Increase Your Prices
The first and most obvious way of achieving this is simply to increase all your prices!
Now, I know most of you just mentally called me an idiot for suggesting that, but hang on a minute and let’s examine this in a little more detail…
Firstly, it has been proven OVER and OVER by studies all round the world that price is NOT the #1 most important factor to most people when making a purchase.
I’m willing to bet that every single one of you reading this report has made 1 or more purchases in your life where you paid more than the minimum going price for a product or service!
Think about it. When you last brought clothes, did you go to Kmart or Target (or, even worse, the local Op Shop or Good Samaritans Clothing store) and buy the cheapest items you could find?
Or, did you go somewhere a little (lot) more swanky & up-market and buy something more expensive instead?
Why did you do that?
Was it a quality issue? Or, perhaps its because the more expensive stuff just looks better, or do you just trust and prefer the better brands?
Go on, admit it. Most of us want to save money, BUT we prefer better quality items when purchasing and will sometimes pay more for that privilege. The reasons are immaterial – what’s important is that people WILL and OFTEN do pay more for things.
Now, when it comes to your business, take a look at your pricing. How long has it been since you last raised your prices? And, has your costs of doing business gone up since then?
If you’re scared that people will stop buying from you if you raise your prices, then start small. Just raise them a measly 1% and see what happens.
A $50.00 item becomes $50.50 … A $12.87 item becomes $12.99 (or $13 if you round up). A $2310 service becomes $2333.10 …
Come on! Seriously, do you think an extra 50c or $2 or even $23 is going to devastate your sales?
Of course its not.
But, here’s the thing. You just increased your net profit across your entire business (if you raised all your prices), which means more money in your hand at the end of the month.
For those of you who want to take a bigger risk (for a bigger reward), try raising your prices 5-10% instead of 1%. Add some additional value to each sale if you feel funny about doing that, so that your clients get better service, etc.
Lastly, for those of you willing to raise prices 1%, try raising your prices 1% every month for the next year and see what happens to your sales & profits.
It’s such a slow gradual increase that it’s unlikely to even be noticed by most customers, and yet in 12 months you’ll have an additional 12% in profit dropping to your bottom line! Imagine what a difference that will make.
By the way, forget about the whole “Recession” thing as being a reason to NOT raise prices. That’s WHY you requested this Special Report – to learn how to say “No Thanks Recession!”
Improve your customer service, add more value to each sale and make your clients feel special, and that extra 1%, 5% or even 12% won’t bother them in the slightest, because they will still love doing business with you.
Upsells & Cross Sells
“Would you like fries with that?”
That’s perhaps the world’s best known upsell, and it makes McDonalds MILLIONS of extra dollars in profits each and every year!
Yet, no matter where I shop these days, I practically NEVER get upsold (except at McDonalds), and hence, businesses are missing out on lots of extra profit for every client who makes a purchase with them.
Now, rather than me spend another 2-3 pages writing about what upselling is and how to do it, I’m going to take advantage of a wonderful 21st Century tool that you will no doubt have already heard of…
I browsed through all the videos on YouTube discussing upselling and found this one from Michael Schildberger’s Business Essentials site.
In it, he’s interviewing Tony Gattari on the subject of Upselling and Cross-selling.
Tony’s an ex-Harvey Norman computer sales manager who achieved amazing things for them, and one of his key strategies was upsells & cross sells.
So, without any further ado, watch Michael interviewing Tony and learn the basics from a pro!
Another way to increase your client’s spend per sale is to offer package deals.
You can see this in action every time you go into a fast food chain like McDonalds, KFC or Pizza Hut.
Take a look at their price boards next time you’re in one of these businesses, and identify how many items they sell that involve combining multiple items together for a price that is cheaper than the sum of the individual items’ price.
A Breakfast deal at McDonalds usually includes a McMuffin, Hash Brown and Coffee. If you were to pay for those items individually, you’d pay more than the price they do charge you.
Same at KFC. Now days, most of their stuff is packaged up (chicken, fries, drink, etc) to push up the overall spend each client makes.
Open your post box at home and there’s usually the ubiquitous flyer from Pizza Hut offering you 3 pizzas for $27 or a Family sized pizza, 1.5L Coke, Garlic Bread and so on for a great price.
At the end of the day, all these businesses are doing is getting the client to spend MORE money per transaction than they normally would.
You go in wanting a burger, coke & fries, but it’s too expensive to buy them individually. However, that package deal saves you a couple of dollars, so you justify the additional expense and say yes!
McDonalds didn’t just get a sale, they actually earned MORE overall profit from your purchase because you paid extra for items you wanted, but would NOT have brought due to the additional costs.
