Thursday, 31 March 2011

How Much Is A Customer Worth? - Part 2

On 17th March we posted about the trader who had decided to give a free gift to customers to thank them for shopping at his stall. This followed a quote by a US retail commentator who said, if we value foot traffic so highly, why don't we reward customers who visit our shops.
Our trader has reported a good response from customers and, although he has yet to assess the impact on sales, the initial economics look OK. The giveaway costs 60c and is given for sales of $10 or more. At the bottom end ($10) the gift takes around 10% of gross profit while at the average sale ($29) it represents around 3-4% of gross profit. 
The gift is presented as a "Thank you for your business" and all customers have responded very well. Many are surprised to receive a gift and openly express appreciation. This trader doesn't discount his displayed prices so the gift is a useful softener for customers seeking a discount. The jury is still out on whether the gift increases sales but this trader sees it as a useful adjunct to his merchandising program and he likes the idea of a smile at the end of every sale.
The idea may be useful to other traders.

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