What You Love: More Profit Through a Pricing Increase & Internships
For our final chapter we discuss more about how to increase profit. It’s easy to see that an increase in revenue or a decrease in cost would make that impact.
To dive a little deeper, let’s look at increasing your revenue first. A fast and simple way to do this is to increase your prices. It’s a simple as that. When we talk with a lot of companies they have never tried to do it. Most of them are super scared to increase their price as they have a big fear around loosing customers. And that’s a real fear that’s associated with loosing the revenue and therefore business. We understand this well, so let’s check and see if this is really true.
For example, let’s say your product sells for $100. And you choose to make a price increase of 10% to $110. Do you really think that the price increase to $110 will really cause that mass exit of your customers?
Maybe some might leave. And they are the price shoppers and they’ll always be hunting the cheapest option. And when they move to a cheaper company what happens when another cheaper company opens up? Yes, they go straight there! These customers have no brand loyalty and you’re honestly better off without them. You want customers who love and support you.
As you know, a big part of business is the numbers. And we can do a security calculation to understand how many customers you’d have to loose before it made an impact.
With an increase in price, the business is now making an additional $10 per sale. And this is all profit. So, if their profit margin was $30, it’s now $40 and this is a 33% increase.
So, to make a $1000 in profit at $100 each, they need to sell 33.3 items. And for them to make $1000 in profit at $110 each, they now only need to sell 25 items.
Now, here’s the clincher. To Break Even at the new price of $110, they would need to loose 25% of customers! That’s a huge drop in customers that would need to happen and do you really think that 25% of people will not purchase the product because of a price change from $100 to $110? No. Absolutely not! Most people aren’t that stingy.
So, you can safely assume a small price increase will have nothing but a NET positive impact. To determine the most lucrative price increase for your business we need to do an in-depth price analysis but for small increases, you can implement them immediately and see an immediate impact for your business.
To be honest, we don’t know of a faster or easier way to cause more revenue so quickly.
We suggested this in a business the other day and it took him 25minutes to implement. I asked him how much money that will make him over the next 12 months and he said “about $100,000”. He obviously loved the quick improvement we did for his revenue!
What about cutting costs? Yes, it’s a way to generate more profit and you need to be careful to not impact your product quality or internal culture. One of the fastest ways to cut costs is to look at labor costs. You know in your heart who is doing a good job and who puts in the effort for your business…and you know who doesn’t.
You need to be sure that what you cut out in labor costs won’t cause an impact as you implement the other strategies and your business starts growing as well. Then the current staff get overworked and overwhelmed and product quality and culture get impacted.
Having Interns in your business is a great way to reduce labor costs. It can be a bit tricky to find them at the start, and train them, but when you have a good system in place, they can walk right in and start working for you.
The benefit for interns is that you’re giving a junior person experience in the working world and this helps them get real world experience and references for future jobs. We hear of many interns getting hired after their internship because they do such a good job.
To find interns, there are a number of online organisations that specialise in finding interns work, or you can go to your local college or university – students are hanging out for good work experience to put on their resume and out compete the other students. Schools love it as well – it makes them look great for having the connection with industry and providing their students with real experience.
In terms of expenses, you’re generally not obliged to pay them as you’re providing them with training and being accepting of their limited working experience. We’re happy to pay for their lunch and transport and give them introductions to our network if we don’t have ongoing work for them. Having a number of interns throughout the year can save your business thousands of dollars.
Do you think we could increase your price by a small amount and not be concerned about loosing customers? I.e. Maybe just 5%. Write down how much this would generate for your business over the next 12 months.
With some of the significant revenue increasing strategies that we’ve mentioned in the book when would you see yourself needing additional assistance to implement? I.e. for operations, or sales, or other role.
Write down an estimate of how much it might cost for this person(s) to assist you. And add any miscellaneous hiring costs that may be included.
If you don’t see any need for administrative assistance, do you see a need for an intern? If you do, calculate the savings they provide for your business.
In a Capital Raising business we worked with last year, we assisted with integrating 4 interns into the business over the period of 1 year. They supported the business in marketing and events and saved the business a significant amount of time and money – close to $15,000 for each intern ($60,000 for the year).
Add up all the revenue you identified for your business with each of the 8 strategies. Now remember that this is just a conservative amount and it will continue year after year.
The most exciting part of this is that what you’ve discovered is only a drop in the ocean. Why? Well, remember this image at the start of the book: (The Profit Growth Calculator):
The image shows that if you increase each of the 5 Profit Formula Areas by 10% then you see the annual revenue go from $62,500 to over $100,000. That’s close to doubling the profit with only a 10% increase in each.
And imagine what could happen to your business is you increased each of the areas by 50%! Your annual profit would be nearly $500,000. Your business would have some seriously good problems going on with it (i.e. Where to expand to, Who to hire and in what positions, How to keep quality consistent with larger numbers of customers etc).
Now, a 10% increase is nothing to sneeze at and we know a lot of programs and coaches that deliver those kind of results. But how can you seriously get ahead of the pack with those small increments each year?
You need to get in the 50% and higher game. That’s the league we play in. Can you imagine how your business looks with a 50% increase in each of the 5 profit formula areas?
Now, this type of revenue increase is actually NOT the most exciting part. It’s secondary and yes it’s great, but the most amazing part is that you’re turning your business into a machine that works with tried and tested SYSTEMS. Without systems your business doesn’t increase in value, continues to be hard work and is very difficult to sustain as it grows … and also as you grow.
Systems mean self sustaining. Systems mean you can replace yourself and have other people following procedures and processes and produce the same results as the past. The full implication of this is that you don’t need to be in the business all the time. You gain freedom! You can get others to do the work you used to do and you’re now financially free.
That’s how we generate big exits in business. The exit is another book and there’s a real art to it.
