Why and How To Sell Products With Low Profit Margin
Many retailers are being forced to sell high-priced, low-margin products by their vendors right now.
The experience of their customers is what store owners should be focusing on, and not only the profit margins…
My parents moved me from Toledo to Los Angeles in the sixties. One of my non-negotiables when we bought our new home was a swimming pool.
A pool was everything Toledo was not. I grew up in a suburb without shade trees, thunder storms, and newspapers that I delivered in bitterly cold.
L.A. was about having fun under a clear sky. Simple living. The good life.
And I was only eleven.
The pool was beautiful, but it did not come with a pool boy.
It fell on me.
The pool was not just fun. It was also work. Every day, I had to grab dates from the palm tree above the pool. It stained the plaster if I missed one. Every Saturday, I spent two to three hours cleaning the plaster surfaces and vacuuming around the pool.
It didn’t matter whether it was hot or cold. Every day was a work day for a farmer who raises cows.
I quickly lost the glamour of having a swimming pool. It was a chore.
When I was asked about low-margin pool cleaners, I thought of that.
They understood that it wasn’t about the margin; it was about the customer. This applies regardless of whether you are selling pool cleaners, cameras, appliances, or other high-priced/low-margin items.
You have to admit it: Selling high-margin products can be easier and more lucrative than selling other products.
Think of all the customers who longed for a pool for many years. They could not wait to have parties around it and turn the lights on at night. It was their dream! Then, reality hit!
They didn’t plan the parties, they forgot about the midnight skinny dips, but they still had to go to your store each month to purchase chemicals for the harrowing chore of owning a swimming pool.
You wouldn’t mind if everyone got rid of that having to-clean monkey?
Are you not interested in making their pools more enjoyable?
You can do this with an automatic pool cleaner. Don’t you think these customers would tell all their friends?
These automatic pool cleaners, which cost $300-$1000, often end up in boxes on the back shelf of misfit toys. Anyone can ask for one if they want it.
Why is this?
It’s more lucrative to sell higher-margin cleaners, nets, and brushes than it is to clerk. It’s easy and takes little effort.
It is easier to sell multiple nets for $20 than one machine that costs up to ten times as much.
Your low-margin products might not sell because your employees are able to know your profit margins, and then sell down accordingly.
Here’s how it looks…
I was looking for welding equipment in a shop. I asked a man about a hood. I asked him about a hood. He replied, “You can buy the most expensive one, but the private label one is just the same quality and I make a better profit on it.” Wow! I really appreciated his honesty about his commission. However, I could see that the more costly one was superior by looking at both the products.
He looked at me with the extra commission in both of his eyes. Since he was honest and being friendly, he assumed that this would lead to a sale.
Uninformed customers would not know the difference and would have purchased the more expensive one. The same thing happens in brick-and-mortar stores all across the country with all types of goods.
Why is this?
One crew member confided that he was selling lower-margin items when he could sell higher-margin, lower-priced items. We make more money, and the customer is satisfied!”
But are they really?
It’s not my opinion. I don’t think so.
Manufacturers are forcing many retailers to sell high-priced/low margin products at the moment.
Remember to keep your focus on the customer experience and not only your profit margins.
Low-margin products should be treated as stars, and prominently displayed on your sales floor. You should then train your employees so that they can recommend these products to any customer who might be interested.
Your commissioned sales team should be rewarded not only for their margins, but also for average tickets.
This is the only way to increase sales. You’ll have to be able to solve customer problems. These are often solved by higher-priced items.
This attitude will open you up to the world of possibilities your store offers.
Why would you like this?
Because customers will start to smile more than frown when they return. It’s easier to sell high-margin add ons when they smile.
My mom bought an automatic pool cleaner after I left. She enjoyed the convenience of it many times more than what it cost. The pool store that sold it to my mom enjoyed her devotion for more than forty years.
It’s not about margins, it’s about the customers. Always.