Revenue for Retailers: How to Increase Customer Spend
7 Min Read
Written by: Parcel Pending
Innovative reward programs and exceptional customer service are no longer enough to boost and maintain a brick and mortar retailer’s revenue. Today’s retailers are looking for new ways to boost their retail sales and gain a competitive advantage.
In this article, we will discuss tips for how retailers can increase customer spend:
Hire and develop employees who can offer exceptional customer service
Will your customers receive great service? The first step to ensuring you provide exceptional customer service is to hire, train and develop your team. According to the McKinsey Global Institute, “superior talent” is up to eight times more efficient than average employees. Companies like Glassdoor report organizations with a robust onboarding process improve productivity by more than 70%.
You also need to provide a work environment that ensures your team thrives in terms of customer support and work efficiency. This can come in the form of increased employee training or improving the physical space employees work in. Employees should always be in a position to assist a customer’s needs; that means not being tied up rearranging boxes or stuck behind a counter remote from the action. Additionally, RetailDoc reports that retail staff need to focus on selling the value of a single product vs. the price of the product while also looking for ways to enhance that value with additional products. This tactic will generate more up-sells and add-ons. Whether it’s a good or service, you will always want to offer best-in-class customer service and your staff can help you do so.
From gift card breakage to service agreements and estimating returns, retailers need to take an in-depth look at all factors that can potentially impact their revenue streams. For example, the National Retail Federation estimates that total merchandise returns cost U.S. retailers a staggering $351 billion in lost sales last year. With e-Commerce return rates as high as 30 percent, returns are definitely a major pain point for retailers. In fact, returns top the list of retailer challenges (48%) followed by customer issues with packing/shipping items for return (39%).
Retailers also need to remember that the new revenue recognition standard goes into place this year. ASC 606 is the new revenue recognition standard that affects all businesses that enter into contracts with customers to transfer goods or services – public, private and nonprofit entities. This defines the how and when a business addresses income it earns through contracted work.
For example, for the card issuers, gift card sales are essentially an obligation to deliver goods or services in the future. Under both new and old accounting standards, gift card sales are initially recognized as a liability. The gift card revenue is recognized only after gift cards are redeemed. Meanwhile, the income recognized from the gift cards that are never expected to be redeemed is known as breakage income. Under ASC 606, companies are expected to use a redemption pattern method – prorated recognition based on the redemption pattern of the gift cards sales – for their financial accounting.
Set the right sales targets
When it comes to setting sales targets, the first thing you have to take a close look at is your revenue. What revenue do you need to hit in order to be successful? Next, examine how well you have currently been doing with your sales. For example, if you’re doing really well with sales then it may be time to boost your sales goals. Afterwards, analyze the timeline to achieve your desired revenue figures. How long do you think it will take your team to learn about the products or services? Finally, you’re ready to develop your sales targets based on all of these steps. You will want to set challenging yet achievable performance obligations for your sales team so start with daily or weekly sales targets for your team. According to Harvard Business Review (HBR), salespeople who start off the month poorly might become less motivated after realizing they weren’t going to make their quota for that month so daily quotas can help prevent such behavior. Additionally, HBR found that having daily quotas increased sales productivity by nearly 5% and that the improvement was more pronounced for low-performing salespeople, with the bottom quartile experience an 18% boost in sales productivity.
Nowadays, loyalty programs won’t cut it when it comes to winning over customers. Consumers, especially millennials, want to purchase products from companies that care about mankind and the environment. That is why it is now more important than ever for a publicly or privately held retailer to invest in CSR. In fact, a recent Cone Communications survey found that 87% of consumers are apt to purchase a product if the company supports something they care about and a recent Nielsen study showed that about three-fourths of Millennials are willing to pay more for sustainable offerings.
Have strong in-store visuals
Grab new customers’ attention through signs that represent products and brands. Depending on the type of location, this could be outside in a parking lot, on the sidewalk, or outside of the shopping center in which the store is located.