If you implement the strategies in this book then you will always have new orders in your pipeline due to emotionally attractive advertising, followup communication that builds trust and JV’s sending you customers and revenue.
Then you’ll have cross-selling, down-selling and up-selling generating additional revenue daily combined with affiliate revenue from alternative products and services. You’ll have higher prices that your customers are willing to pay as you have higher perceived value. And then you’ll have lower expenses and this increases your profit margins.
It’s all proven before in businesses and it’s 100% possible for your business too.
The only thing that’s in your way is getting it implemented in your business as fast as possible.
Our FREE 45minute assessment starts you on this journey so just ask for it on our Facebook group or via email:
A big question on many business owners minds is “How do I increase my prices and not loose customers?” It’s scary to think about loosing customers …erk… and having that horrible feeling of decreasing revenue and business going backwards.
One of the strategies I love to use is known as ‘Bundling’. The concept is a simple one. It’s all about putting certain products together as a package and then selling them.
The power in doing this is that the complaint about price is removed. And that’s because a product from one business can’t be compared with the same product from another business. Because it’s bundled with another product it’s difficult for the customer to work out the pricing. All they see is the value.
Unfortunately most small businesses don’t have a strong value proposition. This causes price to be the only thing for customers to compare.
Successful marketing is all about offering more value than any of your competition. Potential customers are not shopping on price – they are actually shopping for value. And they’ll pay more than twice the price if they feel they get much more value.
Most businesses don’t understand this concept and they consistently keep going down the road of discounts and price slashing to get customers in. Unfortunately this destroys their margins and causes cashflow issues in their business. Did you know that when some businesses discount their price by a simple 10% they have to sell 50% more to get back to their original position?
For example, let’s say your widget is $100. And you have a 30% profit margin. That means you make $30 for every widget. If you reduce the price by 10% it sells for $90 and your profit is now $20.
To make $1000 in profit at the original $100 means you need to sell 33.3 widgets (33.3 x 30).
Now, if you discount to $90, you need to sell 50 widgets to get $1000 profit (50 x 20).
This means they need to sell 50% more widgets! (33.3 x 1.5 = 50).
Now have a think about this: When did you last see a 10% discount sign? It’s pretty rare and if we see it we usually don’t take any notice. Most businesses know they have to discount by 20% – 40% to make an impact.
So, what is this telling us and why is this so important?
Well, research says that price is actually one of the LAST things that impacts the buying decision – unless the discount is 40% or more!
Here’s one of the big secrets to growing your business.
GET AWAY FROM DISCOUNTING!!!
Do this through creating INNOVATIVE solutions that separate your business from your competition. And that can involve increasing your price.
Through bundling you can increase the perceived value and this causes a potential customer to purchase more.
For example, let’s look at a home builder. They’ll work with suppliers who provide them with a discount for purchasing a large volume of material.
The builder understood that as he was constructing the home it would be easier for him to install home entertainment systems, security systems, fire protection and monitoring systems. Normally this happens after the house is built and the home owner gets charged a considerable amount for the labour to install it.
To get this installed, the retail price for this type of package was $30,000. However, this smart builder knew that he could purchase the systems in bulk at $6,500 each and it would be much easier for his team to install as the house was in construction.
His building business is building homes in the $400,000 price range and there’s a bit of competition in that price range too.
So, he differentiates his business by offering a $406,500 home that comes complete with a FREE $30,000 entertainment and security system!
Personally, I’d be taking a serious look at what this builder is offering. Wouldn’t you?
Does it make you think that it’s a MUCH better deal than the homes without the system?
This could allow the builder to generate a much higher sales volume each year and a much higher overall profit.
A builder who specialises in home renovation could also use this type of differentiation for every job they quote.
Can you see the power of this yet?
The builder discovered what else the customers wanted and then created the partnership with the electronics company and included this in his package. It wasn’t something he normally dealt with and it wasn’t something they normally offered. But they discovered that it was a problem their customer had and didn’t have a solution for.
What are the potential products or services that you could offer your customers? This strategy can add a significant amount of revenue for your business. Commonly we find by as much as 25% – 40%. Is it fair to say that you could lift your revenue by a simple 10% if you implemented this strategy?
And so how does that look for your revenue figures?
Expand Your Product / Service Offerings & Get More Transactions
If you’re not fully present to this, I’ll re-state that business is built on trust. So, this means if your current customers are happy with your product or service they’ll be open to other things you offer. It’s difficult to find a business to trust and when you do you stay with them. There’s too many dodgy companies out there with no integrity.
When we talk about additional products or services, they don’t have to be ones that you produce. You can partner with other organisations and offer your customers theirs. In this way, you become an affiliate or position yourself to collect the referral fee.
Other organisations can find this highly valuable as it can save them a lot of time and expense. As you well know, generating new leads can be a stressful and costly experience!
A good example is a Web Developer.
Their role is to develop good looking websites and they generally understand about the digital world. Due to them working in the digital arena those business owners may also need assistance with Digital Marketing on Facebook or Instagram, Branding, Brochures, Business Cards, and perhaps App or Software Development.
The Web Developer doesn’t do these services and he is in a perfect position to recommend other providers. Referral fees are normally in the range of 10% – 25%. This can become a solid component of the Web Developers income.
A Business Strategist example.
In my position as a business strategist, I do this as well. My clients get great value from me as I give them access to marketing and growth strategies, tactics, a bucket load of resources, an online e-learning system and connections that are in my network. They get access to an Ask the Expert call each week where they can talk about any business issue and we work together to resolve it. As a result, I combined this with a Mastermind group to make it more powerful. In the group we work together to find additional ways for their business to dominate their market. Being an ex IT professional I know the fastest and most cost effective ways to get up anything tech up and running. Importantly, I’ve also been a founder of a Capital Raising business and I know a lot about raising capital and working with investors.
