If you have followed this series of blogs from blog 1 which was focused on customer retention rate through to blog 4, which was focused on how to increase transaction frequency, you should have set your business up with a steady stream of leads coming in, great conversion rates, more purchases than before… now it is time to focus on maximising on all these opportunities by increasing transaction value.  

Before you make any changes, it is beneficial to understand what your current transaction value is. This will give you a benchmark ahead of any changes you make. This simple formula will help you work this out:  

12 months total sales / Number of invoices raised = Transaction Value (£)  

Our suggestion isn’t as straight forward as applying a price increase, although that is an option amongst many that could be considered. So, before you jump straight into thinking about your pricing it is worth asking yourself, your team members and if possible, your customers “how can you add more value? Do you give them enough of options? Is it clear which products/ services are complementary? Would it be useful if recommendations for additional products or services, were made based on their enquiry?”   

Whilst I have suggested you ask your customers; don’t always assume they always know what they want or more importantly what they need. Always, take feedback as an opportunity to grow and develop, not as guidelines to follow.  

A favourite quote of ours: “If I asked my customers what they wanted, they would have asked for faster horses” Henry Ford.  

Combining your insights into customer needs with the feedback you have secured from elsewhere, you should be in a strong position to implement some simple strategies designed to start increasing transaction value. 

Here are 10 simple suggestions:

  1. Upselling
  2. Cross-selling
  3. Bundle offers
  4. Discounts for add-ons
  5. Sending proposals or quotes with 2 options (basic & premium)
  6. Stop offering discounts for basic purchases
  7. Small price increases where sensible to do so
  8. Train staff to increase focus on customer experience and the right customer offering
  9. Team Incentives
  10. Set daily targets

Avoid introducing all of these at once or blanket rollouts, otherwise your customers will feel bombarded, and your tactics will feel pushy rather than complementary. The key to success in this area to embed a sales culture into your business in a way that fosters and maintains customer loyalty and protects customer relationships.  

Don’t underestimate the impact focusing on increasing transaction value will have on your business growth. When implemented correctly you will see repeat and increasing sales with little cost associated, further benefiting your bottom-line profit.  

Here is an example to put into perspective how little differences can have a significant overall impact. 

  • Mr XYZ is a sole trader and has annual sales of £125,000 
  • During the same time period his sales transactions were 150 
  • To generate the sales Mr XYZ has £70,000 of overheads 
  • This leaves Mr XYZ with a profit of £55,000 

So, the calculation (as outlined at the start of this blog) for Mr XYZ would be as follows:  

£125,000 / 150 = £833.33 

If Mr XYZ decided to introduce upselling, small price increases for difficult jobs and bundle offers to different clients, and where appropriate. He may be able to increase his transaction value to £865. 

If we then work back the increase to transaction value into the formula the impact become clear:  

£865 (transaction value) x 150 (number of sales) = £129,750 

All three of the strategies Mr XYZ incurred no costs, so the impact on business results would be as follows:  

  • Annual sales of £129,7500 
  • 150 sales transactions  
  • Overheads remain at £70,000  
  • This leaves Mr XYZ with a profit of £59,750  

This equates to an increase in profits of £4,750 which is a substantial growth in profits of 8% year on year. 

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7 Ways 1 customer retention thumb
7 Ways to Grow Part 1 - Customer Retention Rate
7 Ways 1 customer retention thumb
7 Ways to Grow Part 2 - Generate More Leads
7 ways 3 Conversions thumb
7 Ways to Grow Part 3 - Increasing Customer Conversion Rate
7 Ways 4 Increasing Transaction Frequency thumb
7 Ways to Grow Part 4 - Increasing Transaction Frequency
7 Ways 6 Reducing Business Costs thumb
7 Ways to Grow Part 6 - Reducing Business Costs
7 ways 7 reducing overheads thumb
7 Ways to Grow Part 7 - Reducing Overheads