307 | Elevate Your Sales with These Two Wholesale Metrics
There’s no “easy mode” in business. Selling physical products is a lot of work and being a product entrepreneur requires grit, tenacity, and courage.
Today’s episode is for seasoned wholesalers who might be experiencing a slower sales season. If your sales have stalled, there are two metrics that you can tap into to build stronger relationships with your current accounts and sustainably scale your revenue for wholesale.
Tune in and you’ll learn:
how to find opportunities for reorders
ways to simplify your purchasing process
how to make small but impactful changes that improve cash flow for your business
This episode offers some high-level number-crunching and practical sales strategies that will help you increase your wholesale revenue and get out of your sales slump.
Today’s episode is brought to you by our signature program, Paper Camp, our 4-week program that takes the guess-work out of selling wholesale. When you follow the strategies and methods in Paper Camp, you’ll not only feel more confident but you’ll reach your wholesale goals faster. Come join the program now!
Two Metrics To Increase Wholesale Sales
If your wholesale sales have stalled, there are two specific metrics you should focus on:
Wholesale reorder rate
Average Order Value, also known as your AOV
The first way you can increase your wholesale profits is by increasing the frequency with which shops are reordering from you. In my communities, there is a lot of talk and focus on obtaining new shops. New shops are great and it is a lot of fun to hit different milestones — I love when people share that they’ve hit 100 shops, 500 shops, or event 1,000 shops.
But we also have to keep in mind that existing accounts are some of the warmest leads you will ever have. And, if you’re able to consistently nurture those relationships, you will very likely see more frequent orders and likely larger orders from shops.
If you are a member inside LABS, be sure to check out our training on customer retention and how to nurture your current customers.
We also have a podcast all on improving your customer journey that will be helpful in identifying ways you can nurture the relationships you have with your current customers or wholesale buyers.
80/20 Rule to Improve Wholesale Sales
Are you familiar with the 80/20 rule?
It is also known as the Pareto Principle but it states that 80% of our outcomes result from 20% of our inputs. In the business world, this boils down to 80% of our revenue, which typically comes from our top 20% of customers.
Do you know who your top 20% of wholesale customers are? If not, that will be your first piece of homework. Dig into who your top customers are.
1. Figure Out How Frequently Your Top 20% of Revenue is Ordering
Once you figure out who your top customers are, the next step is to look at the sales data for the top 20% and figure out how frequently they are ordering and what their average order value is.
Once you have those data points compare your AOV for the top 20% to your overall AOV for all customers. Are they the same, is one higher than the other?
These data points will give you good insight as to how often folks are ordering and where there is an opportunity to reach out for reorders.
For example, start with anyone in your top 20% of customers who have not placed an order in the last six months or more. You could send them a personalized email or a marketing postcard.
Look at the products that they’ve purchased in the past and make suggestions for complimentary items and best sellers that they might be interested in or that they may have missed.
Remind them about the key pieces of information that they need to make their buying decision. Things like your:
reorder amount
turn around times
types of product categories
number of SKUs.
We want to do everything we can to make it an easy “yes” for the stores — so focus on the things that they need to know to make an informed buying decision.
Focusing your sales & marketing efforts on your existing client base and specifically building stronger relationships with the top 20% of customers will lead to more frequent reorders and likely larger average order values from this shop.
2. Increase Your Average Order Value
The second way that you can increase your wholesale revenue and profits is by increasing your average order value.
I was perusing Faire recently and was shocked to see so many people with low or no minimum order amounts in their shops. I actually talked about why this is so detrimental to your business in episode 298.
But, back to increasing AOV.
Let’s pretend that you get on average 30 wholesale orders a month and that your average order value is $200. If we could incentivize our customers to purchase more of our products and thereby increase our AOV to $230, that would increase our monthly revenue from $6,000 to $6,900.
And if we extrapolate that $900 increase per month over the course of 12 months that’s an additional $10,800 per year in revenue for your business.
Let’s look at another example…. Let’s say that you’re increasing your volume of reorders AND you’re increasing your AOV.
So, midway through the year maybe you start averaging 40 new orders a month at the $230 mark, instead of 30 orders per month. Those 10 additional orders per month at the increased AOV would pump an additional $2,300 a month in income into your business. Over 6 months, that’s almost $14k in extra revenue.
How to Increase Your Average Order Value
So, how do we increase our AOV? There is not one method that works for everyone but here are a few ideas.
Simplify the purchasing process. Offer transparent pricing, wholesale terms & conditions, turn around times. Give wholesale buyers the information they need to make an informed and educated decision, AND make the check-out process as streamlined and simple as possible… to reduce and any all friction.
Personalize the shopping experience. In so much that you can offer suggestions for best selling products, new products, or items that complement other products that they’ve purchased in the past. This may involve a little digging into your sales data and some personal outreach to the shops, but providing personalized recommendations will further enhance your relationship with the shop owner and will likely improve your AOV.
Position our products strategically in collections or groupings that enable buyers to shop online while also being able to visualize how they would merchandise the products in their stores. This may involve bundling similar product categories like a group of candles or it could involve mixing and matching items into a set, like a candle, matches, a wick trimmer, etc.
Offer limited-time offers like free shipping if they reach and add more product to their cart. This tactic is typically more common on the DTC side, but it also works on the wholesale side as buyers love free shipping and will often add a few more skus to their cart to meet a minimum threshold for free shipping.
Scale Your Wholesale Sales
Slow sales seasons can be discouraging but there are things we can do in our business to increase sales and build relationships with our best wholesale buyers.
Be sure to focus on these two key metrics:
Wholesale reorder rate
Average Order Value
Once you figure out who your top customers are and what their AOV is as well as what types of things they typically purchase from you, you can tailor your outreach to their specific needs.
Quick Links
Here is a recap of links shared in this podcast and blog post:
If you’re looking for additional support as you grow the wholesale side of your business, join our Paper Camp program.
Paper Camp is an intensive program to help you not only understand the steps and processes within wholesale, but also why we do things a certain way and how it impacts your business. The alumni community also allows for even more collaboration to take your business to the next level by working with your peers.
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Connect with Katie Hunt
Katie Hunt is a business strategist, podcaster, mentor and mama to four. She helps product based businesses build profitable, sustainable companies through her conferences, courses and coaching programs.
Website: prooftoproduct.com | Instagram: @prooftoproduct
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