And that’s not all. I completely understand about self limiting beliefs, concerns, worries and internal and external communication and I hold personal development sessions with them. And all I’ve done to create this is leverage what I already know. I know these skills and experiences are really valuable for business owners and I know that my skill set is quite unique and I don’t know anyone else with my combination of experiences. This allows me to seperate myself from my competitors and it doesn’t cost me any more money. I didn’t have to go out and purchase anything else.
So, my point is that you can dig a bit deeper too. And you’ll find valuable things that you can offer your customers as well.
How many things can you find off the top of your head right now? And what other services or products might your customers desire and who could you partner with?
In less than 6 months I generated nearly $15k of Web Development for a partner agency. In return they do all our Web Design and SEO for free. That saves me around $15,000 per annum and I get a great looking Website.
Just Like McDonalds: Upsell and Cross-sell for More Transactions
Another area to grow your business is to look at how to increase the number of transactions each customer has with you. i.e. Getting them to purchase more frequently from you.
The most common example is McDonalds when they ask if you would like fries and a drink to go with your burger – this is called Upselling.
And then they ask if you want an apple pie to go with your meal – this is called Cross-selling.
These are 2 common ways to increase the number of transactions a customer has with you. Through Upselling, you increase the size or quality of the original item and you offer it when the customer is ready to purchase. On the other hand, Cross-selling requires offering a product or service that aligns well or complements the current item.
The reason why McDonalds offer both the Upsell and the Cross-sell is because of the statistical results from research. Figures show that 34% of people will purchase additional products or services at the original time of purchase. You’ve probably already noticed that it’s difficult for yourself to say no sometimes – especially when you really like the product – so this is what we’re talking about.
Most businesses never ask for the Upsell or Cross-sell and therefore leave a substantial amount of cash on the table. And they wonder why their business isn’t working so well!
Here’s an example from our US partners – see the Groupon image below. The price for an oil change used to be around US$29 and today it’s US$11. The fee is broken up into $6 for oil change and around $4.50 for oil disposal. Now, that’s a big difference between $29 and $10 and profits have been reduced significantly. This is a bargain for the customer so why would they do that?
The Groupon offer below shows FREE Oil changes, Free services, Half price services and discounts. This is lucrative for the customer and it’s also lucrative for Econo Lube because they’ve now realised where their profit is really made – through Upsell and Cross-sell.
The Groupon is designed to get them in front of as many people as possible – people they normally wouldn’t have had access to. And this is through providing them with almost free basic services.
Econo Lube is still making a little money from each and this covers their basic costs (so they don’t go backwards). And with half of the free services, they need to pretty much do them anyway – but it gives Econo Lube the opportunity to have a look at other high profit services and see if they need to be done.
i.e. After they change your oil, it’s quick and easy to take off the tyres to inspect the brakes, or check the transmission, or check the battery. And if there’s any issues then they have the opportunity to Upsell or Cross-sell you those services.
Econo Lube also offers to do a complete vehicle check before you take a long trip. Other places would charge around $100 for this, but Econo Lube provides 2 of these every 12 months for free. And of course, if they check over your whole vehicle you can guarantee they’ll find something wrong with it. And since you’re travelling a significant distance you’re more likely to get your vehicle fixed.
What’s necessary for this strategy to work is that you get yourself in front of as many prospects as possible and as many times as possible – so you give yourself more chances to offer them more services.
Any business can always get themselves in front of more customers – just provide them with more offers!
Another example is a restaurant that was having difficulty with revenue. We know restaurantes have the highest profit margins with wine, entree and dessert. So they became the focus for the waiters and waitresses.
Before a customer had ordered, the staff wheeled around an entree and wine cart and offered free samples of each. Then after the customer had finished their main meal the staff brought around the dessert cart and offered free samples of those too.
Their generosity immediately impacted the customers and a much larger number of them ordered the entree, wine and/or dessert. Personally, I’m a sucker for this as I love my food and it’s a great excuse for more.
After seeing the impacts, the restaurant decided not to stop there.
They trained their staff to spend more time describing the higher priced entrees and to provide their personal recommendation. Most people will go with the staff recommendation and this caused another considerable increase in their entree revenue and profit.
So how does this strategy look for your business? What impact does 34% of people purchasing an Upsell or Cross-sell product / service look like for you? Or even a conservative 10% one?
With a Removal company I worked with the owner said to me: “ Sam, I’ve never sold so many boxes, wraps and sticky tape rolls before – I just made an extra $1000 in the first month of doing this”.
Results improved over the following months as the sales script and understanding of the new process became comfortable. After a while they stabilised as the number of conversions became maximised.
Don’t be a Drip – A Drip Campaign Causes More Conversions
When we talk to business owners and ask them how many times they follow up with prospects that don’t buy from them – the common answer is None.
How many times do you contact people that don’t purchase from you?
And why is that? Most people think that it’s because the prospect isn’t interested in the product. That may be true for when you had the contact with them but what about later on? And what if they were just sussing you out and comparing you against the competition.
Remember, on average, that less than 3% of people are ready to buy NOW. That leaves a whopping 97% of people who are still in the market for what you sell and are waiting for the most valuable and trusted organisation to stand out from the crowd. And they’ll become your customer in the future if you keep in communication with them, nurture them and stay in touch on an ongoing basis.
Unfortunately most small business owners don’t have much of an idea about this and end up leaving vast amounts of money on the table. Did you know that 80% of all sales occur between the 5th and the 12th point of contact between the business and the prospect?
80% is HUGE! It’s a massive opportunity to generate more customers and therefore more revenue.
To get access to this 80% then all you need to do is implement a drip campaign. It delivers messaging to customers or potential purchasers on a scheduled and regular basis.
