So I did my grocery shopping online last week, a hundred and eighty dollars, which honestly seems to be a normal grocery shop right now. It is what it is. I went through in the evening. I clicked everything. I checked out. I went about my day, and then the next day the delivery driver showed up. Three bags, three bags for a hundred and eighty dollars. Now to be clear, one of those bags, and I want you to picture this, one of those bags only held. A box of Coke Zero, an entire bag just for the box of Coke Zero. So the reality is, we're talking about two bags of actual groceries with no meat, just two apples for Alana's lunch, and a handful of stuff that I would call, at a stretch, basic staples. I stood there at the door, and I just looked at it. Three bags, a hundred and eighty dollars. I actually said to the driver, "Are there more?" And he's like, "No." That's it, and I think most of you know exactly that feeling. Maybe not in that specific moment, but you've had your version of it. You've opened a bill, you've restocked something, or you've paid for something that you used to pay half as much for, and you've just stood there thinking, "When did this become normal?" Hey there, I'm Salena Knight, and welcome to the Bringing Business to Retail podcast, where we talk all about the ways to make more money. And grow your retailer e-commerce business because here's the thing, that grocery shop is not just a Salena problem. That is an everybody right now problem. Costs are up significantly up. Here in Australia, our award wages, so our our basic wage, just went up by four point seven five percent, starting next month. You guys in the US, your minimum wages have been climbing state. By state for the last few years, and in some states they sit at around $17 to $20 an hour and above. In Canada, businesses are navigating tariff pressures, trade uncertainty, and their own cost increases that are being squeezed from multiple directions at once. Interest rates, depending on where you are sitting right now, have either stayed stubbornly high or they have gone up after people thought that the relief had arrived. Inflation is. Still above target in most markets, and this is hitting you twice. Your cost of doing business has gone up: wages, freight, platform fees, packaging, lease renewals. I just logged into my Notion account to discover—I can't believe it—we added a new team member, and I needed them to connect their Notion to Asana and to our CRM. And she kept coming back to me and saying, It doesn't work. It doesn't work. It's like, oh, you're gonna have to get onto support because it works for everybody else, only to discover the plan that we are on has deprecated all of those connections. It now only connects to, I think it was Gmail and Outlook or something, and so we now have to pay double for every single seat in our business who uses Notion to be able to access. The things that we accessed just a few months ago, and your customers—they are standing there at their own front door, looking at three bags, the same thing that I did. They're becoming more careful with their money than they have been in a very long time. So the squeeze is real, and it is coming from both ends. Now, when most store owners feel that squeeze, what is the instinct? It's we've got to sell more. We've got to get more customers. We've got to do more marketing. We've got to spend more on ads. We've got to run a promotion. We have to boost our posts. We've got to do something to drive more traffic through the door. And when I say door, I mean your online door or your physical doors. And I get it. I completely understand why that is your first move, because more customers always feels like the answer. If we get more people coming in, if we get more people coming to the website, we'll have more sales. We'll have more revenue. Problem solved. Except, is it? Because here's what I want you to think about: if your costs have gone up and the profit on each sale is already pretty thin, getting more people through what I like to call a leaky bucket strategy—that is not sustainable. It is just faster leaking. And the thing that I notice across thousands of retail stores is that most of them are pulling just One lever in their business to try and get back, claw back that money. And it is the most expensive lever of all. There are actually four places that money can come from in your business, four different levers that you can pull. Most store owners only use one of them. They're aware of the others, but they never actually stop and look at all four of them at the same time. They never run the numbers on what happens when you move each one, and that is what this episode is about. Because in an environment where every dollar of profit matters more than it did two years ago, knowing which lever to pull and when isn't a nice to have. Isn't something I'll get around to. Quite honestly, it's probably the difference between you staying in business and not. So in this episode, I want to go through all four of those levers, and for each one, I'm going to give you a very honest version of what it can do for you, and also where it has its limits. Because every single one of these levers has both, and it's easy for us to to default to the one that looks the prettiest on paper, without thinking about the implications in the background. Our first lever is your average order amount or your average sale amount. This is how much your average customer spends every time they buy from you, and it is probably