Season 2, Episode 23
How To Increase Customer Spend
“The more likely they feel like they’re joining something that’s important to them, the more likely they are to spend more money with you. So the key here is called making the customer a hero.” -Lyle Leads
Join Matthew Zamutt and Lyle Leads as they discuss Part 3 of our series, “The Only Four Ways To Increase Profitability in Business.”
In this episode we will cover:
– How to get your customers to buy more
– How ecommerce increases customer spend
– What is point of sale?
– How to increase customer spend with a service based business
– How Starbucks creates an experience with customer spend
– Making your customer the hero
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Transcript Of The Main Podcast
This is a fun series to me. I’ve read books about this. You can search us on the line, but seriously.
Don’t try to challenge me, just go with the flow. There are three there are four ways that you can increase profitability in your business and only four ways everything else is going to feed off of those four ways.
So in session one, we covered how to get more customers, more leads in session to recover, how to get customers to come back more frequently. Now, in session three, we can talk about how to increase the amount customers spend with you. So, Matthew, have you ever gone to McDonald’s, by any chance? All the time.
What happens when you buy a hamburger there? Would you like some fries with that? Would you like some fries with that? That is the ultimate upswell up sell is the key when somebody is already purchasing something.
And this is huge a psychology. If I bring my wallet and I’m purchasing something for you and you add something on to that for a little bit extra, I’m more likely to go and pay for that because I’ve already built trusts in who you are as a as a business.
Does that make sense? Yep. So what’s my walls out once I’ve made a purchase, it’s more likely for me to make that purchase again with you or to make more purchases. I mean, Mathie, if you’ve been on Amazon and you ordered a T-shirt, let’s say, and they suggested another item to go with that, it happens all the time or you.
But let’s say you bought electronic thing. Did they ever ask you, like, if you bought a TV, did they ever say, hey, the other people that bought this would buy this also all the time?
What happens on the checkout page? Other customers who have done exactly so?
Amazon is a good example of this.
eBay not so much because eBay is built by individual customers, whereas Amazon has an integrated system, which if you’re going to have an increased average spend, you want to have an integrated system so you can suggest items. So let’s say I buy a TV. What might be a suggested item, Matthew? Suggested item for a TV would probably like a TV station, a TV mout, or maybe they would sell Amazon fire TV because you plug it right on the TV and there you go.
Exactly. Or even a cord.
Oh, or new remote or, you know. Well, hopefully it comes with a remote. Yeah, that’s the point. So simple to think about that. So think about in your businesses. What are some up cells you can have. So Matthew, I know we talked last week and I’m kind of doing coaching with you on this. I hope you kind of feel that as we go through these processes. I do. But last week you talked about you do what did you say?
Digital storefronts. eCommerce. Yes, digital storefront is over time. OK, so if somebody gets a digital storefront from you, what might be something you could offer them in addition to that, that would increase their spend for that one order? I could offer, I guess, what we’re doing now, additional Facebook. Facebook ads for those so you create this digital storefront and then you help them by getting ads whether to get ads, they have to be on a Facebook page.
Right. And if they don’t have a Facebook page, you might have a Facebook page.
Social media, branding. Exactly. And so you see how a single item can spread into multiple items. If I go to the store, if I go to McDonald’s, I buy hamburger. They’re going to ask for I want fries with that. What’s the next question? Would you like a drink with that? Yes, would you like to have a drink? Hey, if you make it a meal deal, it’s only twenty five cents more and you’re going to drink.
They do that. It’s more dollars more. Or, you know, you go to a sandwich shop. Hey, do you want a cookie? Do you want a brownie with that. You want chips. Exactly. And so you see this in the food industry really well, because they’ve got this thing called a point of cell.
A point of sale means when somebody is currently purchasing something, you offer them something in addition to it. Have you gone through a grocery store aisle recently, Matthew? And there’s maybe some candy or gum alongside of it. Yes, they actually.
OK, here’s something. I’m not going to go to party. But people love Reese’s Frozen, so they put the pieces in front of your ice cream and they put it in a little container. So when you open the door, hey, would you like Reese’s with this ice cream? And it’s like a quick little up. So weird, but it’s good.