What’s cool about drip campaigns is that you can leverage information you’ve already created. If you’ve developed a FREE informational guide then all you need to do is cut out specific segments from there and send it to them. Now that’s making good use of time and leveraging the work that’s been done before.
Here’s an example for a sunroom company. Now, when people are renovating their home they love to get their hands on nice brochures to assist with creating their own ideas for their sunroom. So, the sunroom company decided to go ahead and develop an Idea Guide:
As you can see, there’s variety in the pictures and it took a bit of time to develop (and cost for a designer).
Sadly, only 20% of people who request the brochure will actually read it! Initially they have every intention to read it but life gets in the way and it gets put on the pile of other things to do.
The first trick is to get their contact details so we can build trust with them by sending them more information (start our 5-12 touch points). And we use the same content in the Idea Guide to save us time and money.
Notice how we start out the Idea Guide by listing the 7 Benefits of Owning a Sunroom and the first benefit is ‘Enjoying the outdoors 365 days of the year’. Now, that’s a great benefit and a big reason why someone would purchase a sunroom, but the sad thing is that 80% of people won’t even read it.
So, we gently put the information in front of them again in a drip campaign. This increases the chance they’ll notice it and even more so if we use a different medium – email or post cards are efficient and effective ways to do this. The great thing about snail mail is that people aren’t really using it anymore – so that means it actually gets noticed when it does appear in their letterbox. Put a magnet on the back and they’ll see it every time the go to the fridge!
Benefit number 4 says ‘Owning a sunroom recharges your solar batteries’. Many people are aware of the health benefits of getting the daily dose of Vitamin D from the sun…and so that was the topic of the next communication.
The drip campaign goes on and on like this – giving them snippets of information that slowly builds more and more trust. You probably notice that some people are resistant to your suggestions and they say things like ‘Oh I’m not ready for that…or… I’m all good and fine’ – but that’s just them being concerned about being ripped off, being concerned about money or some other concern. So these types of people need to be nurtured.
For those people who are concerned about the financial outlay money, benefit number 5 is major as it provides education about how a sunroom actually increases the value of their home. So, it’s great to send that information out again.
I’m assuming you’re starting to get the point about how the value of the drip campaign. And how to create it with the least amount of effort and cost.
Interestingly, from a lead generation point of view, let’s go back to the Child Psychologist and have a look. We said he averaged 300 leads per month. With the implementation of an Informational Offer a (conservative) 20% would opt in to read it. And out of the 60 people that read it, a (conservative) 10% would become patients (i.e. 6). Now, the interesting point is that 54 people DID NOT become his patients.
And so those are the people that are resistant (for whatever reason) and more trust can be built. Such people are perfect for the drip campaign. We can reasonably assume that 2 of them will purchase in 30 days.
If the doctor continues his advert and continues to generate an average of 300 leads per month, we can assume this pattern will continue month after month.
Check out how this looks from a mathematical point of view (month by month):
The doctor will have generated 4080 new prospects by the end of the first year. And then he would generate an additional 72 new clients through his squeeze page.
Then through his drip campaign, due to the compounding effect, he generates an additional 156 new clients. Yes, we agree that not all prospects will become patients and so we are happy to be conservative here. And so let’s just say he generated half of that (i.e. 78) – and that’s still a huge improvement from before.
It gets to the point where 1 doctor can’t handle all the patients. He can grow the practice by getting more doctors in. Alternatively, he can turn off the Lead Generation as the drip campaign will still keep on producing results.
So how does this strategy look for your business? If you’re the only business in your market doing this you’ll be a market leader in no time and you’ll see an increase in the number of clients quite quickly. If you look at your total sales revenue for last year and take a conservative 10% of that – then this is what a drip campaign can do for you. And it can easily double each year if you keep the campaign in place. Are you now starting to see how you can outgrow your competition when you start putting a few of these strategies in place?
How To Get More Potential Customers to Purchase From You – Downselling
So far we’ve talked about 2 Lead Generation strategies. Now we’re going to the next step of talking about Lead Conversion strategies.
Downselling is a fun way to have that final chance to get the potential customer to purchase from you.
And if you don’t have a Downsell strategy we highly recommend you read this.
Quite simply, downselling is offering a potential customer an alternative product at a lower price if they decline your current offer.
Yes, you may not make as much revenue or profit as the current offer, but you still make some money and most importantly you get to build the relationship with the customer and increase the probability they’ll purchase again in the future.
Here’s an example. Many gyms try and sell new members a six or twelve month membership. If that fails, they’ll try and downsell them by offering a 3 month ‘body makeover. And if that fails, they may go to a 1 month or even a 1 week trial membership.
They do this because they know that if they can get them to buy anything then the odds of them staying with them long term is increased dramatically. The customers biggest fear comes before they open their wallet to pay.
Another example is a florist. Normally a bunch of nice flowers for Valentines Day, Wedding Anniversary, Birthday, Mothers Day is normally around $50 but lets assume the guy doesn’t have that much money (or doesn’t want to spend that much money) . So, if he has flowers on his mind, do you think he would be open to the idea of purchasing cheaper flowers that were just as romantic?
Yes he would! Of course he would. And so if the alternative only costs $25 and the florist only used the downsell strategy once per day (quite conservative) then this creates nearly $8,000 in extra annual revenue for them. And suppose they had this downsell option for wedding flowers, funeral flowers and other styles – that’s even more revenue.
To implement, the first thing to look at is the current price point for your product. See if you can come up with an alternative but similar product – for half the price. And how many of these do you think you could sell each week? And calculate how much extra revenue does that give you for 1 month and for the next 12 months.
The revenue created from the Downsell opportunity multiples with the more downsell products you have. And it continues to grow year after year.
