Identifying and understanding customers: increase sales

The idea

Increasing sales means raising the value or volume of goods and services a business sells over a period, usually measured as revenue (price × quantity sold) or as unit sales. A business can grow sales by attracting new customers, encouraging existing customers to buy more often or to trade up, and by reducing the number of customers who switch away. For example, a café with 200 customers a week spending £5 each earns £1,000 weekly; lifting average spend to £6 with the same footfall raises revenue to £1,200, while attracting 50 extra customers at £5 raises it to £1,250. Understanding customers underpins this: identifying who buys, why they buy and what they value lets a business target its offer, so sales growth is planned rather than accidental. Sales growth is not the same as profit growth, because extra sales may bring extra costs.

What earns the marks

• Defines increasing sales as raising revenue or the number of units sold over a period, distinguishing revenue from unit volume.
• Explains at least two routes to higher sales, such as attracting new customers, increasing purchase frequency, raising average spend or improving customer retention.
• Uses a numerical example, for instance price × quantity, to show how a change in price, quantity or customer numbers changes sales revenue.
• Links sales growth to understanding customers, explaining how customer knowledge informs targeting and the marketing offer.
• Distinguishes sales from profit, noting that higher sales can involve higher costs and do not guarantee higher profit.

Common mistakes and how to put them right

• Treating sales and profit as the same thing.

  Put it right by stating that sales are revenue or units sold, while profit is what remains after costs are deducted.

• Assuming that raising price always increases sales revenue.

  Put it right by explaining that demand may fall when price rises, so revenue depends on both price and quantity sold.

• Ignoring the role of customer understanding and describing sales growth only as advertising.

  Put it right by linking each method to identified customer needs and wants.

Exam tips

• Use a short calculation, such as price × quantity, to demonstrate how sales revenue changes rather than describing growth only in words.
• When a case study gives customer data, refer to it directly to justify how sales could be increased for that business.
• Check whether the question asks about sales or profit, and keep the answer focused on the measure requested.