So you used to be in the old school. They only put magazines next. They had a magazine rack next to the cashier station. Then they realized what people get magazines they’re more likely to buy, like something like a gum so that have little small candies specifically for the kids. But then they got to adults and then they said, well, somebody buy a little 5000 or 10000 candies, let’s put the dollar candies in there. They added more candy.
So that’s why when you go buy a grocery store, there’s candies and gum and magazines. And what have they added recently, Matthew? Do you know, like in the last five to 10 years? I’m starting to see that they’re starting to add like small house items, you just don’t think about it to you, right? They’re like batteries.
OK, so batteries, little things. But I’m thinking more along the sodas. At the end of the vending machines, yes, want to grab it? Yeah, because you’re hydrating whatever you just like I need a quick drink. Exactly.
So you’ve gone grocery shopping inside the store. Now you’re fixing to leave and you know, you can get in your hot car if it’s summertime. So you’re gonna need something to drink. So why not put a refreshing cold drink instead of buying one off the shelf? That’s not refrigerated. We’re going to the refrigerator right up front next to the cash register.
So you buy it.
That is a point of sale. So when you have a point of sale, if you want to get customer to spend more. Now, what about if you don’t have a physical item, you could sell them? What’s another way to service? So let’s say I’m a plumber.
If I’m a plumber and I come and I, I work on your plumbing and I fix your pipes, is there an upside to that? What you can do?
Sell my wrench. Not really, but they all service Service-based. So, like, all right, if they. Fix their bathroom, for example, I guess they would ask for a referral, so referrals goes back to our previous ones are getting leads. This is getting that customer to spend more. OK, so if we can get our customer spend more, we got to think about it. So there was a plumbing company or excuse me, not a plumbing company, a garage door company.
They fixed our garage door. And you know what they did? They offered us a monthly or yearly maintenance plan. That’s genius, and I got to use that that increases the so here we paid sixteen hundred dollars or whatever it was for the door and now for an additional one or two hundred dollars, we have a maintenance plan. But what did that cost? What do they do? They created a customer that’s already spending money and took a little bit extra money so they can come back.
And what happens if something breaks on it?
Who are we going to call them? Not exactly. So do you see how taking that one concept of increasing the average spend actually get your customers to come back more frequently, which is the previous lover? That’s genius. Isn’t that genius? So you want to create this this experience for your customer, not only do you have suggested items, but the more experience you give that customer, the longer they want to sit there. Starbucks is a prime example.
Does Starbucks do they do? Their whole business model is based on increasing your average spend.
Did you know that? Yes, I’ve noticed. So they get used to come in or they get you addicted to coffee and then raise the prices. Well, yeah, that’s true.
That’s not what we’re talking about. We’re not talking about increasing prices. That’s a whole different subject. We’re not increasing the spend, but. They started offering. Cookies and muffins and stuff to start with, biscotti and stuff like that. Well, the dry, so it’s going to drink more coffee so it can make you want more coffee. But they also created an environment where you can sit there more, more, more frequently. So they’ve created an environment where I’m going to invite my friends to come there.
So we’re going to spend more because now there’s two or three of us hanging out there.
And if we’re there for a long time, we’re going to eat something. And you know what? They’re playing music on the on the sound thing. Oh, look, right there beside the register, there’s a really interesting thing. It’s this is the CD that we’re playing on the sound system. You want one of these? This is exclusive Starbucks only. Oh, since you’re here frequently, did you know that we also sell these cups and if you buy this cup, you get a special discount on it?
See, I dare you to go in and just sit back if you really want a a crash course in how to increase the average speed set in front of the cash register at a Starbucks and watch what people do there create an experience.
They’re offering you cookies and CDs and special things. Eventually they got T-shirts and hats and all this kind of stuff. Why do they do that? They’re creating the experience. When you create an experience, your customers are more likely to spend more.
It’s that simple, the more likely they feel like they’re joining you. We talked about this last week, but the more likely they feel like they’re joining something that’s important to them, the more likely they are to spend more money with you. So the key here is called make the customer a hero. Matthew, what do you think that means? Make the customer a hero?
I feel like you’ve got to make them feel special, like they are the ones helping you, they feel like they’re the they’re the reason why you’re succeeding and they feel special on the inside. You know, I’m feeling part of you, you know.
Right. And see, you’re good with this kind of stuff. So if I feel like I’m connected to you anymore and I want to be more connected to you, what am I gonna to buy more stuff from you?