We found one business owner $65,000 in additional annual revenue and this increased the valuation in the $200,000 – $250,000
Want to talk about all the leads your business can handle? Of course!!
Joint Ventures (JV’s for the cool cats) are one of the most powerful ways to multiply the rate at which your business grows. They’re super low cost and can have massive impact on your business performance.
a trusted introduction to your business
access to untapped target market
value for everyone (a symbiotic relationship).
A JV is another business that has the same target market and they endorse YOUR product or service to their customer base. When you have multiple JV’s your business really starts to move. And you start having the good problems to solve – like how to deal with TOO MANY leads coming in!
The value for the JV partner is usually a revenue share arrangement (i.e. commission on the sale), but you can create and negotiate (maybe an exchange of services, or you refer their service to your customers, etc).
Make sure you find a JV who services the exact same type of clients that need or want what you sell.
Example: A Florist.
We all know that florists sell flowers. You can imagine that a good day for a florist is when they sell flowers for a wedding. There’s normally plenty of expensive and nice flowers at a wedding because they look and smell great and play a big part in creating a beautiful atmosphere. The standard cost for flowers at a wedding is often in the thousands – generally around the $3000 mark.
Now, what we discovered about florists and weddings is that they are only one part of the ‘event chain’. What that means is that there’s a number of other businesses involved in making the event happen – not just the florist. And considering leverage is one of the major levers of business, let’s see if we can leverage the other businesses in the ‘event chain’.
So what are the other businesses in the ‘event chain’? Well, a wedding doesn’t start unless someone (usually a dude) decides to purchase an engagement ring from a jeweler.
And then once the marriage proposal has been accepted (let’s say 90% of people say yes because I’m sure you’ve heard the stories too!) the rest of the event chain kicks into gear. In the majority of cases the first thing for the new Bride-to-be is that the venue is booked for where the ceremony is to be held – church, chapel, synagogue or other.
And then it could be highly necessary to hit up the wedding planner. Everyone knows its a big deal to pull off a decent wedding. There’s a lot of moving parts that need to be considered. This can be stressful for the bride – especially if they have to hold down a full time job as well.
Next is to secure the venue of the reception … Then the wedding dress needs to be chosen at the price that’s suitable.
And then comes our florist. The bride will want to select her flowers for the wedding and the reception and ensure they look the part.
After the florist comes a wedding cake, and then the invitations need to be created and printed…and so on. Maybe hiring a limosine or a DJ. The travel agent, the honeymoon and the hotel. And then catering has to fit in there as well.
So, what we’ve identified is a number of lucrative JV partners that the florist can build a relationship with. Now, the businesses above the florist in the event chain have the potential to endorse and send brides (prospective customers) to the florist. It’s important to note that the florist has no control over the flow of brides. So, it’s critical to create an attractive and compelling offer with these organisations so they feel it’s necessary to send prospects to the florist.
So what about the businesses after the florist in the event chain? Well, here’s where the florist has all the power because they ‘own’ the relationship with the customer. By creating a sequence of processes and procedures they can ensure their customers use those businesses the florist recommends – and so the florist can negotiate a deal with the business owners below.
Now it’s time to have a look at the numbers the JV’s can produce for the florist.
Assume this florist creates a JV with only one business of each type in the event chain. To be conservative in our assumption, is it fair to say that the florist would receive at least ONE referral each month from just ONE of the businesses above them?
And is it fair to assume that the florist can easily send at least ONE referral to each of the businesses below them in the event chain?
Yes, it depends upon the size of the business in the event chain. But they wouldn’t be in business for very much longer if they couldn’t refer at least ONE customer per month! These numbers are super conservative.
As we said earlier, the average bill for a florist is $3,000 and so just ONE referral per month from the businesses above them converts into a customer then we can say that the florists revenue will now increase by $3,000 per month or $36,000 per year.
And we do the same for the businesses below the florist. Let’s be conservative and say that the florist negotiated a 10% referral fee. Starting with the wedding cake (normal average of $3,000 as well) a single referral each month provides the florist with an additional $300 (or $3,600 per annum).
And now the printer. Let’s say the average printing costs are $1000. So the florist can make an extra $100 per month or $1200 per annum.
If we stop the calculations there (from just 3 JV’s) we can see the following starting to surmount:
Wedding Cake: $3,600
Total: more than $40,000 per annum!
So, you can quickly see how the referral fees can add up and make a huge difference to the florist. Imagine if the florist gets referral fee’s from all the other vendors in the event chain?
Now the same applies for businesses that aren’t in a chain. They just need to identify which businesses are working with the exact same type of clients that might need or want what they sell.
Yes, this JV strategy looks easy but it sure isn’t. It takes time to properly identify who would be an excellent JV for your business, how to approach them and with what offer, what order to approach the JV’s in, and when to approach them. It’s critical to do this with ease and grace otherwise you can burn relationships and end up with nothing. Believe me, I’ve accidentally burnt relationships in the past and they didn’t want to talk to me again – they didn’t want a bar of it and I had no idea how to repair it. Luckily that’s all changed after I did a heap of work on my communication skills.
Conservatively, lets have a look at your business. Let’s say that from a dozen JV’s you only get 3 referrals per month. So how much revenue does that equate to per month and also per annum (just multiply by 12)?
Before we move to the next lesson, do you remember how we talked about the power of an informational offer? Suppose the florist has a free informational brochure in their marketing that said something like… click here to get “5 Things Every Bride Should Know To Avoid Disaster On Their Wedding Day.”
This would get them a heap of prospects into their email drip campaign. And cause another lift in sales (only 1-3% are ready to buy right now. This offer build trust with the other 97-99%). And this then causes a lift in the referral fees they get from passing their clients to the businesses below them in the event chain.
