Solved: How to Increase Average Transaction Value in Retail
Warning: Trying to access array offset on value of type null in /www/citcon_716/public/wp-content/mu-plugins/wpengine-common/plugin.php on line 1485
Consumers are buying online more than ever. Since 2020, online sales have grown 33.6% while the cost for merchants to acquire new in-person customers became seven times more expensive than retaining existing customers.
These industry shifts make it imperative for brick-and-mortar retail stores to find ways to increase the average transaction value (ATV) for in-person sales.
To thrive as a brick-and-mortar business owner, it is important to foster long-term loyalty with customer experiences that provide shoppers with two things:
1 – The solution to a particular problem they face
2 – An experience they can’t get anywhere else (including online)
How do you create a store that meets these goals? How do you create an experience your customers will want to experience repeatedly?
This article explores tips and strategies for increasing average transaction values at your retail store by improving the overall customer experience.
Tip 1: Create a Great Customer Experience
Customers need compelling reasons to continue visiting your physical store and spend more money on each visit. To achieve and sustain an increase in your average ticket size, you need to build customer loyalty. The goal is for customers to leave your store feeling happy, surprised, or otherwise excited.
Creating a great customer experience starts with recognizing that how you’re selling is just as important as what you’re selling.
Think about your last great shopping trip. Was it the attentive service, the great atmosphere, or the ability to feel, examine and experience the products that made it memorable? Consider how you can deliver a unique experience so your customers are incentivized to continue returning in person.
According to Qualtrics’ 2020 “The Global State of Experience Management” report, 89% of companies with “significantly above average” customer experiences outperform their competitors financially.
Tip 2: Turn Loyalty into Increased Ticket Size
75% of consumers say they favor companies that offer rewards. Research conducted by Frederick Reichheld of Bain & Company showed that increasing customer retention by just 5% can boost profits 25% to 95%.
If you want to increase your average ticket size, customers need to feel an affinity with your company or brand.
Customers who are part of your loyalty program and receive perks for shopping in your store, may be more likely to buy from you instead of a competitor. According to a 2020 McKinsey survey on loyalty programs, members of paid loyalty programs are 60% more likely to spend money on a brand, while members of free loyalty programs are 30% more likely to spend money with a company.
There are many ways to structure a loyalty program. One way to use a loyalty program to increase average transaction size is to reward customers when they purchase and engage more with your brand or store. Rewards can include increased savings or special services and products only available to members who achieve specified status levels.
Here are three additional strategies you can use to increase customer loyalty:
Accept Contactless Payments
Overall, the use of paper money is hitting record lows. In 2020, Statista reports that just 12% of sales were completed using cash, down three percent from the prior year. The same report found credit card use at the point-of-sale in 2020 to be at four percent, while mobile wallet use jumped from six percent to 10% from 2019 to 2020.
Without the technology customers expect and desire, you’re not just missing out on one sale — but on the potential lifetime value of every customer. Contactless payments offer faster checkout times, convenience, and hygienic comfort for shoppers and store associates.
Protect Customer Data Through Tokenization
Security concerns are top of mind for many consumers. From the Equifax data breach to Meta’s (formerly Facebook) repeated privacy scandals, it’s hard for consumers to feel their data is safe.
Your customers are acutely aware of the security risks with cashless payments. One way to protect their sensitive data is through payment tokenization.
What Is Payment Tokenization?
Tokenization replaces sensitive data with non-sensitive data consisting of a unique string of numbers. Tokens can be stored in your system and re-used for future customer sales.
Here’s an example:
Let’s say your customer uses their credit card to buy a product in your store. Part of that transaction will include the transfer of their data to your payment gateway.
Although the original data is easy to hack, tokenization makes it nearly impossible.
With tokenization, your customer data is substituted, encrypted, and sent to a payment processor. A randomly generated string of numbers (or tokens) will be made and stored in a token vault at your payment gateway.
Tokenization is more secure than a standard credit card purchase because hackers will never have direct access to your customer’s data. Since sensitive data is never stored in your system, payment tokenization also reduces your PCI compliance burden.
Payment tokenization is a win-win for both merchants and shoppers.
Make Check Out Easy
Adding value for your customers can be as simple as making things easy at check out. Whether that happens in-person or online, here are three things you can offer to improve the point-of-sale experience for shoppers:
1 – Alternative payment methods: Your international customers expect a wide range of payment types. Help them reduce the chance of canceled purchases and chargebacks by accepting global payment solutions.
2 – “Buy now, pay later” payment plans: Payment methods like Klarna help shoppers pay for products over time. This budget-friendly option can help your business sell bigger ticket items that may have otherwise been missed revenue opportunities.
3 – Seamless pay for faster lines: No one likes waiting in checkout lines. In addition to offering a payment method customers expect and prefer, contactless payments will have your shopping queues moving noticeably faster — improving the overall customer experience.
These solutions can all work in concert, providing your customers with a frictionless and more enjoyable shopping experience. You’ll retain more business, sell more products, and ultimately increase your average transaction value.
Tip 3: Create a Sense of Community
Your retail space is more than a physical structure — it’s part of the community. Use this to your benefit by hosting classes or events in your store or by giving back in other ways. Creating a brand community is a great way to keep current customers engaged. A recent study by Accenture found that “two-thirds of customers will spend more on brands to which they are loyal.”
Tip 4: Partner with a Global Payments Gateway Provider
Digital payments aren’t just taking over the online world. Plenty of large businesses leverage this technology to increase their in-store footfall.
For smaller retail stores, offering contactless pay, digital wallets, payment tokenization, international payment methods, and payment plans may seem intimidating or too complex to consider. But with just one API integration from the right global payments provider, businesses of all sizes can implement and accept these newer payment solutions.
Here is how a global payments provider can help increase the average transaction value for your business:
Keep Processing Fees Low
High processing fees add up quickly and reduce profits. Look for a payments platform with optimized rates to reduce costs and grow your revenue.
Increase Authorization Rates While Decreasing Liability
False authorizations cause money to slip through the cracks and into your competitors’ pockets. In fact, false declines cost businesses over $20 billion a year and hand $13 billion to direct competitors, resulting in lost revenue for your store and frustration for your customers at the point of sale.
You can address the issue of false declines by implementing the ability to accept digital wallet payment types. When choosing a payments provider, ask about their authorization rates and how they filter out fraudulent payments that lead to chargebacks and liability fees.
With the right strategy, you can look forward to increased ATV in your retail store. However, it’s important that along with developing a more loyal and satisfied base, you offer the alternative payment methods modern shoppers demand.
A global payments gateway that integrates seamlessly with popular eCommerce shopping carts, POS software, hardware, gateways, and apps like WeChat, WhatsApp, and Tulip will be essential to increasing your store’s ATV. Keep an eye out for solutions that help you deliver beyond your customers’ expectations.
If you need help with your ATV strategy or are interested in upgrading your payment gateway, we can help.