I find many growers and marketers feel like passive bystanders when it comes to increasing their produce sales. Once the product is grown, packed and shipped into a retail channel, it becomes hard to influence the sales outcome.
I realise growers contribute to marketing and retailers put products on promotion, but long term sales increases seem illusive.
This is where packaging has a significant role to play, especially when combined with a compounding sales strategy.
Compounding Sales Is Easier Than You Think
I once attended a marketing seminar and was taught the compounding sales formula. To increase your sales, you simply have to do three things:
The formula is often written like this:
Number of customers x Transactions/customer x Dollars spent/customer = gross sales.
What’s interesting about this formula is it compounds and you don’t need a huge increase in any one area to get an increase in sales.
Consider a non-produce example for a moment.
Let’s say you run a cafe. Currently, you have 100 customers. These customers visit your café twice a month and their average spend is $10.00. In terms of sales and using the formula above: 100 customers x 2 visits/month/customer x $10.00/transaction/customer = $2,000 in gross sales per month.
Now, let’s say you invest in some marketing and advertising and are able to get a small, 10% gain across the three factors. In terms of sales, you now have 110 customers x 2.2 visits/month/customer x $11.00/transaction/customer = $2,662 in gross sales. Thanks to the compounding nature, this is more than just a 10% increase – it is a 33% increase.
Now why share this with you? In business, people often get caught in the trap of thinking that any increase needs to be huge to make an impact. This formula shows you differently. Most people can get their head around increasing their sales by 10%. The key is the compounding power of multiple areas of increase working together.
Let’s see how this relates to produce packaging.
Your Produce Packaging Can Influence and Drive Sales
One idea when looking to try and drive sales is to look at your physical packaging size. In the kumara project, for which I won a marketing award, one of the core strategies was to reduce the pack size of the main pack from 1kg down to 900g.
The goal was to stop shoppers comparison shopping between loose and bagged product. The other reason was to create a differentiated, ‘perceived’ higher value offer.
If 1kg bags of kumara sold for $4.99, by dropping the bag size down to 900g and maintaining the $4.99 price point, the per kilo return with the 900g bag increased to $5.54. That’s an 11% increase.
By changing the product specs in the 900g bag, we created an easier product for shoppers to use. The goal here was to improve their ‘kumara experience’ and get them buying the bag more frequently.
The final objective was to attract more consumers to the category by making kumara smaller, smoother and easier to wash, peel and serve. We did this through changing the branding and the on-pack communication to better educate shoppers on the improved kumara offer inside the 900g bag.
The outcome from this exercise was the project ended up growing both sales and grower returns.
The point: Packaging is not just a perfunctory container that enables you to get produce from A to B. Your packaging is a powerful marketing tool that, when done strategically, can gain
you compounding benefits.