This is one of the first things I help a client with implementing. It generates a quick lift in monthly revenue for them. And it compounds to substantial annual amounts.
For most small businesses I find additional revenue of $50,000 – $75,000 for them using this one strategy. And this increases their valuation somewhere in the range of $150,00 – $300,000.
Now that’s good business and a good return on their investment with me.
Before you spend thousands on a website have a read of this. You may just need a simple website to explain the features of your service.
In the early days of business it’s a generally a real struggle to get more people wanting what you offer. It’s a dream come true if you didn’t have to do any marketing or advertising and you have all the leads you could handle.
Most small business owners have limited ideas around how to successfully attract potential customers to their business. And they’re overwhelmed with putting those strategies in place – some are quite technical and require a degree to operate effectively. For Example: Click Funnels, Facebook & Google Ad’s, the suite of Social Media platforms, website design and development, Search Engine Optimisation and email marketing for instance.
A number of you are already familiar with the 80/20 rule and for those that don’t it just means that 20% of what you do everyday generates 80% of your revenue. (Check out Pareto’s Law if you’d like to know more).
If that’s the case, that means that 1 in 5 things you do during the day is actually generating you more money! Sorry to say the truth here but the rest is really getting you nowhere.
So would you be interested to know what those 1 in 5 things are? Of course you would!
It boils down to one of these 5 areas:
Leads, customer conversion, customer transactions, product price and profit.
We have a tool called the Profit Growth Calculator and it takes in the quantitative data (i.e. the numbers) about your business.
i.e. In the past 12 months, do you know the exact number of leads and sales for your business?
Most business owners say no to this question and that’s totally fine. So, we’ll use some simple numbers to make an easy example. Let’s just say you:
– generated 1000 leads last year
– had an average conversion rate of 25%
– had customers purchase from you 10 times during the year
– your customers pay (on average) $100 per puchase
– had a profit margin average is 25%
And we put this into the tool like we show in the image below.
With just a 10% increase in the five areas (and 10% is quite a small improvement) you can see how the profit nearly doubles. There’s obviously nothing wrong with that kind of improvement and most business owners would be happy with those kind of results.
But what does a 50% increase look like? Most business owners we talk to think that this kind of improvement is near on impossible. And that’s a fair comment to make when most of them are only generating their leads from referrals, word of mouth and a few that come from their website. Referrals are a great source of leads and it’s actually one of the best sources as it comes from an independent source (trust can be surrounded with the source as well). However, they’re not a reliable source of leads and you can’t generate them whenever you want – so that’s a big problem for growing a business.
What’s required is a solution that consistently generates leads. And here’s where we get to the pointy end of the stick. We’re sure you’ve tried putting some adverts out there or some marketing material (fridge magnets, flyers, websites, Google & Facebook Ad’s etc) and you’ve probably spent a few thousand dollars on them and a bunch of time. And you’ve probably not gotten the results you wanted.
The big mistake we keep on seeing is that their marketing doesn’t enter the conversation that’s going on inside the head of their prospect. It doesn’t resonate with the questions that are going on for the prospect and it doesn’t align with their thought process or where they are at.
This misalignment causes the marketing material to be pushed to the side and the potential customer goes off and does other things. ‘Delete, rip it up, next web page are common thoughts for them’.
Being successful with marketing and generating more leads requires some different thought about someone else and what they might be thinking – i.e. you need to get in their shoes for a day and experience what it’s really like to be living in their world.
From their perspective, there’s two major things that are going on:
There’s a problem they have and they don’t want … and there’s a result they want but don’t have.
And because we understand this and have put a lot of thought into it, we’ve developed a marketing formula that takes the answers from these two statements and creates a message so attractive for your customers that they feel like they’d really miss out if they didn’t buy what you sell.
Now that’s phenomenal and we see great results from the marketing we assist business owners create.
We call this the Conversion Equation and it has four main components:
The Headline is the Interrupt and it does this because it’s the first thing someone sees when they go to a website, read your marketing material or hear what you have to say.
Now, we’re sure you’ve heard of the saying “First Impressions Count” and so that’s exactly what this Interrupt headline is related to cause a big impact with. It’s either the first thing you say when they ask what you do, or it’s the first thing they read on your marketing material. And it must resonate with ‘The problem they have and don’t want’.
The Sub-Headline is the Engage component and is the second thing someone sees after they’re read the Interrupt Headline. The wording here must resonate with second major thought they have: ‘The result they want but don’t have’.
The information you provide in the next segment is where you Educate them (either verbally or in writing). You present the evidence that positions your business as the clear leader of your competitors.
Yes – You’re the LEADER and your potential customers see this. They can do their research with your competitors but you’re the clear winner and you easily dominate the market. Your business is so innovative that they’d be foolish to go with anybody else – you provide so much more value that they’re happy to pay MORE than what your competitors charge. Now that’s a seriously powerful position!
Most businesses don’t clearly separate from their competitors and innovate. So this makes it really difficult for your potential customer to choose who to go with. Unfortunately, price ends up being the tipping point.
So, Innovation is the key here. It makes your business unique and separate from all else. You’re not resistible … your irresistible and that’s what the Offer segment is all about.
Marketing is so everwhere these days that there’s communication coming at you left right and center. Everyone has become numb to most marketing that it’s rare and somewhat enjoyable when we find some that resonates.
Our Conversion Equation creates powerful messaging that cuts through the junk marketing messages. However, as you know in business – that’s not all 🙂 It generally still takes time to build trust with your new prospect before they will buy what you sell. It takes numerous ‘touch points’ to answer the range of questions they have – and for most businesses that can be in the range of 20 to 100! Now that’s a lot of touch points and what we find is that this is significantly reduced when our Conversion Equation template is applied to the marketing.
