Why lowering prices is a bad way to increase profits. Here is what it looks like schematically

The client, a major international food producer in Russia, gave McKinsey a massive challenge: "We want to double sales in five years." The company has grown rapidly over the past ten years, it has set itself the task of selling as much product as possible, no matter how. Now the client wanted to make a breakthrough, start growing at a qualitatively new level. It immediately became clear that we would have to completely reorganize sales, applying a systematic approach. We have formulated three blocks of tasks. The first is working with distributors. Here it was necessary to determine how many of them there would be throughout Russia, how the client would interact with them, how he would choose the best and what prices to set. The second block is the determination of the best placement of goods in the store in terms of sales. And finally, the third block is the reorganization of the sales service. It was necessary to critically evaluate its functions and define tasks; understand who does what, is responsible for what and decide how to motivate employees.

Finding a Solution

We started by looking at the company's experience, assessing the skills and potential, talking to employees at all levels from sales to management, and of course engaging McKinsey experts.

As part of the solution of the first block of tasks, we conducted a thorough analysis of the working conditions with each distributor: what kind of contract was drawn up with him, how much he is paid, whether the company wants to cooperate with him further and whether there is an alternative to him. As a result, we prepared recommendations for the client: which of the distributors should be reconsidered, and which ones should be replaced with new ones. When making decisions, we were guided by the developed criteria for effective work with distributors. main idea that we tried to convey to the client was that a distributor is not just a “contractor”, but a partner who should also be interested in the growth of the company with which he works. In addition, the partner must have commercial, technical and infrastructure opportunities to grow together with the company - if sales double tomorrow, then the distributor must also have enough warehouses, trucks, etc. to "digest" this growth.

When working on the second block of tasks, we compared the stores with each other: we looked at what is where, and tried to understand how the arrangement inner space store and location of the product affect its implementation. McKinsey was able to train sales managers in the ability to systematically assess the location of goods in the store. Now the employee immediately sees where the product should be, at what level, with what sales materials. He understands what is done right and what needs to be changed. We also segmented all points of sale in Russia and assessed their potential. Now the client has at his disposal the addresses of all stores selling his products, and he knows which of them are the most promising in terms of sales growth. In some of them, as we found out, the goods are presented very well, while in others we had to agree that the client's products should be placed differently.

For the third block of tasks, we have completely revised organizational structure sales departments - and redistributed the roles and responsibilities of managers. We also recommended to the client to change the system of remuneration of personnel and directly link the criteria with strategic goals and objectives of the company as a whole. Since it has now become important for the client to internal organization stores met the highest standards, then, accordingly, sales managers began to receive remuneration for how the stores they are responsible for look like.

Result

The project has now been completed. We started from Moscow, but in the next year and a half this technique will be extended to the entire territory of Russia. Already in the first two months of the pilot project, all planned indicators were exceeded. This gives confidence that large-scale plans to double sales will be achieved.

For four months we worked side by side - employees of McKinsey and the client company. Immediately after the end of the project, the client formed a development department from his specialists, which continued the work we started. One of the top managers of the company, who previously led sales in the region and raised this project with us, now leads this department and implements the transformations we proposed.

Our customer service policies do not allow us to disclose company names and other confidential information.

Consider your DISTRIBUTOR NETWORK. Are you satisfied with it? Would you like to IMPROVE it?

There is hardly a business owner who would NOT want to increase sales and the number of lower level distributors. The question is, are you willing to do what IS REQUIRED to do it? To not only improve but also DOUBLE sales during next year?

Here's what needs to be done:

DEFINE THE GOAL.

The human mind works best when it has a purpose in mind. The more FOCUSED the goal is, the more likely it is to ACHIEVE it.

Let's say you sold 5,000 units of a certain product last year. What do you think will FOCUS your mind better? Say you want to sell MORE - or that you want to sell 10,000 units? The answer is obvious, isn't it? Setting a DEFINITE GOAL is the FIRST STEP in achieving it.

SET A DATE FOR THIS TASK.

As in the past, the human mind works best if it has to solve a problem by a CERTAIN DATE. If you simply say that you want MORE sales - but do NOT say WHEN you want to achieve it, the thought remains UNFOCUSED, HELELESS. But if you say you want to sell 5,000 more units by a CERTAIN DATE next year, the mind has a CLEAR PURPOSE and can START WORKING on it.

