Why Complementary Sales are SO Important

 

If you want to make more profit, you don’t want to miss this! Below is a table showing how a retail store selling $3,000,000 in annual sales can bring home $240,000 in profit for Excelsior Service Plans alone! In this example we’re using service plans, but you could easily extend this to lamps, rugs, mattress protectors, detergent and more! This isn’t just theory; we’ve been in business for over 30 years helping retailers get the most profit they can.

Want to get this profit in your store? Contact sales@phoenixamd.com. We’ll show you how focusing on complementary sales can dramatically increase your profit margins.

 

Example store annual sales	$3,000,000
Average retail value per invoice	$1,500
Average number of total invoices / opportunities	2,000
Average retail value of a service plan	$230
Total potential retail service plan sales	$460,000
Total potential retail service plan sales as a % of total sales	15.33%
Average dealer cost of a service plan	$110
Average dealer profit per service plan	$120
Total potential gross profit from  service plan sales	$240,000

The full original article from The Monthly Minute (October 2023):

In retail, it’s easy to think that selling expensive items is the key to your business’ success. Sure, revenue looks good on paper, but it’s profit that fuels your business growth.

You can make more money in three ways: cut costs, get new customers, or sell more to the people who already shop with you. But cutting too many costs can actually hurt your business, and getting new customers can cost a lot with no guarantee it will work. So, selling more to your current customers is the easiest way to make more money.

This is where complementary sales come into play. Complementary sales, or add-on sales, are the extra purchases you can offer the customers in your store that already want to buy something. For instance, a couple buying their first sofa might also be interested in throw pillows and area rugs. Similarly, anyone purchasing a mattress could also use a mattress protector, sheets, and pillows. These are easy sales that make a big difference.

You might think these are just small sales, but here’s the kicker: the profit from these add-ons goes straight to your bottom line. When you sell a big-ticket item, the margin often covers just the overhead. Your take-home profit frrom these sales might only be around 5% in some cases. But sell a lamp, service plan, or bottle of detergent, and that mark-up goes straight to your bottom line.

So, the next time a customer walks into your store, remember that the most profitable sale might just be the add-on. Start focusing on complementary sales and watch your profits soar effortlessly.