Profitable Times Newsletter

How to Increase Highly Profitable, Incremental Sales

What Are Incremental Sales?
Incremental sales are purchases by customers in addition to what they intended to buy when they entered your store. The tourist who goes to a gift shop in a resort town looking for a trinket, but buys an expensive bowl instead, is one example. The museum visitor, who wants a book about the museum's exhibits, but also ends up buying a gift for their child's teacher, is another example. The hospital staff person, who intended to spend $25 on a gift for Aunt Sarah's birthday, but spends $50 including two additional items, is a third example.

Why Incremental Sales Are Important
It's a matter of efficiency and claiming discretionary dollars before other stores do. You have worked hard to get customers to cross the threshold into your store. You've carefully selected merchandise, trained your staff, and put a lot of money and/or creative energy into promotion. Now that the customer is the store, you need to do all you can to encourage them to spend as much money as possible — NOW!

There are two important categories of incremental sales. The first is the purchase of additional items beyond what the customer intended to buy. The museum visitor and hospital staff person are examples of this type of incremental sale. They went into a store with the intention of buying something, but were motivated to buy additional items. The second important category of incremental sales is the purchase of a higher priced item. The tourist illustrates this category.

The key point about incremental sales is that there are things you can do to trigger these purchases.

Two Incremental Sale Merchandising Ideas
The purpose of theme merchandising is to trigger additional purchases. You want to remind the customer, while they are in your store surrounded by merchandise, that Uncle George has a birthday next week, or they need a housewarming gift, or a prize for the bridge club tournament. Theme merchandising triggers these thoughts, and when they make additional purchases, it qualifies as an incremental sale. There are two merchandising themes that should be present in every store, 365 days a year.

  • Add-on and Suggestive Sales
    Use your displays to give customers ideas about how to use a product and suggestions about related products that enhance the main purchase. A couple of examples: When you display a book include a bookmark, book plate, reading light, associated plush and other related books in the display. Don't just display a vase — add glass beads and a couple stems of chocolate roses to the display. Most customers are not as innovative as you are. If you stimulate their creativity they will reward you with additional purchases.
  • What's New
    The second merchandising theme that should be present in your store every day is a 'What's New' focus. Everybody likes to be the first on his or her block to have something new. Choose a spot for the 'What's New' display and keep it there. Constantly add a sample of the newest items in your store to the display and remove the oldest of the new items as new merchandise arrives. You will quickly find that repeat customers will always check out the display, and tourists and infrequent customers will be thrilled to be directed to the newest items in your store.

Museum Stores
Museum stores should always have at least one display focused on a new or temporary exhibit, a segment of the permanent collection that is currently on display, or the most popular display in the museum.

An Incremental Sale Marketing Idea
Those of you who have read previous issues of Profitable Times or have attended our seminars, know that one of my favorite marketing tools is to make sure your store is known for something. Being known for something, almost anything, drives incremental sales. If your store is known for having the best, broadest or most unusual selection of 'whateveritis', people will beat a path to your door. A customer who believes that they are viewing the best, broadest or most unusual selection of 'whateveritis', is inspired to buy additional and more expensive items because they are not sure they will encounter this extensive selection again. A store filled with general merchandise, without a special focus, is missing a golden opportunity to use their product selection as a magnet for customers, and to encourage word-of-mouth advertising and incremental sales.

An Incremental Sale Signage Idea
Merchandise signage is an undervalued factor in encouraging customers to buy your higher priced items. If your store is like most stores, 80% of your merchandise falls within a specific price range. When asked to describe your store's merchandise, you probably mention your broad product lines and general price range. But, you probably also have (or should have) some merchandise that sells for considerably more than the average, and the sale of that merchandise is often the incremental sale that turns good days into great days.

In my experience, I have seen two major factors affect the sales of higher priced items. One is the ambiance in which the higher priced items are displayed — but that's not the topic for this newsletter. The second factor affecting the sale of higher priced items, is how the customer gets the information they need to help them justify spending more money. If the customer understands why a particular product is special, you have a far greater chance of making that incremental sale. Is the item imported? Is it handmade? Is it a limited edition? Are the bear's arms fully articulated? This kind of information helps a customer make the decision to spend more money.

Since I do not believe that we can always rely on salespersons to be available, and to know and convey this kind of information to the customer in an accurate and consistent manner, I strongly advise my clients to use a limited number of product related signs as silent salespersons. Choose some of your higher priced items and give the customer the information they need to make a decision about this special merchandise. The signs should be consistent in design, concise (no more than 35-40 words), printed in large, bold type, and should include the price at the end of the description.

Incremental sales are highly profitable, an efficient use of your resources, not more expensive to generate, and can turn okay days into great days. Try these simple ways to generate incremental sales and I know you will ring up more sales.

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