor influencing their purchasing decision. To overcome this, retailers often deploy a buy-one-get-one-free offer or a limited-time price drop.
If you’re a retailer looking to thrive in the industry, chances are you already utilize promotions. However, are you optimizing them?
Make sure your customers are aware of the promotions you’re offering. This can be achieved by encouraging staff to mention them when communicating with a customer. Even if the customer is enquiring about a completely different product, your workforce can find a way to highlight the deal while maintaining the natural flow of the conversation. This strategy should work in tandem with visual aids signposted throughout the store which advertise the promotions available.
You can also create urgency to buy by placing a time limit on offers. Knowing a deal won’t last forever could influence the consumer into buying the item for fear that such a bargain might never happen again.
Product bundling is another proven strategy to get consumers to buy more. Packaging complimentary products together could convince your customer to leave with multiple products instead of just one. Again, make sure that your staff are aware of these promotions and know how to communicate them with customers by providing ongoing training on the latest offers and bundles.
4. Create and Optimize a Loyalty Program
Loyalty programs are typically customer retention strategies. However, they also increase revenue due to existing customers spending more than new customers on each transaction. It’s therefore imperative that you have a well-structured and appealing loyalty program in place to keep your customers engaged and avoid losing them to competitors. And chances are your customers want you to have one—87% of consumers reported that they want their brands to have loyalty programs.
As a retailer, you need to either create or optimize your loyalty program. It’s all about making your customers feel valued while rewarding positive behavior, so do your best to offer discounts, promotions, and savings to those who earn them. For example, you could employ a points reward system where customers earn points for every dollar they spend. Collect enough points and they earn a discount.
Inform your staff of the details of your program so they can then tell customers and raise awareness.
Unsure of where to start? Find inspiration from other retailers with successful programs, such Macy’s and Target. These two retail giants employ very different yet equally effective loyalty schemes that help them retain customers and drive their ATV. Macy’s implements a four-level star reward system, whereas Target offers a REDcard that saves customers 5% on every item they purchase.
5. Offer Items at Checkout
How often have you placed all of your shopping at the checkout, only to be enticed by a promotional offer placed directly in front of you as the cashier scans your items?
These impulse purchases are incredibly common, with one study revealing that impulse buying accounts for between 40% to 80% of purchases.
If that number seems high, it’s because there’s a psychological process running in the background. Simply put, our long-term memory works in tandem with visual stimuli, creating emotions that drive us to buy.
Point-of-purchase displays are incredibly effective at mustering impulse buys, as your consumer has plenty of time to view the item and develop an emotional response as they stand in line. For retailers who utilize online shopping, include options to add on when the customer is checking out.
6. Train Your Staff
All of the previous mentioned points are only possible when your workforce is effectively trained. However, the retail industry has historically struggled with providing effective employee training—in fact, 31% of frontline retail employees receive no formal training whatsoever.
This statistic proves even more alarming when you consider that businesses that invest in training are 57% more effective than their competitors. On an individual level, sales training can boost performance by up to 20%.
With these benefits in mind, it’s important to know how to train your retail staff effectively.
Products and offers are constantly changing in retail, so ensure your staff remains up to date with ongoing training. Often retailers stop training their employees after the onboarding stage, failing to account for the changing inventory and consumer demographic. With continuous learning initiatives, you can ensure that your workforce remains informed and productive.
Make training relevant to the job. You can do this with role-play exercises that mimic real-life situations your staff will experience. Rehearsing problematic conversations for staff to overcome will better prepare them for the hurdles they face when upselling to customers.
Finally, ensure the information on products and services is easy to access. Retail staff are constantly on the move and need to be able to access information right at the point of need, e.g., when responding to a customer’s query about the latest product launch. Mobile learning is an effective way to solve these issues, as it provides staff with the information they need in just one tap and doesn’t require them to remove themselves from the shop floor to find the answers.
eduMe is a seamless mobile learning platform designed for the deskless workforce, providing role-relevant information to your staff when they need it most. Through the use of continuous learning and gamification, eduMe provides your staff with the tools needed to drive sales and increase your ATV.
Get in touch with us now to see how we can increase your ATV 👇