Therefore, Clarify the situation for yourself. Decide exactly WHAT you want to achieve and WHEN. Consider the current situation: is there any reason, INTERFERING, that you put forward? Are there any BUSINESS or PERSONAL reasons that could prevent you? Consider the following:

YOUR HEALTH:

Is it RELIABLE enough? Can you make an EXTRA effort without hurting yourself? Are you going to a serious medical checkup?

FAMILY RESPONSIBILITIES.

Do you have SUFFICIENT RESOURCES to support your family for the next year? Look at things REALLY. Will your family approve of your EXTRA LOAD, or do you have certain responsibilities that do NOT allow you to make an EXTRA effort?

YOUR STAFF.

Is the staff working WELL enough to load them with NEW JOBS? If you double your sales, will the EXISTING STAFF take all the RESPONSIBILITY, will you need to hire ADDITIONAL STAFF? If NEEDED - how much TIME is needed to TRAIN them and put them into work - so that they fully contribute to the achievement of your goal?

MONEY.

Do you have the REQUIRED CAPITAL? A doubling of sales may mean the need to allocate funds for NEW PRODUCTS and SERVICES - before you RECOVER the investment. Do you have the necessary capital NOW? Or do you have to take extra care of it? Are you sure that you will get it when the NEED arises?

In REAL life, doubling sales will require a lot of PLANNING work. Depending on the SIZE of your business, it may take a month or more - BEFORE you figure out everything you NEED to decide in order to move towards your new goal.

THE IMPORTANCE OF THE PLANNING PROCESS.

There are only 2 KEY PHASES in this process: PLANNING and EXECUTION.

PLANNING IS THE MOST IMPORTANT phase - because if the process is planned CORRECTLY - THE PERFORMANCE of the task occurs almost AUTOMATICALLY. Therefore, do not underestimate the CRUCIAL importance of PLANNING.

Planning must be EXACT. To ensure accuracy, start by creating a computer file; call it "DOUBLE SALES". In the file, list ALL items you NEED to consider. Include:

HEALTH

STAFF

SUPPLY QUESTIONS

CAPITAL ETC.

Also include the following important information:

FORMER CLIENTS.

How many customers BUYED your product during PREVIOUS years but did NOT SUBSEQUENTLY? Will you be able to offer a product or service that will benefit THESE PEOPLE (which will give you the opportunity to contact them AGAIN) - or have you sold everything you COULD sell to them? (In this case, there is no point in referring to them again).

Is the DATA about these customers (NAME, ADDRESS, PHONE, etc.) easily accessible. In other words, will you be able to IDENTIFY past customers so that you can develop a strategy for RECALLING them?

The FIRST thing you need to do to double your sales is to focus on PAST customers. These people already KNOW you and (if desired) are HAPPY with their purchase and your company. To work with these customers, you need a CONSTANTLY UPDATED DATABASE (including information about customers), and a SERIES OF ATTRACTIVE OFFERS that can cause them to repeat purchases.

CURRENT CLIENTS.

How many customers buy from you every month? Do you have ADDITIONAL products or services they could buy? Or do you have nothing more to offer?

Do you have an ADDITIONAL SALES PROGRAM? Those. Do you have a METHOD of attracting customers to ADDITIONAL products or services? Or does the program not exist?

The minute a customer BUYS a product or service from you is the BEST OPPORTUNITY to introduce ADDITIONAL products or services. Unfortunately, many companies do not care about this at all. They sell the customer what they NOW want to buy, but DO NOT try to identify OTHER wants or interests of the customer, and make NO attempt to get the customer to take ADDITIONAL actions.

If you are going to DOUBLE sales, you need to make an effort to ensure that EVERY client is offered OPTIONAL item– in the MINUTE OF THE FIRST PURCHASE. This will likely require a specific TRAINING PROGRAM for all your front-line staff.

NEW CLIENTS.

How many NEW customers will it take to DOUBLE sales? How much should EACH of them purchase your product or service?