And out of the thousands of businesses we’ve talked to, most of them don’t follow up the prospects they’ve been in contact with. And this is one of their biggest areas to generate more revenue – it’s a MASSIVE opportunity they’re missing out on.
To realise the full potential of this opportunity and get your message in the hands of your prospects at least 5 times you MUST find a powerful way to build trust and have them provide their contact information. This is the whole purpose of the Offer segment.
Most marketing that businesses use is only appealing to people that are wanting to buy right NOW. Unfortunately most businesses don’t even know that this is where their marketing is targeted and it only is interesting for people who are wanting to purchase immediately. Now, there’s nothing wrong with that until you know that NOW buyers only make up between 1-3% of the total number of people that are interested in buying what you sell!
We can easily spot this in their marketing because it says things like: ‘Free Assessment’, or ‘Free Consultation’, ‘a Discount’, ‘Call Us Now and we’ll give you a FREE quote’ or similar words to that effect.
This is a huge mistake! And we find it on their website, business cards and flyers – and their sole offer is their phone number or a contact form to fill in (so they can call you back). This only appeals to the 1-3% of NOW buyers and the remaining 97-99% of prospects are just gathering information and investigating you and what you sell.
This is normal behaviour because they want to see who is offering the best value. And if you don’t already know that people shop on value and not price, then here’s a great lesson.
Yes, people shop on price when businesses don’t offer them different value from their competitors. Their main value proposition is a cheaper price or a discount! Talk about crazy.
Now how can your business grow if you’re just undercutting everyone’s price? All that’s happening is a race to the bottom. There’s no market domination or uniqueness and only serves the people that don’t want better value.
And when there’s nothing but this type of marketing people are literally forced to shop by price.
Does your website provide this type of messaging? Compare it with a website we revised for a child psychologist. Here’s how it looked before we worked with him:
As we’ve already said, we notice this type of messaging all the time and this is standard practice for most businesses. It reads pretty much identical to this and they all have generic headlines that describe what they do: i.e. ‘Parenting Advice & Resources from Dr XXX’
They try and be all things to all people. They try and spread their net as wide as possible so they can catch everything that comes in close proximity. He basically deals with adolescent problems and helps parents deal with the issues: teen pregnancy, peer pressure, behavioural problems, teenage rebellion etc.
Does he have a Market Dominating Position? No, he doesn’t because he’s trying to be all things to all markets. But he could position himself as a leader in each of those markets and have 9 Market Dominating positions.
To explain further, imagine he chose to be a leader in just one area, say Emotionally Disturbed Children. These are the kids that scream, yell and don’t listen to their parents – sometimes they even threaten them. There’s no reasoning with children like this and most parents have no idea how to deal with this.
And because this doctors website is so generic we recommend developing a squeeze page – a single web page that targets ONE particular issue. He could do squeeze pages for each particular issue but let’s keep things simple and get results from one before going into doing all/many of them.
So for this squeeze page, the content must enter the conversation that’s going on inside the head of the potential customer. What we know is that ‘There’s a problem they have that they don’t want…and there’s a result they want but don’t have’. This covers the first two components of the Conversion Equation – Interrupt and Engage. The Interrupt component covers the Headline and it is essential to address ‘the problem they have and don’t want’.
To get more understanding of what we did for the doctor, please look at the image below. You’ll notice the Headline stands out. And it gets straight to the point and the reality of what’s really going on for these parents. Would you say it hits the nail on the head and would Interrupt them in their tracks?
As for the Engage component, the subheadline, it needs to address the part ‘the result they want but they don’t have’. And would you say that it nails this question and hits the nail on the head there too?
The next component of the Conversion Equation is Educate.
You can hear in the video on the original website that the doctor says “I welcome you to my parenting business and you will find heaps of great information here…and hundreds of pages of articles”.
Now, we don’t work in the world of right or wrong. What we see is this isn’t workable for his potential clients. The reason is because they don’t have the time to read hundreds of pages of articles! They have a specific problem and they want a solution as quickly as possible.
So, are you starting to get a sense why most websites don’t have a very good conversion rate and are generally a complete waste of money (and time from the founders)? They struggle to address the things your potential clients are really looking for.
We created a completely new script for the doctor and it radically changed the thoughts of his potential customers:
“As a parent, is it a big effort and struggle for you to get control of your child? Do they scream and yell at you, pay no respect and sometimes threaten you in an angry tone and no matter what you try or do… you just can’t get them under control?
Every day I help parents like you learn techniques that solve these frustrating and destructive problems once and for all. My name is Dr. John Smith, and I’ll prove it to you if you enter your name and email in the box to the right. I’ll email you a series of powerful 60 second techniques that will immediately cause peace and quiet in your home”.
Do you think this is a bit more inviting and low risk for the prospects?
The final component to look at in the Conversion Equation is the Offer. The doctors original offer was a free consultation and that’s really only applicable for the NOW buyers. Remember 97-99% of buyers aren’t ready to buy and they’re concerned if they get on the phone to you that all you’re going to do is sell you something. Anything that’s like ‘Call me or Call us’ is basically saying ‘I’m going to try my hardest to sell to you if you give me a call’.
In this day and age we’re all sick to death of companies trying to sell something to us. We struggle to pick up the phone when it’s a private number through fear of some call center. We really don’t like it unless it’s actually for something we’re looking for (rare). And if we do pick up the phone half of the time it’s an incentive offer (buy now and get x for free) which really only work for common purchases, emergency situations and impulse buys.
The big question becomes:
How do you market to people so you can get in communication with them at least 5-12 times? You need to build trust with your brand and business. And they don’t really want to call you so what do you do?
Secretly, the power in marketing comes when you give your prospects the thing they really want – INFORMATION!
