Matching Your Passion With Profits:
Tracking Your Daily Average Ticket
As part of the Tru Vue® Retail Makeover, Ken reviewed the financials of Tom Perrine’s business, Frame Works, in Johnston, IA. This is part of ‘Matching Your Passions with Profits,’ a series of articles with advice on how to improve profitability and create a sustainable business that enables custom framers to keep doing what they love.
The fastest way to a more profitable custom framing business is by increasing the average price of the projects being sold. One of the greatest things about improving profits through growing average ticket is that you only have to increase your average sale a slight amount to make a huge difference. You need to know where you are to develop a plan for improvement. The desire to achieve a goal is not enough. The only way for you to reach a goal is to track and score what you are doing now. With tracking, your goal changes from something you desire into something you focus on achieving every day.
Working with custom framers on profitability, I have found that creating a simple scorecard that is filled in each day by every designer is the most effective way to improve a company’s average ticket. To do this accurately you must track every opportunity your shop has for a custom framing sale.
As we all know, there are many times when a customer is not interested in custom framing. They may just need a repair or fit a piece of art into a frame they already own. To score your company’s true average ticket, it’s best to only look at instances where you have the opportunity to sell something that genuinely captures your design skills. For this reason, it’s best to keep score manually rather than rely on your POS system which will count every type of project you take in.
If you have each designer score themselves individually, very revealing patterns develop after a few short months. Those who excel at obtaining a higher average ticket can then help the rest of the team improve their design and sales skills.
Here are four direct benefits to building a better average ticket:
- A small improvement leads to big benefits. For example a company doing $150,000 in custom framing sales, with an average ticket of $125, would increase sales by $30,000 in one year if they raised their average ticket by only $25!
- Your company can do FEWER projects and still make the same money, saving you production labor. Using the above example, if average ticket went up $25, the company could do the same sales of $150,000 and produce 200 fewer projects per year.
- Concentrating on average ticket helps you move away from discounting. Every time you discount you lower your average ticket. If your team focuses and records their average ticket each and every day, they will be much less likely to o er discounts.
- Building average ticket leads to better designs. The most important way to build a value for your company is to promote your talent as a design driven company. Any framer can put something in a frame. Those who excel in custom framing brand themselves as designers capable of producing something very special.
How different shops can benefit from tracking average ticket
The Shop A framer was one who does not understand the benefit in tracking numbers. They love to design and sell, yet they hate the “business” aspect of doing business. Because of this, the owner and the team have no real idea about how they are doing. They don’t track or measure performance, so they have no concept of their true effectiveness in the area of average ticket. If you don’t know how you are doing, you can’t begin to improve. Without score keeping, this company will never know if they are improving or going backward until it may be too late. They are also missing an opportunity to motivate their team to grow their design skills.
Shop B focuses on what the competition is doing and worries a lot about being too expensive. They often use discounts to make sure they have no price objections. This is perhaps the type of company that could benefit most by tracking average ticket. Setting goals and monitoring performance daily will change the focus from making a sale at all costs to making sales that contribute to the company’s profitability. Without tracking, the company will continue to emphasize getting any sale they can, instead of making sales through the use of inspiring designs.
Shop C has the belief that custom framing is too expensive. They are convinced that prices for framing are too high, and they don’t have confidence in the value of what they produce. They design with low priced materials because they assume their clients also feel that custom framing is priced above its value. This shop won’t grow average ticket until it believes that the company is in business to provide something people really value. This type of shop can benefit by setting small goals for improvement. By setting a goal of just a $10 increase in average ticket and then upping that slightly once the goal is reached, Shop C can change its focus and start to understand that their customers already have a higher appreciation for design and that they can do a better job of providing that.
Tracking average ticket and setting small goals for improving it is the single most productive goal you can set for your business. Growing average ticket reinforces all the things that contribute to a healthy business, and it discourages the use of things that hurt profits. Measure your current average ticket, set a very realistic improvement as a company goal, track it daily and share results with every designer on your team. Within just a couple months, you will have changed the focus of your business.
A real-life success story
Tom Perrine of Frameworks, IA: Tom Perrine, owner of FrameWorks in Johnston, IA, has been working with me for more than a year, the first six months as the winner of the Tru Vue Frameworks for Success. Following is his experience using the average ticket score sheet.
“I have been using Ken’s ‘Sales Opportunity Sheets’ for about a year now. They allow me to quickly see just what my business is doing and how I can grow my business. Seeing my average daily ticket has been quite an eye opener for me. I always knew that getting my average ticket price up would be a good way to increase my profitability, but now I see, on a daily basis, just how easy it is to track average tickets and work on getting those numbers higher. I have found that a small increase in my average ticket makes significant improvements in my profits! I can honestly say that using these simple tracking sheets have empowered me to know how my business is doing on a daily basis and where I can grow business. These sheets are remarkably easy to use and a bit ‘habit forming.’ They both challenge and encourage me. We all get busy. We all think we know how our businesses are doing. I have found that by using this technique of tracking my average ticket, along with a few other tracking techniques, I am more aware of what is happening with my business.”