one of the most underutilized levers in most retail or e-commerce businesses. Here is why I love it so much. You do not need a single new customer in the door to pull on this lever. Not one. Everyone who is already buying from you just becomes worth more. A customer who was going to spend eighty dollars spends one hundred and ten dollars instead. If we multiply that thirty dollars across a thousand transactions, that is thirty thousand dollars. If we multiply it by every transaction over a year, I'm guessing that you're looking at a very meaningful difference in revenue without spending any extra to get someone through the door. That means you become more profitable because it costs you money to get somebody in the door. If we can get them to spend more, then we keep more. It doesn't have to be complicated. Think about the last time that you walked into a store, whether it is physical, whether it is online. For me. A grocery store just last night, and someone showed you something that went with what you were already buying, or you offered a bundle, or suggested the thing that you didn't know you needed but immediately wanted. Even my grocery store is doing this now. When I go to check out, it throws things up like Amazon does, that says, "Yeah, did you forget something?" And usually, the answer for me is yes. I'm like, "Oh, that's right. I forgot. I was supposed to add watermelon." Ting, that is your average sale amount in action. Now, when you do it well, it actually feels like better service. Just like me for getting the watermelon and having it pop up at checkout, I'm happy for you to show me that offer. From the customer's point of view, we get more of what we wanted. From your side of the table, you make more per sale. Now, here is the honest part: there is a ceiling on this lever. You cannot push average order value up indefinitely without it starting to affect whether people buy at all. At some point, that upsell starts to feel like pressure, or the bundle doesn't feel like value anymore, and conversion starts to drop. So yes, this lever works. Yes, it is one of my favorites, but yes, it also has a limit. If your product range is narrow, or if your price. Points don't leave a lot of room for bundling or add-ons, or if you don't actually think about the way that you're putting this forward, then you will hit that ceiling pretty quickly. Now, let's say if we come back to my grocery store example, that when I get to these, hey, have you forgotten? If they're instead offering me things like, I'm just trying to think, denture tablets. I don't know where that came from. I never need denture tablets. I've never bought them. There's nothing in the algorithm. That suggests I might want that. So if they had put that in front of me, the whole experience just becomes icky. There's a few things we have to think about when we are trying to pull that lever of increasing our average order value. But for most store owners, they hit that ceiling way later than they ever think, because most retailers that I've worked with haven't even started implementing this yet. That's our first lever. Increasing our average order value. Our second lever is the number of customers and the number of visitors. Try to get that number up. We just talked about this. Now, this is the one that I find everyone jumps to. When things are feeling a little bit tight, the easy answer is we just need more customers. We just need more traffic. We need more followers. We need more eyeballs. And look, I want to be fair because there are absolutely times when pulling this lever is the right move. If you have a genuinely strong repeat customer rate. If you have been selling to the same pool of people for a long time and they love you to bits, the downside of that is that you will fatigue those customers. If you keep going back to that same group over and over and over again, at some point they're going to have bought what they need. And if you want to grow, you have to be bringing in new people. There is no getting around that. But here's a little benchmark that I'm going to throw out at you. The e-commerce industry average repeat rate sits at around twenty-seven to thirty percent. So, roughly one in three customers comes back. If your repeat rate is already at or above that, I see businesses quite often who are excited that their repeat customer rate sits at seventy percent. For me, that's a red flag. If you're already above that, then you're outperforming. But you also have to be thinking about. What am I going to do when these people stop? We do know that we need more customers. We need to be topping up what we call our customer funnel. But this is a big but. This is the most expensive lever to pull by an absolute significant margin. Acquiring a new customer costs between five and twenty times more than selling to somebody who already knows you. So the bonus is we can sell to those customers. Because they already have gone through the no like and trust phase, but at some point they're going to tap out. But if we want a new person to come in, we are going to have to pay for it. Ad costs are already up. Customers are already cautious with their spending. That number is not going to get any cheaper. So getting more customers is not wrong. Customer acquisition should one hundred percent. Be part of your entire marketing strategy, but it should be a very deliberate strategy. It shouldn't just be a reflex. It shouldn't be the first thing you reach for every time sales drop. Because