Yeah, if Matthew was my best friend in the whole world and I could spend time with him, I might have to buy a digital storefront and I have to buy some social media from meet him again, getting the idea.
So a lot of times we miss out on creating the customer to be the hero.
We think we’re the hero that’s solving this big problem for him.
But if you want them to buy more from you, make them the hero. That’s huge.
All right. So we want to increase it. Think about this in a different way. A lot of people do cells so they can increase the value. So to say buy one, get one half off. Is that a good or bad deal? Matthew, what do you think from a customer perspective? Ms. I buy one, get one, sounds better than a buy one, get half off because you still have to pay for the second item.
Buy one, get half off doesn’t really shocking, you know, and usually, OK, I’m not going to go off a little tangent there.
OK, so we’re going to tell you this. But the point is, if I say buy one, get one half off, you may not. That may not draw you in. Right. But what if you’re standing on the cash register and you’re buying the ARISS that’s frozen? And they said, hey, you know, if you had another one on that, it will give to you for half price.
You don’t think about it too long, see, you actually do do it. Do you see the difference? I do see the difference. It’s the presentation, the way to do it. Exactly.
So having a buy one, get one half off sell or that lead generation, that first lover doesn’t work in this concept. However, you get somebody at your cash register and you offer them a second item at half price, they’re 90 percent likely to buy it. I say 90 percent. That’s just a random made up number. But you get the point.
So that is called the point of sell. Ask them something they could do to up sell, ask them additional thing they can they can add to it, but also offer them something. But don’t be afraid to ask them for more money.
If somebody comes into my store and they’re buying, well, let’s go to Home Depot. If you go buy stuff over there, they’re going to ask you what? You know, no, I don’t think so. If you go to people and you buy stuff, they’re going to ask you what kind of car do you want with that? Do you want us to install it for you? Do you want us to deliver it for you? Do they do that?
All those things become part of the process. So you see how increasing the average spends comes with a customer service, but you’re also helping the customer out. You’re helping them by by allowing them things that are addicted to it. Now, it’s important to note on this part that when you offer them something, make sure whatever you’re offering them is in line with what they are currently buying. So if I came in and I purchased a stove and I went to the checkout, they said, oh, by the way, do you need a store with that?
So that would work. I just don’t think about these things, like I guess I don’t go to Home Depot enough. Well, I know, but think about it.
If you’re if you go in there for a stove, they’re not going to try to sell you a store because that does not align with your current purchase.
So if you want to increase the average spend order, you’ve got to have it aligned with. Now, how are you looking down on your phone or we had our 20 minute market.
Yeah, I was about to say, like, we’re getting pretty close to five minutes.
OK, so we’re at a five minute mark. So I always want to make these these podcasts. I want them to be valuable, but I want to be a short and to the point.
I want us to stay in 15 to 20 minutes because an hour long podcast is just way too long for people to really get some value out of it. So let’s recap what the value is from this one. Number one, if you want people to spend more money per order, make sure you have some kind of associated item to go with it. Make sure you have a point of sale system and don’t be afraid to ask for the cell when they’re checking out.
People are a lot more likely to buy when they’re currently checking out on their current. Situation, but make sure you create an experience for them, so when they check out that experience, makes them feel like they’re part of something bigger. Again, that’s a lever lever. No one wants to bring in more leads. Lever number two is to bring them back more often. Number three is to increase the profits. And again, if you did 20 percent at each level, you increased 20 percent more customers and you increased 20 percent more frequency and you increased 20 percent more.
More per spend, you’ve just increased your business by 60 percent with three lovers. Think about that. So in the last three things we’ve talked about in the last three sessions, you could take each of those, take these little podcasts, watch them over two or three times.
If you do have an hour, watch all them together. But make sure you’re taking notes and taking action on it. Did you do three? I was listening to you, though, and while this is about profitability, I’m Matthew, this is episode three of four of our our of our four part series called For Ways to Increase Your Profits in Business.
Come join us next week for our last part of part four of our series for Sorry. Now, again, all we’re to hear.
In other words, there’s four parts. We’re all part three come next week to part four is the final lever of how you can increase profits. The only four ways you can increase profits in your business. My name is Lyle has been optimize profitability.
And we’ll see you next week.
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