Most likely, working with OLD clients and improving the policy towards CURRENT clients will not bring DOUBLE of sales. Therefore, you need to focus on HOW to make sales to people who have not yet bought ANYTHING from you and may not even be aware of your existence. To achieve this goal, you must do the following:

IDENTIFY AREA OF SALES. WHERE are your POTENTIAL buyers located? In the LOCAL market? In your area? Countrywide? All over the world? Your goal is to EXPAND THE AREA OF SALES to the maximum extent possible. (Many entrepreneurs artificially limit the sales area.)

Having defined the SALES AREA, you need to find out HOW MANY potential buyers are INSIDE this area. Research will be required. Strange to think, but many entrepreneurs have no idea how MANY POTENTIAL BUYERS they can actually attract. They do business with the expectation that they WILL have potential customers, but have never thought about HOW MUCH there are. Illiteracy!

Determine whether the number of potential customers in THIS SECTOR of the market IS GROWING or DECREASING. If you are trying to sell a product or service in a SHINING market, you will find that it is much HARDER than if your market is GROWING. Many get richer because they study DEMOGRAPHY and direct their efforts to a GROWING market. This is one of the SECRETS OF SUCCESS.

List possible WAYS reaching potential buyers. If you are going to double SALES, you must at least double the NUMBER OF POTENTIAL BUYERS. This implies listing ALL WAYS TO REACH these people. Consider:

Find at LEAST two resellers (brokers) selling mailing lists and consult WHICH mailing lists are best for you, WHICH SAMPLES of them, and find out all the DETAILS about their lists. Why TWO intermediaries? Because you need to get as much INFO as possible, and understand WHAT SELECTS they offer.

What publications serve your potential market? Find DEMOGRAPHIC information. Find out exactly WHERE each edition is DISTRIBUTED, FOR WHOM it is intended. Be PERSISTENT when collecting this information.

ELECTRONIC DATABASES.

Does the Internet, or other promotional DATABASES matter to you? ELECTRONIC advertising media are very popular now, but for most people they still don't make PRACTICAL sense. You must be WELL KNOWN with electronic advertising media.

REVIEW ALL YOUR MARKETING MATERIALS.

During the PLANNING process, carefully check and inspect EVERY informational marketing kit that you use. Review the materials used for:

ATTRACTION OF POTENTIAL BUYERS.

PRESENTATIONS OF YOUR PRODUCTS AND SERVICES

APPEAL TO FORMER BUYERS

ADDITIONAL OFFERS FOR CURRENT CUSTOMERS, etc.

Here's what you should pay attention to:

OFFER.

Does EACH information kit contain an OFFER - i.e. something designed to cause IMMEDIATE ACTION. Don't forget about SPECIAL OFFERS! In EVERY message!

CLEAR FOCUS ON THE POTENTIAL BUYER.

When a POTENTIAL buyer reads any presentation, he should think that it was made EXACTLY FOR HIM. EVERY message should be FOCUSED ON SPECIFIC person. General information Does not work. Unfortunately, most entrepreneurs do not understand this.

CUSTOMER FOCUSED BENEFITS.

If you want to MOTIVE the client to take ACTION, you must present the BENEFITS - one by one. It is necessary to emphasize the MOST IMPORTANT advantage - FIRST of all. Then - the SECOND on value. Then - the THIRD, etc. List them in descending order. Attract the client IMMEDIATELY - by indicating the MOST important of ALL that he will receive - IN THE MOST MOTIVATED WORDS.

CUSTOMER-ORIENTED EVIDENCE FROM SATISFIED CUSTOMERS.

People will want to know about the RESULTS obtained by OTHER people. That is why you need the evidence of "REAL PEOPLE". Ask buyers who have ALREADY used what you sell - what RESULTS they got. USE these results - by presenting SATISFACTIONED BUYERS in EVIDENCE - to MOTIVATE others to IMMEDIATE ACTION.

After you HAVE FINISHED THE REVIEW of all marketing information - you will most likely be disappointed. In the vast majority of cases, people find that their information is focused on the COMPANY of the SELLER - and NOT on the BUYER. The information tells about the COMPANY, ITS staff, ITS location, the number of products offered, and other, NOT MOTIVATED details.

