THE FIRST QUARTER of the New Year is underway, and I’ll bet you a bag of donuts you’ve spent a good deal of time considering how to generate more sales for your business. We would all love to add a few zeros to our sales dollar figure. Wouldn’t it be nice to go from $10,000 to $100,000? Or $100,000 to $1,000,000? However, there’s a small problem in making that magic happen. You actually have to ideate the way to do it.
I’ve created my version of the four best ways to handle that issue for your business. You may know these, but it helps to get a refresher every now and again:
Before we begin discussing these ideas, I want you to do some math homework. Yes, I know. Homework sucks, but if you play along I guarantee you’ll get more out of this article than if you simply read it. We’ll refer to the answers to these questions throughout the article.
In your system, go back and review each fiscal year for sales. Last year certainly, but three to five years is better. Here are the things you need to know like the back of your hand:
1.Top 20 percent of your customers based on topline sales volume. Sort your customers by total sales for each year. How many total customers do you have? The top 20 percent of these customers will give you 80 percent of your total revenue each year. Identifying these customers is mission-critical.
2.For these top 20 percent, chart their orders. You need to understand the business trends before you chart the average size of each order. When did they place the orders? What are they ordering? How are the orders placed with you?
3.If you can, show everything per month. We want to be thinking six to eight weeks ahead in our sales planning at a minimum at all times. Understanding your sales order history by month can help you plan to set aggressive, but attainable sales goals.
Got it? I know it’s a lot to ask, but understanding where you’ve been can help you determine where you want to go. Gut feelings or intuition simply won’t cut it. Pull up your real numbers and facts.
Let’s start with the notion of understanding how increasing the size of an order can lead to better sales growth. Where we start on that discussion is with minimums. What is the minimum quantity order for your shop? 12? 24? 36? Why?
Usually, this is because the shop feels the need to be able to help customers with smaller size orders. But if you look at the research you’ve completed, these small-order customers are in the bottom 80 percent of the orders taken. And because the orders are not as large, they only account for about 20 percent of your overall revenue. That’s 80 percent of the work you’re doing for only 20 percent of your money.
Look at your top 20 percent. Are they placing a significant amount of these smaller orders? Probably not. If your minimum order size went up a level or two, what type of impact do you think that might have on your sales total? Let’s say your minimum order was 12 pieces. Starting now, the new minimum goes up to 36 pieces. What would that do?
Sure, you may lose a few customers, but they aren’t driving serious sales dollars to your shop in the first place. A new quantity minimum will help you define better work to take while eliminating a chunk of the smaller orders that clog up your production schedule. Run your numbers and see how this might work for your shop.
Another strategy might be to use psychological-based numbers for your pricing breaks. Instead of 48 pieces or 72 pieces that determine the price break, what if it was based on multiples of 50? Most pricing matrices are built on pricing based on multiples of 12 until you get to 1000 shirts.
What if the pricing matrix was based on multiples of 50? To get to that next level of a pricing discount, the customer will need to order 100 instead of 72 or 150 instead of 144. How would that play out for your shop?
Would your customers order a few more shirts to get the discount, thus increasing your order average? Or, would the customers keep the quantities at 72 or 144, leaving less money in your pocket for each order as that pricing discount hadn’t kicked in yet. With your averages, how might this idea affect the average quantities per order? How much more revenue might this idea create?
The next idea is to get your customers to place more orders with you. Let’s say you’ve examined your customers and, on average, they each place one order per month with you. How can you get them to place two orders per month instead? Or more? Of course, every shop is different, but here are a few ideas you might try:
Want to increase order frequency from customers? You can try all of the above and more, but a great way is simply through communication. Ask them. Based on your averages, what if 25 percent of your customers added one more order per month? What would that generate revenue-wise? Also, with that increase, what pressure might that put on your production team?
What else can you sell them? If you’re already printing, it doesn’t take much to learn how to decorate other substrates or items. Have you tried to screen print a poster, cooler, or a beer koozie? A lot of items can be printed – many with the same equipment you already own. You simply need to find out what it takes to do it correctly and with quality. If you can print a T-shirt, you can print a towel or a bandana. Note: it might need different ink to print without a rough hand on the substrate.
Your customers may be purchasing other items they need, but you’re not getting the sale because they don’t know your complete capabilities. Learn to do more, and then market those acquired skills and add more items to each sale. Let’s pretend 15 percent of your customers added another item to their orders. Let’s say the order value was $500. What would that mean revenue-wise at the end of the year?
I left this for last because it’s the toughest. New customers are hard to find. The reality is, for a new customer to start using you, they have to fire their current printer. You have to give them a reason to do that. Remember, the sales cycle is composed of four movements. Know, Like, Trust, and then Buy. (See pg. 13 of the December 2019/January 2020 issue for more.)
Remember, you don’t need to wait for a customer to call you. Come up with a creative idea that will help solve a problem and reach out. They, of course, will look you up. What will they find with their Google search? This is the reason why your efforts in building the Know, Like, and Trust components of the sales cycle will help you with the last Buy part.
Here’s the kicker: you don’t want any customer. Instead, spend the extra time developing ideas for attracting new customers who match the attributes of the top 20 percent of your customer base.
What would it mean to your shop to add one new customer per month who averaged the sales of your top 20 percent? What would it take to get that level of a customer? Would you do it? Don’t forget, if you’re going to spend the time working on attracting new clients, make sure they’re the ones who will make a significant impact.
And last, if you read all the way to the bottom of this article and haven’t run your numbers yet, now is the time! Get the coffee going and do it! You won’t be sorry.
Marshall Atkinson is the owner of Atkinson Consulting, LLC, based in Mesa, Arizona. He coaches apparel decoration companies on operational efficiency, continuous improvement, workflow strategy, business planning, employee motivation, management, and sustainability. He is a frequent tradeshow speaker, author, and host of two podcasts, as well as co-founder of the Shirt Lab educational company. He can be reached at marshall@marshallatkinson.com
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