What Could 30p Be Costing Your Retail Business?
I've just returned from Philadelphia, where I spent three days with some of the best independent retailers I know.
It's one of the things I value most about getting away from the day-to-day running of my business. The opportunity to sit down with other successful business owners, share experiences, challenge each other's thinking and come home with fresh ideas.
And this time, one conversation in particular got me thinking.
Numbers. More specifically, average transaction value.
A conversation that sent me back to my numbers
Average transaction value (ATV) is simply the average amount a customer spends each time they make a purchase.
It's one of those numbers that every retailer should know. But knowing what it is and really understanding what it's telling you are two different things.
We'd been discussing ATV during our meetings, and that evening, back in my hotel room, I decided to take a closer look at my own figures.
What I discovered surprised me.
Our customer numbers were up in October. That's good news. More customers coming through the tills is something most retailers would be pleased about.
But there was something else happening.
Our average transaction value had fallen by just 30p.
Thirty pence!
It hardly sounds worth worrying about, does it?
But when I multiplied that 30p by the number of transactions we'd put through the tills, I realised it represented thousands of pounds in lost sales compared with maintaining our previous ATV.
And that got me thinking even more.
What could an extra 60p be worth?
Imagine we'd managed to maintain our previous average transaction value and then increased it by another 30p.
Instead of being 30p down, we'd be 30p up.
That's a 60p difference per transaction. Potentially £10,000 in additional sales in my business.
Now, I appreciate every retail business is different. Some shops put through hundreds of transactions each week, while others put through thousands.
But that's not really the point.
What would an extra 60p per transaction be worth in your business?
Take your weekly transaction numbers and multiply them by 60p. Then multiply that by 52 weeks.
You might be surprised by the answer.
And we're not talking about opening another shop, spending thousands on advertising or finding hundreds of new customers.
We're talking about making a little more from the customers already choosing to shop with us.
Of course, additional sales aren't the same as additional profit. But understanding the opportunity is the first step towards doing something about it.
The difference between amateurs and professionals
One of the things that struck me during those three days in Philadelphia was just how closely some of the most successful retailers understand their businesses.
They know their sales. They understand their margins. They watch their customer numbers and their average transaction values.
And importantly, they use those numbers to make better decisions.
I've long believed that one of the biggest differences between amateur and professional business owners is how well they know their numbers.
Numbers. Numbers. Numbers.
You can work incredibly hard, attract more customers, introduce new products and run brilliant promotions. But if you're not paying attention to what's happening beneath the headline sales figure, you could be missing opportunities right under your nose.
And sometimes, as I discovered in Philadelphia, it takes a conversation with another business owner to make you look at something differently.
Here's my question for you this week
How well do you REALLY know your numbers?
Not just your weekly turnover, but the numbers behind it.
Are your customer numbers growing? Is your average transaction value improving? Are you protecting your margins?
And perhaps most importantly, do you know where the opportunities are to make your business better?
You don't need to know every number in your business. But you do need to understand the ones that matter.
Because sometimes, the difference between a good week and a great o
