More revenue 5 tips to boost online shop revenue
Did your Christmas trading not go as well as you expected? Could the revenue from your online shop be better? If so, we’ve got five tips for you on how to encourage customers to buy more – without having to sacrifice your margin.
If you want your customers to buy more, then simply reduce the price of your goods. At some point, customers will snap them up. It’s a truth that’s probably as old as retail itself. But this game has two disadvantages. The first is that customers soon become used to the low prices and discounts and are then disappointed when you want them to pay the normal price again. Moreover, each time the selling price is reduced, the retailer’s margin takes a hit. And depending on the goods being sold, this may not be particularly high to start with.
So why not try the following measures that don’t impact on margins?
A classic technique, especially for retailers selling via marketplaces, is to use product bundles. And they work, as Harvard Business School demonstrated a few years ago in its study “The Dynamic Effects of Bundling as a Product Strategy”.
For example, a product bundle makes a lot of sense for combining low-priced items – which on their own seem unappealing, given the shipping costs – with related, higher-priced products. An example could be a coffee machine that is sold together with water filters, cleaning products and a pack of coffee. You can make a good argument for selling these items as a package. That’s because customers will immediately have everything they need to get started. There is a reason why McDonald’s offers combo meals, which are really just product bundles.
While a good salesperson in a physical shop has to do a bit of convincing to motivate a customer to purchase a more expensive item, an upselling offer online does not seem at all intrusive. Upselling is based on the idea that customers are absolutely willing to spend more money than they intended, provided that they can see an advantage in doing so.
Apple has turned upselling into a fine art. Anyone who buys a notebook or desktop computer from them is presented with a huge number of additional offers and more extensive configurations. These options are indeed more expensive, but they are described so positively that the original item seems almost under-powered and out of date. An oft-cited statistic is that when upselling is used, the final sale price ends up around 30 percent higher than the product originally chosen.
Offer solutions rather than products
As the saying goes, the customer doesn’t want to buy a drill, but needs a hole in the wall. In other words, the customer is interested less in the product and much more in finding a solution to an existing problem. This is an approach that can also help you to differentiate yourself from the competition. If you combine this intelligently with resources that you already have, your costs will remain manageable, while customers will be pleased about the tailored service – and they’ll probably be willing to pay for it.
The basis for a solution could be a product bundle. Let’s stay with the drilling example. A ”picture hanging made easy” service could include a hammer, nails, spirit level and picture frames, as well as a phone number that customers can call if they have any problems. Or another example: DIY retailers which sell products that need to be installed could offer a measurement service to save customers from the hassle of doing the measuring at home themselves. Convenience and time savings are powerful arguments in today’s world.
Vouchers are always a good idea
Do you already offer vouchers for your range of products, or a subset of them? If not, why not? There are so many kinds of vouchers that there is sure to be one that meets your customers’ needs. With a traditional gift voucher, customers purchase credit for future sales from you in advance. This is good for your revenue, but also a proven method for boosting familiarity with your online shop.
And it’s well known that many vouchers end up being forgotten by customers. In other words, they are never redeemed.
Then there is the type of voucher linked to a minimum spend, which can make customers order more than they originally intended.
Supplies and subscriptions
Printer cartridges, descalers, household cleaning products and cosmetics are typical examples of consumable items that need to be replaced on a regular basis. For customers, it’s very frustrating if these run out when shops are not open or there are no postal deliveries. That’s also a strong argument which could boost the value of customers’ orders.
Actively promote stockpiling, e.g. by offering three descaler bottles for three months, or two deodorants, etc. On marketplaces, you could also make this into a bundle that has its own SKU, which will also make price comparisons more difficult. The Holy Grail, although complicated to implement in practice, is automatic delivery of these kinds of items. We could easily write a whole article just about subscriptions in retail. Perhaps we’ll do that another time.
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