Secret of Increased Sales

or Cut your Ad budget in Half and Double your sales!

Many businesses rush headlong into an advertising contract when what
they really need is a Marketing Campaign. Why? Because the perception
persists that 'advertising' is the way to increase sales. In reality
it's only part of the way, and in some cases a small part, in
comparison to the THREE WAYS TO INCREASE SALES.

The best way to explain is to create a case model. Think of a decent (not the best or the worst quality) furniture store in a medium sized city. Bob's Furniture in Topeka. Let's say they do $100,000 a month or about $1.2 million a year in gross sales. The amount has been pretty much the same for a couple of years and the economy is 'flat.' There are really only three ways Bob's, or any other business, can increase sales.

1. INCREASE THE PRICE. If you only sell the same amount of furniture (product) and have the same amount of customers, but the prices are increased by 15%, the gross will be 15% higher. Of course, there is more to raising prices than putting new numbers on the price tag. To be successful a business must maintain a cost factor margin, usually double wholesale cost or a keystone (100% mark up) in retail. Establishing and sticking to a cost factor is one of the most critical factors in your business. Competition often plays a part in raising prices and that's where creativity in marketing comes in. Creating the image of increased value and bigger customer benefit is necessary to smoothly facilitate the price raising transition.
   
   
2. INCREASE THE NUMBER OF CUSTOMERS. If you increase only the total number of customers and don't increase the prices or the sales closing ratio, the annual gross will still be higher. This is where advertising and promotion play a vital part in your business by continually attracting new customers. Instead of letting the advertising dollars flow out of your wallet for expensive 'hit or miss' advertising, consider the 'water-torture' method. A slow but steady 'drop at a time' aimed at the right target has proven to be better than several 'media blitz's' during the year, if there is a trained sales or customer service team ready to close.
   
   
3. INCREASE THE CLOSING RATIO. The closing ratio is the percent of the total number of customers who actually spend money and buy product. The national sales closing average, generally speaking, is about 20% or 1 in 5. So, if you don't raise the prices and don't increase the number of customers, but increase the closing ratio from say, 1 in 5 to 1 in 4 or from 20% to 25% the annual gross will increase. Trained, skilled and experienced sales people, can and do, average a closing ratio of 30% to 65% which is much, much better than the national average.

It should suffice to note that at this point the descriptions of the above three methods are the most basic and could go on for volumes, but not in this forum. It is true there are numerous variations on these techniques, all of which stem from the three root principles. The goal of this report is to familiarize the reader with the basic principles of increasing sales and to encourage the full understanding of these three basics before exploring more complex variations that look appealing but may not be appropriate to your specific marketing plan. Keep increasing the training to it's maximum and keep targeting, but reducing the advertising expense to its minimum.

Advertising is only directly effective in number two above, INCREASE THE NUMBER OF CUSTOMERS. Marketing encompasses all three. The sad part is that some businesses rely so much on just advertising and don't raise prices or increase the sales closing ratio, so no matter how much they do sell, they still leave a lot of money on the table.

In addition, when it does come to advertising, just going after the general market is a waste of money and time. Advertising, to be effective, must be a message that contains the proper offer in the proper way and must be targeted to specific, not general, demographics. There is no such thing as cheap advertising. It either works or it doesn't. If it works, it's well worth the price. If it doesn't work, it's not worth anything. Make sure your advertising is working in harmony with the rest of your marketing. Remember the main job of advertising is to 'attract new customers' to your business. It's up to the sales people to close them once they get there. There are a number of very effective, low cost, long term advertising solutions available for every type of business.

Sales training is something that, if the truth were known, can win the war almost on it's own. Not that we're suggesting this, but, if you did nothing more than minimal advertising and had highly trained sales people that had a 30% to 50% closing average you would probably do way better than average...in any business.

An effective marketing campaign takes into consideration all three factors and has them working in harmony with each other. Prices must be adjusted to maintain a margin; a small, but targeted and consistent, advertising campaign must be in place; and the sales force or customer service team must be trained and ready to close the sale.

If you need guidance or help in making all three of these critical profit generating factors work for your business, consider calling the marketing professionals at Ashton & Company for a no obligation analysis. Use contact link below.

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