imagesNow that we’ve dealt with Gross Profit Margin and Weekly Gross Sales, let’s look at a Key Performance Indicator (KPI) that goes all the way down to the “per transaction” level.

When we talk about working smarter, not harder in service, it isn’t just about streamlining your processes, efficiency, and productivity. It’s also about how many times you have to go through certain processes. Like preparing estimates, presenting and selling; setting up a job; tearing down/completing a job. Each individual sale or work order requires those processes. The more you sell per each, the fewer times you have to repeat these processes to achieve the same gross sales goal.

In other words:

  • You can do 100 jobs at $1,000 each and have sales of $100,000 *OR*
  • You can do 50 jobs at $2,000 each and have $100,000, *PLUS*
  • Save an enormous amount of sales process, set-up and tear-down time, allowing you (with the same human resources) to accomplish additional jobs.

One of the clearest examples I can give is in automobile service and repair. Each time a customer arrives, they must be checked in, their vehicle walked around, and an employee may also provide shuttle service back to the customer’s home or office. The car is then driven into the work area, put on a lift, the requested service performed, the car lowered and driven back to the parking lot, and the customer contact for pickup of their vehicle –  assuming that no other issues are found that require diagnosing, preparing an estimate, and contacting the customer for approval of additional work. Other than the actual service being performed, the rest of that time is not directly producing income.  It is mind-blowing to calculate what it actually costs a repair shop per vehicle BEFORE ANY WORK IS ACTUALLY PERFORMED, averaging well above $150 per vehicle, with that cost increasing dramatically the more regulated automotive repair services are in a state. Think about that the next time you go shopping for the cheapest oil change in town – you might not like how they cut corners to get you that price!

The same idea can be applied to any service industry business – the time it takes to travel from each job site, hauling of equipment and personnel, checking in and billing out each client, and setting up everything that is required to provide the service you are providing are not directly producing income. They are necessary – but what if we could reduce how many time those non-producers needed to be performed for the same amount of sales?

I am a huge fan of upselling when it is done right. Upselling reduces these “unpaid” processes while increasing overall gross sales per receipt.

Many people have a negative connotation of the word “upsell.” It leaves images of a pushy, arrogant, or possibly desperate salesperson trying to talk someone into something they really don’t need or want. But you probably are upsold all the time and don’t even think about it. That pack of gum or mints at the cash register is an easy upsell for the retailer. Your stylist tried a new product on you that you absolutely loved and decided to buy it. Did you go ahead and get the seasonal maintenance package when you replaced your HVAC system? Why not let your favorite auto mechanic replace your wipers while he completes your oil change? They were streaking last week anyway when it rained.

Upselling is done right when a business has already established trust with their clientele.  Some businesses require a high level of trust before a new customer will even walk through the door. Trust can be established with great on-line reviews and current customers who are happy to tell others about you.  You can even establish trust through your selling process, knowing the balance of educating a customer and positive reinforcement (confidence) of why your business is the best one for the job.

Upselling is done right when it is a win-win for both the business and the customer. My stylist has done my hair for years. She knows that I am concerned about it thinning as I age. So, she recommended products that she sells that are specific to my concern. I am happy because she addressed my need with a quality product. She’s happy because she made an additional sale beyond my haircut. A win-win.

In the auto repair industry, it is common to recommend replacing both the water pump and the timing belt at the same time, even if only one has stopped working. Why? In most vehicles these two components have the same lifespan, so if one is bad the other will not be far behind; and it is also common to have to remove one to get to the other. So a shop will discount the labor from what it would be to replace these parts at different intervals if the customer agrees to replace both that day.  The customer is saving themselves money compared to what it would cost as two separate repairs, and the shop is reducing their “unpaid” processes while increasing their sales. A win-win.

Upselling is only one strategy for increasing your average sales per receipt, but it is a very effective one.

It’s up to you – you can work REALLY HARD for that $1M sales goal…

Or you can work REALLY SMART and achieve it anyway…

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