All information focused on the COMPANY is USELESS! Of course, it is EASIER to compose. Compiling CUSTOMER oriented materials is MUCH HARDER. The same way It's always easier to focus on yourself and NOT on a stranger. But if you do NOT shift the focus of the information presented FROM your company to potential BUYER- You WILL NOT ACHIEVE THE SOLUTION OF THE TASK.

After considering all these aspects of the plan - you need to make CHANGES in your work. If you work INDEPENDENTLY, you only need to start SELF-EDUCATION. But if you work together with others, the task becomes HARDER.

FIRST of all, it is necessary to provide ALL employees with an overview of WHAT IS NECESSARY TO DO in order to achieve the goal; make sure they AGREE with it and TRAIN them accordingly. In other words, you must MAKE SURE that employees UNDERSTAND the goal, KNOW THEIR ROLE in achieving it, and HAVE essential tool and skill. Only BY CARE of these factors, you CAN go FURTHER.

DECLARATION GOAL.

You are now ready to DECLARATION THE GOAL. Never state a goal that you are NOT sure you WILL achieve. A goal should be stated ONLY if you are ABSOLUTELY SURE that it is achievable. The task at hand must be HARD, of course. But, FIRST of all - it must be REACHABLE.

MAKE A BIG POSTER FOR YOURSELF capital letters write down your goal on it. Also indicate WHEN exactly you are going to achieve it. Before you PLACE the poster on the wall - ask EVERYONE who will be busy achieving it, SIGN on it. So this is NOT JUST a poster. This is a CONTRACT. Put the poster where EVERYONE will see it DAILY.

Give EACH participant an INDIVIDUAL contract. On it, indicate the OVERALL goal for the NEXT year. After that, set a goal for each HOUR, DAY, WEEK, MONTH. It is important for EVERY person to know that there are NO periods of INACTIVITY during the contract period. The account goes on MINUTES. Emphasize that achievement COMMON GOAL- INEVITABLE IF ALL participants REGULARLY achieve a SEQUENCE OF SMALL, WORKABLE goals throughout the entire period.

FOLLOW THE PROGRESS, MAKE AMENDMENTS.

Achieving the goal means constant CONTROL. What works? What does not work? Remember that the plan is only a series of RECOMMENDATIONS that may require CORRECTION. Don't let that worry you.

By deciding to increase your sales throughout the year, you have embarked on a challenging journey, and IN NO journey, EVERYTHING works EXACTLY according to plan. Get ready to make CHANGE. It is important that these changes are designed to HELP achieve BEST RESULTS in the REMAINING time.

With this plan, you CAN DOUBLE your sales - within a YEAR!

How to double your profit

Do you think selling the full program to the buyer after he bought the piece for $7 increases our profit?

Well, of course!

How does this happen?

In our case, a person buys 2 coaching sessions for only $7. For this money he gets a lot useful information. And if earlier he had doubts, now he is personally convinced that the coaching program is worth the money. The person is ready to buy!

At this moment, our sales manager contacts him and offers to participate in full version coaching. Everything, the purchase took place.

And what happens to profits? That's right, it's growing.

Here's what it looks like schematically:

But that's not all.

Yes, the customer has already bought from us. And brought us profit. You can stop there, or you can go further and make him an additional offer.

Our experience shows what to do upsell It is much easier for an existing client than to attract a new one.

So why not take advantage of this opportunity?

To double your profits, simply ask yourself the question: “What else can I sell to the client I just got?”.

If it is still difficult for you to answer it, study the article where I talk about . I'm sure it will be helpful.

How to double your shopping frequency

Free Online Workshop Series

Let's talk about modern methods launch and
promotion of your business on the Internet.

And the last part of our formula is Purchase Frequency.

What happens if you can motivate customers to buy twice as often? That's right, your sales will double.

But how to do that?

The proven method is follow-up technique or "Return trip".

The fact is, most sales don't happen the first time a visitor visits your page. But they happen when a person repeatedly encounters your offer. Therefore, without a follow up technique, you lose a serious amount of sales.

How to use follow up in practice?

Offers at the exit – with an offer that appears when a potential client is about to close the page.
Retargeting- advertising that pursues a visitor on the Internet after he has visited your page.
Autoe— mail follow up- strategy that consistently brings your audience back to content and offers.

You can choose one technique or a combination of them. And I would like to elaborate on .

