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20 Jan 2014

The 36 Stratagems that Made McDonald's Rich

Throughout the world serving 69 million customers every day, the world's largest and most profitable restaurant group earns net profits as high as 20% of its sales.  From New Delhi to China, from Tanzania to Singapore, every time when you order something at McDonald's counter, their staff will inevitably ask you one question: Do You Want to Up size?

In fact this single question made McDonald's rich.  Notice that McDonald's did not ask you other questions that most salespeople ask, including, "Can you give us some referrals?", "Do you want to become our member to enjoy discounts?" or "Can you please come back next week?" etc.

If you answer no to the above 'Up size' question, McDonald's staff will next ask you, "Do you want an apple pie to go with your meal?"  If you still answer no to this question, the staff will ask you "Do you want to add $1 to get the limited edition Minion toy?"

All the questions above are questions that increase the average dollar sale.  Yes, the fastest way to increase your sales is not to advertise to get new customers, nor is it to create loyalty programs to get your customers to come back again.  The fastest way to increase your sales is to simply increase your average dollar sale.  This is because you already have the customer with you, why not just maximize the transaction value?  This strategy is so obvious but few use it.  To us, there are at least 36 Stratagems to Increase your Average Dollar Sale:
  1. Up Sell - the 'Up-size' question
  2. Cross Sell - the 'Get another product' question
  3. Add On Sell - 'Get another product at just $1'
  4. Bundle Sell - kids meal are bundled with toys like Minions
  5. 'Down' Sell - start with the higher price first and move down
  6. Increase your Price - this is the most direct way but may leave customers unhappy
  7. Increase your Price but Give More Value - this way the customers will end up with a good deal
  8. Create Impulse Buy specials 
  9. Create Packaged Deals - where the price is less than if ordered separately
  10. Bulk Buy Specials - like buy 10 get 1 free
  11. Move Up Market - serve only premium customers selling premium products only
  12. Give Away Perceived Value - like bigger bowl for just $1 more
  13. Educate customers on value, not price
  14. Scarcity - buy more today as price will go up or stock will be gone soon
  15. Incentives for Bigger Value Purchase - like free delivery if buy above $200 value
  16. Use a Check-list and when you go through it with your customers, they will end up buying more
  17. Provide Full Product Listing - and they will likely buy more
  18. Subtle Suggestion - like placing of emotional-buy products at their eye level at the exit
  19. Create Scarcity and people will pay more for things that will be gone soon
  20. Sell with a Either Or Question, and give better value for the higher price option
  21. Give people 3 options: 70% will choose the middle, 20% will choose the most expensive item
  22. Sell with Extra Warranty
  23. Sell with Extra Service
  24. Focus on Better Customers that are willing to pay more for value (and not go for price alone) 
  25. Get rid of Lousy Customers and your average dollar sale will go up immediately
  26. Clear Excess Stock Deal - tell them you are clearing stock, so worthwhile to buy more now
  27. Provide Incentives to your Staff that achieve Higher Average Dollar Sale
  28. Set an Average Dollar Value target for all sales staff
  29. Make Friend - as people buy more from friends
  30. Stop discounting - this is the most obvious
  31. Give shopping trolley (or provide delivery service) and people will stay longer and buy more
  32. Offer better Credit terms if buy above minimum value
  33. Strengthen your back-end support - and people will find it easier to buy more
  34. Create memberships - as members buy more and at higher value than non-members
  35. Train your staff on all of the above
  36. Just Ask Question and 50% of the time the customers will buy more, it's really that simple

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