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Best Practices: Increasing Your Average Transaction Value

With 2020’s Coronavirus pandemic, many re-opening businesses are focused on how to quickly generate extra cashflow. One way to do this is by increasing your average transaction value. For some tips to get started: read on, and don’t forget to learn about other helpful KPIs to track and improve in The Sales and Retail Metrics You Can’t Ignore.


Your Average Transaction Value (ATV) or Average Unit Retail (AUR)

This is the average price of items sold during a specific period of time. It’s calculated by dividing total revenue by the number of units sold. 

Average Transaction Value = Total Revenue / # of Units Sold

Let's start with an example

You had sales of $20,000 in the month of February and sold 250 products or services. To calculate AUR, you’d take the $20,000 and divide by 250. Your ATV (or AUR) would be $80 for the month of February. 

Basically, this number is a measure of how much the average customer is willing to spend. Changes to this number may indicate that prices are too high or too low on a specific item. If an item is priced too high, you’ll sell fewer. 

Businesses can use this number to compare pricing across departments or categories as well as comparing to industry metrics. Make sure you’re always looking at this metric alongside other factors to get a proper picture.

Why price point evaluation is important

You should routinely evaluate your company’s pricing. Do you offer a diversity of price points? Are there enough higher priced items to drive sales? Are too many items priced too low? In essence: do you have the right spread?

It’s important to have the right selection of price points to ensure you don’t miss sales opportunities. Look at pricing by category to make sure you cover all price points. If you discontinue products or services, make sure you can introduce an alternative to fill the gap.


So, what about some tactics to actually increase your average transaction value?

After ensuring your products are at appropriate price points, you should craft a plan for maximizing ATV/AUR potential. This includes training employees on new sales techniques, if you’re a retailer it could mean re-merchandising the store to highlight higher ticket items, or coming up with a plan to suggest add-on’s and packages. 

Here are 6 recommended tactics  to get you started…

Ask the customer the right questions

This is not about deceiving the customer. This is about listening and identifying a need based on customer feedback. Don’t just shove ideas at them. Ask what they’re looking for. Listen to what they say. Follow up. Then proceed to share product ideas. But don’t just recommend a single product; recommend an entire solution. Whether you sell bikes or bark mulch – accessories, tools, and service add-ons aren’t upsells, but good customer service. Once you’ve guided the customer to a smart decision, don’t forget to follow up in email for a positive review. It will pay off tenfold in the future. 

Train Your Employees to Focus on High Ticket Items First

After determining what the customer is looking for, start providing options. But suggest higher ticket items first. As the customer responds, they may tell you they’re looking for something a little bit less expensive. Then move to lower priced items.

If you start the other way around, you’ll see more price resistance as your suggestions increase in price.

Prepare Cheat Sheets to Help the Sales Process

Consider creating product or service (or package) recommendation cheat sheets for your employees. The cheat sheets could contain suggestions for some of the higher priced items in each product category. This will allow employees to practice focusing on higher price points and may drive up your average ticket price.

Offer your customers a financing option

Right now, many customers are itching to get things done, start new projects, and move-on with their lives. But they don’t want to burn up their cash reserves to do so. If you already have a financing program in place, make sure to include this as part of your sales messaging. If you don’t, consider setting up a financing option for your small business. Studies show that today’s consumer wants options – and this is a fantastic way to offer them. Learn more here.

So you’re a retailer? Place High Ticket Items at the Front of the Store

You want customers to walk in and instantly fall in love with a high ticket item. Make sure you are optimizing potential sales by highlighting your big ticket products. Place them front and center. They’re more likely to draw the customer into the store and may result in higher sales. 

If you want to get detailed, do a price analysis by shelf location in your store. Set a targeted retail value for the products placed on the front table. Set a dollar threshold for what can go in the window. Then place products accordingly.

Consider Packaged Deals / Product Bundles

One way to increase the average purchase and drive sales is through packaged deals and product bundling. Bundling is when two or more items are combined to sell as one product or bundle. This bundle offers customers a perceived savings and is often sold at a price lower than the sum of the bundled items. Sales treatment of a bundled product varies by business, but in some cases it can be a big boost because revenue increases while the number of units sold stays at one.

As you review your pricing strategy, analyze your price points, and look to the future –  pay attention to your ATV (or AUR) and continue to try new techniques  to drive an increase.

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