Increasing sales... the elements of growth T X C X A = S

Diving into thinking about my business and how to grow sales. I have been lazy about this for a while and my sales have been mostly sideways. Time for a change.

There are three elements to changing your sales total. In sense it is a numbers game. Change one of the three elements and you change your sales total. Conversely, if your sales changed it means that one or more of these elements changed:

  1. How many potential customers are you reaching? Traffic “T”

  2. How many orders do these cutomers place? How many customers? What frequency? Conversion “C”

  3. How much on average do your customers spend? Average ticket “A”

If your marketing is reaching 10,000 people in a given period and 5% are ordering 1.2X with an average ticket of $30 your sales are $18,000. If your sales rise 10% to $19,800 you had to have reached more people or increased how many orders those customers placed or increased the average ticket. Knowing which is crucial to understanding what is working. Knowing which you are trying to accomplish and seeking to measure the results is important in allocation of resources.

Each of these three things presents an opportunity to grow sales. The tactics that will incease each of them are not the same.

To increase Traffic you can advertise and promote. You can choose a location with better convenience and/or visibility, mail more pieces, run more ads, attend more events etc etc all so you reach more customers. If your response rate from a mailing is 3% and you mail twice as many chances are good that you will double the orders as a result. It may or may not be worth doing based on cost and diminishing returns but fundamentaly this is about talking to more people.

To increase Conversion you can adjust your menu to local tastes, improve the presentation of your offerings, offer deals, focus on employee training to make sure you get the order when the phone rings. In other words, you spent resources to reach the customer now don’t blow it. Get the order! You can increase sales with the same Traffic simply by getting more of the customers that you reach to place an order or to order more often.

To increase Average Ticket you need to get the customer who orders to spend more. Price increases are the obvious first option here but selling higher priced items like pizzas with more toppings or additional menu items work well too. This can be accomplished with training but it also depends on constructing your menu to facilitate this.

I find it helpful to think about these three areas separately. Decide which are the best opportunities, how you you are going to pursue them and VERY importantly how you are going to measure if it is working. It is a no brainer to figure out if your sales are up. It is less obvious how to figure out what is driving it.

In another post I stated that we are going after an average ticket increase. We will be tracking average ticket by the week. Simple math: What were sales? How many tickets were there? I will be paying a bonus to maangers based on the average ticket whe we launch this as well as shifting our regular advertising to talking about the new menu items.

Getting ready to launch. I signed off on the menu at the printers yesterday that includes some new apps and other smaller changes. Starting a round of staff training next week with a manager meeting to talk about average ticket as well as other issues.

My goal is a 10% gain in average ticket. I plan to push on that for the next 120 days. I hope to find that some of that can become habit and I can switch to another focus.