YES! INFORMATION! It’s zero risk to them and they know that if they get sold to in an email they can easily say no (face to face is much harder to say the word ‘no’). If the information is great (which the new squeeze page is saying that it is), then you’ve just given them something they really want – a solution to their problem.
And all they need to do is enter their name and email address – No talking to anybody or be situated near any type of sales pitch. Do you think: “Learn The Secrets To Gaining And Maintaining Complete Control Of Your Child In Less Than 60 Seconds” is a highly attractive offer and would appeal to a large number of prospects if they were directed to this page?
Can you also see we call this a squeeze page because there are no navigation elements or actions on this page except ‘enter your name and email’. If they don’t enter the information they need to close the page and this is when we can redirect them to the main website to see if there’s something else that might grab their attention.
What people want is the truth – and nothing but the whole truth is good enough. So, the information that’s provided for free is designed to provide proof that the doctor can do what he says. And then there’s the offer to schedule an appointment – because trust has more likely been built.
For the original website the doctor easily generates 300 or more leads per month using a PPC campaign on Facebook. His conversion rate is around 10% of those leads. That means about 30 prospects will see his offer of a free consultation and call to inquire further.
Getting deeper into the sales problem, let’s unpack this further.
Out of the 10% that was left, only 10% will call and consent to a consultation (i.e. 3 prospects). For this type of industry it’s quite common for doctors to have a very high conversion rate. 100% is not uncommon so these 3 prospects will turn into 3 new customers. The net effect is that 1% of all leads will get converted into clients (typical statistics). – that’s the national average.
Now is that acceptable for you or not?
Let’s now look at the new squeeze page and leave the number of leads the same (300 per month). Do you think this new page will increase the number of prospects that will request the free doctors secrets about gaining complete control of their child? He was getting 10% on his old site but what is a more likely offer on the new site?
Anywhere between 50% to 70% is common but let’s keep it at a low 20% to make it conservative. This means that 60 prospects receive the secrets by email and see for themselves that the doctors methods work. And once they see this, what percentage will call up for a consultation? (the original was 10%).
Once again, we see responses in the range of 50% to 70% continually but to keep numbers conservative and build trust let’s keep it at 10%. And it’s fair to say the doctor maintains his conversion rate of 6 people signing up for consultation. That’s a big difference to the 3 people with his old website.
Would an extra 3 patients be valuable to you as a doctor?
The next step is to look at the financial impact this has. Let’s say the doctors fee is $800 per treatment. This means an extra $2400 per month is generated ($28,800 annually). That’s a dramatic spike in revenue considering we’re being quite conservative! All we did was a small amount of work on his website.
Would it be possible to generate results like this for your business? Do you know how many leads came to your business in the last 12 months or for this month?
If we could create a similar process for your business do you think your potential customers would like the information? Especially if it gets them closer to the answer they want but don’t have?
If so, how much extra revenue could this generate your business? Even if you stick with the same conservative conversion numbers as the doctor.
This is all assuming we don’t increase the number of leads you get or your final conversion rate. If you said your last month’s revenue was $25,000… then just this one change alone adds an additional $25,000 to your bottom line.
We consistently perform case studies of our work. In a recent one we found an additional $58,000 in annual revenue using this one simple strategy.
But what’s SUPER POWERFUL is that this is not just a one-time increase. It continues to deliver year after year.
And then the valuation of the company starts to increase in the range of $150,000 – $200,000.
The reason it’s so difficult has nothing to do with you, your methods, or your business. It has to do with the development of the Internet and the enormous amount of information out there which bombards you from every wanna-be business, or online service provider.
People these days are sceptical of any new business or offer, whether it’s online, or a brick and mortar store. They will tend to stick with the tried and tested brands they are familiar with rather than risk it with an unknown entity.
Customers are human after all and purchase firstly with their eyes, and then all of the senses. They will only purchase from those businesses they trust. Or those that have been recommended by their family, friends, close acquaintances, and celebrities they can identify with or trust.
Take Amazon as an example
They have an outstanding brand and very high customer satisfaction. With a simple push email they get instant results for not only themselves but all the sellers on their platform.
This is why we built our online marketing system
It’s designed to be the ultimate lead generating instrument for entrepreneurs around the globe.
Try us out!
If you’re committed to your vision of building a hugely successful business and you’ve realised you don’t know all there is to know in business and would like to get professional assistance than click below and we’ll be very happy to teach you the methods that have helped thousands of small business owners achieve their dreams, and make more money than they ever wished for.
Your typical customer needs what you sell, and your ideal customer wants what you sell. Semantics? No, in this case the difference is actually quite pronounced. People may or may not purchase what they need, but people always purchase what they want. The later are your ideal customers, and once you discover how to find them and look after their needs your business can reach fantastic new heights.
What you need to know
Potential customers make their purchase decisions based on emotions, and wants are emotion based. Needs are logical in nature. When your products or services touch your customers in an emotional way than these people become your ideal customers.
Why you need to know this
Your ideal customer gives you the best returns. For most small business owners 80% of your revenue is created by just 20% of your customers. These are your ideal customers. They adore your company. They are loyal, and they only purchase from you. They boast about you to their friends and acquaintances. They send you new business, and spread the good word about your company.
The expense if you fail to act…
Consider this, 20% of your present customers are delivering 80% of your revenues. Imagine a scenario where you could replace some of the 80% of low yield customers with more of your ideal customers, the ones that make up the high yield 20%? It’s possible that your revenue could increase by a multiple of 16!
This means that if your revenues are currently $100,000 you have the potential to increase this to $1,600,000. Unbelievable but true!
What could you do with this much added revenue?
What could you do with this personally?
How would it affect your business?
How would it affect your family?
Can you afford to let this amount of potential revenue slip away?
It’s up to you to learn these critical new skills.
For a Test Drive on our system please visit https://increaseprofits.net.au/guidedtour