Leverage new technologies within the store. Many clothing retailers are investing in smart dressing rooms that allow customers to browse through products or are utilizing augmented and virtual reality platforms that enable users to visualize products. Implementing this technology can place a retailer ahead of the competition in-store and help differentiate one retailer from another.
Regularly update your displays
Do research when determining the layout of the store. Of course, store layout is completely determined by the category of products sold, but there are definitely creative ways to grab customers’ attention. Be sure to pay attention to the 2020 retail trends in the sector and invest in market research when selecting the layout.
Proper management of storefront and display. Use customer base research when choosing how to organize and market goods. Think about what the target market wants and present it so it is the first thing that they see when approaching the store.
Reduce wait times
When customers arrive at a store, they expect their online orders and items to be waiting for them, not the other way around. One way for retailers to reduce customer wait time is with Parcel Pending’s BOPIL – Buy Online Pickup in Locker – locker solutions. BOPIL significantly reduces customer wait times by making it quick, easy and convenient for them to retrieve their orders. In fact, customers can be in and out of the store with their online orders within just minutes verses having to wait 10-15 minutes for a store associate to locate and provide their order.
Parcel Pending’s BOPIL to the Rescue
BOPIL is the newest disruptive technology poised to shake up the retail industry. BOPIL is more than just a smart, electronic locker system. BOPIL is the engine that keeps the BOPIS experience running smoothly. In today’s competitive landscape, retailers need their BOPIS process to be on point, and BOPIL helps them achieve this. Some of the top benefits of BOPIL include:
- Revving up revenue. By bringing a customer into the store and delivering a convenient and quick experience, customers are more likely to impulsively purchase additional items. In fact, 61 percent of shoppers and 75 percent of millennials who come into the store to collect their online order make an unplanned purchase. Moreover, with BOPIL, stale merchandise is back on store floors faster improving the potential for sales. You can also drive additional in-store purchases by rewarding customers to utilize BOPIS via product coupons or samples in the lockers.
- Driving in-store traffic. More foot traffic equates to more opportunities to market to and encourage customers to buy something. Kohl’s is just one example of a retailer that has experienced a boost in foot traffic thanks to electronic parcel lockers. In fact, the retailer had a 12% increase in foot traffic after installing return centers.
- Boosting marketing opportunities. Macy’s offers their customers a 20% in-store discount as a reward for utilizing their electronic parcel lockers. This type of incentive helps to get their customers into Macy’s twice – once to pick up the online order and then again to make use of the 20% savings coupon. There are countless ways that BOPIL can help retailers market to their customers and providing a 20% discount coupon is just one effective example.
The retail industry is evolving daily and the competition for customer spending is fierce. The good news is that there are new ways – like Parcel Pending’s BOPIL solutions – for retailers to impact their bottom line. Learn how Parcel Pending can help increase your revenue today!
- McKinsey, available at: https://www.mckinsey.com/business-functions/organization/our-insights/attracting-and-retaining-the-right-talent
- Glassdoor, available at: https://www.glassdoor.com/employers/blog/the-top-onboarding-trends-to-keep-an-eye-on-in-2019/
- National Retail Federation, available at: https://appriss.com/retail/wp-content/uploads/sites/4/2018/12/AR3018_2018-Customer-Returns-in-the-Retail-Industry_Digital.pdf
- Invesp Conversion Rate Optimization Company (2016). Infographic. Retrieved from: https://www.invespcro.com/blog/ecommerce-product-return-rate-statistics/
- Retail Touch Points (2018). Are you winning the last mile of retail? [survey]. Retrieved from: https://www.oracle.com/webfolder/s/adv/doc1/RT153-SURV-LastMile-Mar-2018.pdf
- Harvard Business Review, available at: https://hbr.org/2017/08/study-more-frequent-sales-quotas-help-volume-but-hurt-profits
- Multichannel Merchant, available at: https://multichannelmerchant.com/blog/6-reasons-retail-brands-invest-in-corporate-social-responsibility/