Every e-mail you send should serve one of 5 purposes:

introduce– Tell about you;
Engage– Motivate to buy;
Engage Stronger– Motivate to buy more;
segment– Find out what a person wants to buy next time;
Reactivate– Regain the attention of subscribers who have lost interest.

Testing various techniques follow up showed that it is e-mail that works best. Therefore, pay special attention to mailing lists.

And if you are not yet using follow up in your business, implement it in your practice. The increase in the frequency of purchases will not keep you waiting.

Conclusion

Surely many of you have already calculated that by doubling all the variables, they can get 16 times more sales. But is it possible? I doubt. In any case, not all at once.

Can you double one of them? Two of them? Even 3 of them?

Definitely yes.

Therefore, choose one of the methods that I have described and implement it today.

Just before the implementation, like this article! Was it helpful to you?

CLOSED ONLINE MEETING

This book brings together the most powerful methods to increase sales that can lead a retail store to fundamentally new level. How to take for each item more money? How to turn potential customers into real ones? How to sell more products to everyone? How to make more repeat sales? How to attract more new customers? How to write a sales advertisement? How to find a "gold" seller? About this and much more - in this edition. The book is written specifically for owners and managers of retail stores, and will also be useful to anyone who is just planning to open their first store.

* * *

The following excerpt from the book Retail store: how to double sales (Denis Podolsky, 2012) provided by our book partner - the company LitRes.

How to sell more products to each customer

Increasing the purchase amount

The increase in the average check is one of the most effective ways increase profits, because it practically does not require investment of money.

Let's say your revenue left 1,000,000 rubles. During this time, 250 customers made a purchase.

1,000,000/250 = 4000 rubles is your average monthly check.

Let's imagine that you increased the average check by 500 rubles. To do this is easy enough.

Then your revenue will be already 250 × 4500 = 1,125,000.

Revenue increased by 125,000 rubles. Not bad, right?

The main rule for increasing the average check: always actively offer something else to the client.

How to make customers leave more money at the checkout for one purchase?

There are methods to increase sales that work after a while. Increasing the average check is a method that works immediately. The result is immediately visible, and there is more money in the cash register.

There are three main ways to increase the average check. It is necessary to offer each client:

More expensive item

Large quantity goods;

Related product.

We offer a more expensive product

Up sell is the sale of a more expensive product.

The customer comes to the store menswear behind the shirt and chooses the average cost. The seller offers the client a more expensive one, while justifying all the advantages of this shirt: a well-known brand, stylish, fits better, the material is better.

The task of the seller is to reorient the client to a more expensive product. And here the point is not to “sell” it to the client, but to show and tell that you have a much better product with the best performance but a little more expensive.

Real life example

I wanted to buy a bath towel and went to the store. I chose a towel and asked to pack it. But the saleswoman explained that they have a similar towel, which instantly absorbs moisture, it is a pleasure to wipe yourself with it, made of some kind of bamboo fibers. I really felt that the saleswoman wants to help me and offers the very best they have.

I agreed to this purchase, although the towel cost almost 1.5 times more.

Thus, the saleswoman sold a more expensive "complete set".

Here, of course, a lot depends on your sellers. In order for them to do this more effectively, it is necessary to develop a script for the seller describing the benefits of the goods and with information on what to say and at what moment for more effective sale. This script should answer the question: “Why should the client be offered a more expensive product and how to sell it more efficiently?”

The same is done by managers in auto centers. They offer a car with a more expensive equipment, justifying this with the advantages of a more expensive model: chrome molding, car audio, a sunroof, leather upholstery, a more powerful engine, etc.

We offer related products

cross sell is the sale of other or related products.

The easiest way to do this is to simply offer the client something extra. For example, if a person buys a ring in a jewelry store, offer him a bracelet that matches the ring.

To do this, you don’t even have to be a sales master, you just need to offer.

You can just offer it to the client, or you can do it special offer which is hard to refuse.

An example from our business

In our men's jewelry store, the following technique is used. When the client has made a decision in favor of the purchase, our seller makes a unique offer for the client: “Only now you have unique opportunity buy a second piece of jewelry with a 20% discount.

