What we think of as revenue isn’t something that should be thought of as one number but four “levers”. Number of customers, price, items purchased per visit, and frequency of customer visits. The McDonald’s example is brilliant since it points out a successful giant like McDonald’s doesn’t really get “new” customers but the same folks either coming in more or less frequently. The number of customers isn’t as important as frequency and number of items purchased. What can tweak this is the price of the items. Hence why one should not look at revenue as one simple number but four factors.
Key Takeaways:
- Your business earnings is a reflection of the amount of customers visiting your establishment, the number and frequency of their visits and the price of what they buy.
- Retailers need to ask themselves which variant do I need to focus on, because picking the one that can be feasibly altered can boost company earnings.
- For example, a well known company, like McDonald’s, is unlikely to get more customers, but it can work on upping the frequency of those customer’s visits.
“Your sales revenue is not one number, it’s actually made up of four variables and you can increase each variable to grow your business.”
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