play good music, put on a good show, and be nice to your fans. keep the pricing reasonable too.
selling merch is is one of those things that you don't really have an influence on, it either happens, or it doesn't.
personally, i found that the whole merch thing is very genre dependent though.....i've never met a scene where people where as heavily into merch as the black metal scene. BM guys buy merch like mad. it's much harder in the death and thrash realm.
edit: a good looking and charming girl selling the merch does indeed help btw. it's a cliche, but it's true, even though i don't understand it. every time either my girlfriend or the gf of any of the other guys was in charge of our merch we sold more than we did with a random (male) friend of ours doing merch. female charm, i guess.