Not everyone agrees, but someone makes a second purchase. Thus, with a simple phrase and without cost, we immediately increased turnover.

You can tell that this annoys customers. But what kind of customer would be offended if he was offered shoe polish with his shoes so that they would last longer?

Another take. When a client, for example, made a purchase for 4600, he is offered a keychain for 400 rubles to get a round sum. And some agree not to bother with the change, but to give exactly 5,000 rubles.

In addition to the main products that you trade, you need to offer related products.

An example from our business

If you are selling Jewelry, then gift wrapping is very suitable as an upsell. For example, we have a standard gift box that comes free with every piece of jewelry. But there is a VIP package from genuine leather, this is really cool and cool packaging. She looks very stylish. A gift in such a package looks more expensive.

We actively sell it and earn extra money on this package.

But first we had certain problems. The genuine leather VIP gift package did not sell well, despite the fact that scripts were written for the sellers to sell this package. I knew that there were no sales, because the sellers do not tell the client about them. They, of course, are on display, but they are not actively offered. The problem was quickly resolved after the indicator was introduced into the seller's plan - the sale of leather packaging. That is, if you have not sold, for example, ten leather boxes in a month, the salary is 5% less.

It is optimal to do an upsell at the moment when the client agreed to buy, and before he gave the money.

The easiest way to sell related products, even without the participation of the seller, is to place such products next to each other, in sets. For example, in a jewelry store, a bracelet, ring and earrings that are in harmony with each other should be placed side by side.

If you do not use these methods to increase the average check, you are constantly losing your money.

How sales happen in most stores that do not use the technique of increasing the average check

Real life example

I often use printing services. This, of course, is not a store, but the principle is the same.

Once I ordered a bunch of flyers. I was sitting on the couch, while the manager was writing out the bill. Behind her stood Big cupboard, where a whole bunch of printed products was piled up, and then the thought came to my mind: “I wonder what else can be ordered here?” I ask the manager: “Do you have some kind of catalog where I can see the entire list of your services?” The manager looked at me mysteriously and replied: “No, there is no such thing. But you can see examples behind my back.” And that’s it, no one even asked me: “Can we do something else for you?”

They themselves are engaged in the design and manufacture of printed products. Not only do clients not know the entire list of their services, they still do not offer anything in addition.

We use the services of several printing companies, and no one even tried to lure us in, although our company orders a lot: flyers, business cards, posters, LDPE bags, paper bags, postcards, price tags and much more. And only a third we order from this organization.

Why not ask: “What else of what we make can be useful to you in your business?” This organization could make good money on us.

A customer cannot buy what he does not know about

Please answer the question: do customers know about all the products that you have?

You need to tell customers about all your products. Start offering them after the purchase your other products that they did not buy. Include their addresses in the automatic mailing list on the site, and they will be aware of all your new products.

Example

When customers buy from computer firm, she included their addresses in her mailing list. Through a series of letters, the firm told what it still does and what products and services it has. When using only this technique, sales growth was 20%.

What to offer customers if I do not have related products?

If you don't have a clearly related product, then you need to offer the most popular products, just say that this is our most popular product, look. And offer to all buyers.

It is necessary to use pre-prepared scripts for sellers and, in order for sellers to actually sell, set up sales indicators for sellers.

If your store uses 1 C, then you can set up a cashier's place and, before he prints a check on the monitor, a message pops up about an upsell or other special offer. How else can you stimulate an increase in the average check? We will talk about this further.

We sell in packages

Another way to increase the average check is to combine goods into “packages”.

Example, jewelry store

Set "Ring + bracelet + chain" to sell at a bargain price. Moreover, if you buy jewelry separately, then this purchase will be much more expensive. You should definitely tell the client how much money he will save. If you buy separately, everything together will cost 16,000 rubles. And if all at once, then - 12,900 rubles. And the client will save 3100 rubles.

Selling additional options

Another way to increase the average check is to sell additional options to your products.

What additional options can be sold in the store? Here are a few possibilities:

Delivery of goods to the house. If you have a regular store, then why not offer the client to deliver all the purchased goods for an additional fee?

Delivery of the client by taxi to the house after shopping in the store.

Extended Warranty. Possibility to buy additional warranty.

Assembly and installation.

End of introductory segment.