Learn how to grow your business margin in five easy steps!
We have put together some top tips in the retail industry to help you improve your business margin for the long term!
1. Increase average sale value by up-selling and cross selling
It is important to be able to spot opportunities where you can. Up-selling and cross-selling products to customers is an effective way of improving your margin. In-store sales staff or field sales reps can be prompted to up-sell and cross-sell based on customer type, linked products, technical information, promotional offers and discounts on multiple products. At any sale transaction, can you think of products you can up-sell to the customer and offer a richer version of the product they are buying? Can you think of products that you can cross-sell to the customer to offer complimentary products? By doing this type of selling, you are creating awareness and familiarity with products, and enhancing the customer experience by engaging with their buying needs and creating a comfortable relationship with them, which leads to customer loyalty.
2. Cut out low-margin products and invest more time and money into highly marginal products
This may sound simple, but cutting out low-margin products is a highly effective way to improve your margin for the long term. Having accurate data analytics and reports can show you which products are your best sellers and least sellers, which products are selling more than others and when they are selling. This type of information is vital for your business to improve and grow your margin. By focusing on highly marginal products, you will save yourself time and money by cutting out products that are not selling.
3. Automating key business tasks
Automating repetitive, time consuming tasks can save your business both time and money. For example, data entry can be an arduous task for any retailer, and can take up valuable time, where you could be focusing on more important aspects of your business. Having an automated software system can certainly free up your time for other business tasks. With this, automation of certain aspects of your business such as stock replenishment, management reporting and others, can give you live information about your business, giving you full control over what’s going on, and ultimately improving your margin for the long run.
4. Fast and efficient sales processing
This sounds as easy as it is. Fast and efficient sales processes mean more time to improve margins. The faster and more efficient you can deal with a customer transaction, to more time you have to build a relationship with that customer, effectively giving you more selling opportunities for your business, improving your overall margin. If you are finding yourself having to make several phone calls back and forth to your warehouse to see what items are in stock, your customer is standing there becoming disinterested and you are wasting valuable time for relationship building. Inputting the customer information at the time of sale transaction also wastes valuable customer relationship building. Having a system which makes your sales process more efficient gives you more time to focus on other things, improving your margin for the long term.
5. Limit the discounting
Sometimes retailers may find themselves giving discounts or using promotions to boost their sales, but in fact may find they are robbing themselves of profit just to improve cash flow. Retailers may start feeling desperate in the slow months of business and start giving discounts for products they may not normally give discounts for. It is important to analyse the industry you are in, and look at your business’ annual sales performance so you can determine when is the best time to give discounts, so you are not losing out, and improving your margin in some way. Having a quarterly promotions schedule in place makes you more organised in your business, so you have a clear structure of when you are giving discounts, and not just giving them to customers at random.
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