if you are pulling this lever when you don't need to, when the money is already sitting in your existing customers or your conversion rate or your margin, then you are paying a premium for something that you may have gotten for free. If this is what you're defaulting to. When sales slow down, the simple fact is there's probably a much easier way for you to make more money, and it's sitting there inside of your business. Let's talk about another place where that money could be hiding. So my third lever is your conversion rate. Now your conversion rate is simply the number of people who visit your store, your website, your socials, and then actually go on to buy something. Now this is a lever that a lot of store owners Don't really go into detail when it comes to looking at it. If you're in e-commerce, I quite often see people go, "Oh, we're sitting at two percent. That's industry average," and they don't really think about it anymore. In-store, quite often, retailers aren't even tracking this, and so the number can feel a little bit abstract. But when you run this, oh my gosh, you will see just how how much more money is sitting on the table. If you decide to pull this lever, here's the thing: you already have the traffic. You've already paid for it, whether that is in ad spend, in time, in content, in word of mouth, in the amount of money you've spent for somebody to merchandize your windows, whatever you have been doing to get people through the door has cost you money. And every single percentage point that you add to your conversion rate applies to everybody who is already visiting you. No extra money spent. No new audience. Just more of the people who are already there, and the people who are actually buying. These small improvements compound fast. When I talk about e-commerce conversion rates, if we can get you from one to two percent, that is not a one percent revenue improvement. It is literally a doubling of the sales that you are already making from the same traffic, from the same people, the same amount of money you spent to bring those people in. If we can get your conversion rate up five percent in store, that makes a huge difference to your bottom line. But big, big but on this one. Conversion problems are never just a conversion problem. When I see a low conversion rate in a business, what I'm actually seeing is a symptom, and this is why this one becomes really difficult to diagnose. Whether we're talking in store or online, it might be that the wrong people are landing on your website, people who were never going to buy. It might be that your website experience is really confusing, or It is slow, or the pictures aren't what your customers were hoping to see. It could be that your copy doesn't actually tell customers what they want to buy. It could be that the pricing doesn't feel like good value, even if it is. It could be that your product mix doesn't match what the customer came looking for. It's the same with in-store. Is it the simple fact that your sales staff don't make any effort to sell? Is it that what's in the window doesn't reflect the rest of your product mix? Is it that when somebody walked in, they looked around and they went, this is not what I was expecting." So we have a brand alignment issue. Looking at your conversion rate is going to tell you whether something is off or not, but it doesn't tell you what. And so if you're just trying to fix conversion rate without diagnosing why it is low, then you're just guessing. Sometimes you're going to guess right. Often you're not going to guess right at all, and you'll end up spending a lot of time and a lot of money on things that don't actually move the needle. This lever, extremely powerful, but you have to go a level deeper to be able to use it well. The fourth lever is your profit margin, and this is the one that most store owners honestly just ignore completely, or they only think about. About it when they have to do their taxes, profit margins have changed significantly. I know inside of my million dollar store, we just had this discussion about how from the end of last year to right now, profit margins have dropped significantly, but they've crept up. It's been a little bit here and a little bit there. So your profit margin is how much stays in your back pocket after each sale, but from that we have to take out. How much the product costs, what it costs to get to the customer, platform fees, transaction costs, overheads, all of those other things. But here's what makes this one different from the other three: the other levers increase your revenue. This one doesn't increase your revenue at all. It increases what you keep from the revenue. So right now, in a market where costs have gone up, where wages are higher, where freight and fees have All crept upwards. That distinction matters enormously, because you might be doing the revenue. Your top line might look fine, but if your margin on each sale has shrunk over the last three months, six months, two years, because costs went up but your prices didn't, then you are working just as hard, making just as many sales, but keeping less. And here's what makes this one worth looking at right now. A small improvement in your margin goes straight to your bottom line. You don't need to sell more. You don't need more traffic. You just need to make sure that the money that is coming in actually stays. The other good thing is you don't always have to lift your prices to get there. Honestly, it's the easiest way to do it. But some good negotiating on your supplier side can mean that you can put this money in your pocket without having to affect your customers. Now there is always a limit here. And it's the same one that has always existed. There is a floor on what your margin can push before it affects product quality, your relationships with your suppliers, or the customer experience. It obviously depends whether we are getting this profit margin increase from increasing our prices, or if we've found ways to take it out on the backside. And in an environment where your own costs are rising. Maintaining margin actually requires active management. This is not something that you can afford to just set and forget right now. You have to keep an eye on it. But honestly, most store owners they'll set their prices once, or they go to a supplier and they get their terms and they never renegotiate. They don't ever come back and revisit it. Costs go up, but that margin compresses, and then they wonder why I'm making the same amount of money. But there's not enough money in the bank account. Let's come back to my groceries. A hundred and eighty dollars. I looked at that delivery, and something felt immediately wrong. To the point where I asked the driver, "Were there any more bags?" In my head, the equation just didn't make sense. I knew what I had spent, and on the floor, I could see what I'd gotten, and the gap between that two was obvious. That the moment the delivery driver asked me to sign for it. But have you had that moment in your business where you know your revenue, you look at your sales? But you haven't stood back to look at which one of those needs to change to get you to the next level. Will it be your average order value? Will it be whether you need to increase your customers? Will it be going back and looking at margins? Will it be your conversion rate? When you don't have that picture, the instinct is always to go outward. We've got to get more traffic. We've got to get more customers. We've got to spend more on ads because that. Feels like it will be the answer, but the money that you're looking for is probably already inside your business—in the customers who are buying from you, but not coming back; in the website visitors who are leaving before they buy; in the average sale that could be just five dollars higher, without you affecting anything; in the margin that has shrunk because you are so focused on running the business, you didn't stop to look at what that bottom line looks like. The businesses that are finding their footing in this market, the ones that are growing, and the ones that are growing with money in their pocket, they're the ones who look inward first. They find that money that is already sitting there before they go out and look for more. That is not a tactic. It is just a different way of thinking about your business. So, if you're listening to this and thinking, "Okay, Sal, I hear you, but I don't know where to start," then I build something for that. It's a free profit calculator, and it does one thing well. You put in your numbers, and then it will show you live in less than sixty seconds what will happen when you move each of those four levers. These are not random numbers; they are numbers based on your business. What does it mean for you if your average order value goes up by twenty dollars? What does it mean for you if your profit or your conversion rate? Lifts by half a percent. What if you focus on margin this quarter instead of traffic? This little thing is going to show you all of it, and the best of all, it shows you side by side, so you can see which lever is going to give you the most return for the least amount of effort right now. And that clarity, knowing where to actually focus instead of just doing more of everything, that is worth more than any tactic I could give you. It's totally free because I am invested in you making more money in your business. You can get it for free over at SalenaKnight.com/calculator. I'll make sure I put a link inside of the show notes. Go and have a look, download it, put your numbers in, and see what your business is already showing you and how much money is sitting on the table right now. Oh, that was a big one today. We got down into the nitty gritty. I hope that you enjoyed this episode. It feels like ah, I've been a while since I've done a bit of a four-step process or a bit of a digging into all the different ways things work in your business. Let me know if you love these kind of episodes, and we'll do some more of them. Thank you so much for joining me here on the podcast today. And remember, if you want to find out where the money is already sitting in your business, grab my free Profit Calculator over at SalenaKnight.com/calculator. And I will see you on the next episode. So that's a wrap. I'd love to hear what insight you've gotten from this episode and how you're going to put it into action. If you're a social kind of person, follow me at the Salena Knight. And make sure to leave a comment and let me know. And if this episode made you think a little bit differently, or gave you some inspiration, or perhaps gave you the kick that you needed to take action, then please take a couple of minutes to leave me a review on your platform of choice. Because the more reviews the show gets, the more independent retail and e-commerce stores, just like yours, that we can help to scale. And when that happens, it's a win for you. A win for your community. And a win for your customers.