Most businesses can easily duplicate this system by just looking at their products and services that compliment each other, and combining them into a package deal that is cheaper than the individual item prices. They’ll still earn more profit this way than if the client had only purchased 1 item…
You can offer these package deals to clients in your business premises, on your website, via email, or in your advertising. Just start offering them and watch your overall profits go up!
By the way, the idea behind the package deal is NOT to make sales through severe discounting. It is to blend multiple products that make sense together at a discount, but ultimately make more gross profit per sale than you would just selling 1 item by itself.
Customers tend to shop for 1 main product, and if the price is too high for them, they don’t usually make additional purchases to complement their initial purchase. Package deals are a way to bypass this problem.
The classic example of this method of improving profits is your telephone.
MOST Australians who have a phone service (regardless of which carrier) pay a monthly fee to have access to that service.
Have you ever stopped to think about the fact that many of us will continue paying that monthly fee to some telephone provider for the rest of your life!
If you’re 25 when you first get hooked up to a landline phone service at home from Telstra, stop and work out how much money you’ll pay them over your lifetime…
Assuming you live until 75, and your monthly line rental (only) bill is $30 (this assumes NO influence from inflation, etc.), you will pay them (over your lifetime):
(75-25) x 12 x 30 = $18,000.00!!!!!!!!
That doesn’t even include your call charges, which could easily average another $50/month for 50 years (= + $30,000.00!)
That’s nearly $50,000 over your lifetime!
How would you like to have sales like that???
Then, add in your mobile phone bill, your internet access, your electricity, gas, cable/satellite TV, and so on, and you can see that every single one of us will likely spend well over $100,000 on these basic services over your lifetime!
That’s BIG money, whichever way you look at it, and if you can figure out a way to effectively tap into a similar model for your business, you’ll be AMAZED at how much additional profit (and income stability) it brings you.
For example, let’s say you sell computers, and an average purchase is $1,500.
Instead of facing the challenge of convincing some folks who CAN’T afford that kind of money, but would love to own the computer, how about if you came up with a way to sell it to them on a monthly (or even weekly) payment plan.
Yes, that’s normally called FINANCING, but if you’re smart about it, you could enhance the deal and, as part of the deal, offer to replace their computer with a brand new one every 2-3 years as long as they stayed on your payment plan.
You’ve suddenly have taken a single sale and potentially turned it into 5-10 – even 20 sales over the lifetime of the client.
After all, once they have a computer, they rarely want to NOT have one, but they also need to stay current because their old system is slow and will eventually break down. And you’ll be there to help them for as long as they own a computer…
Subscription plans not only increase the lifetime value of a customer, but they also make it easier to get the sale because the price is low (per month) compared to an upfront payment which many can’t afford.
That’s how teenagers all have expensive fancy mobile phones these days. Not because they or their parents could afford to pay $1200 upfront for the latest gadget, but because they can afford $30/month (or whatever the plan is).
You, as the business selling products/services like this, win in both ways. You get more sales out of the client because they stick around longer AND because it’s cheaper (per month) to buy from your business in this way vs a single upfront payment, your NUMBER of sales go up as well!
This is very much a win-win-win for all parties, because the client gets the expensive item/service they want at an affordable rate as well.
Work out how you can sell some of your products/services via a Subscription plan and chances are you’ll extend the lifetime of that customer way beyond 1 sale, AND, also bring in some stability to your cash flow.
Telstra knows exactly how much their MINIMUM income is each month because they can easily calculate the total of all fixed monthly fees. It’s not like a business where revenues go up & down drastically due to seasonal & economic factors – the boom or bust mode that most businesses operate in.
Joint Ventures (JVs)
One of the biggest mistakes in marketing their business that MOST business owners make is failing to recognise the true value of the relationship they have built up over time with their customers, suppliers and others they deal with on a daily basis.
When used properly, this overlooked asset can be turned into thousands, 10s of thousands or even hundreds of thousands of dollars of additional revenue per year, and into the bargain, it can make the business owner look like a star as well.
So, exactly what does this mean?
Well, simply put, when someone makes a purchase from a business, they prefer it to be one that they trust, and who has also treated them fairly in the past. Pretty simple so far.
This goes back to strategy 2 (more sales/customer)… In order for this strategy to work, you NEED to be a trustworthy supplier – someone that your customers feels safe purchasing from, and (ideally) would be happy to refer other friends or colleagues to as well.
The first sale is almost ALWAYS the hardest one to get in business – so as long as you treated them well and they were happy with your service and their purchase, you’re over the biggest hurdle facing any business – getting the first sale – and can more easily move onto getting repeat business from that client.
The idea behind a JV is to take advantage of the (hopefully) good relationship a business has with its clients (ie. they are trusted by the customer), and earn additional revenue by promoting someone else’s product or service to their own clients in return for a share of the revenue generated.
JVs tap into an unused existing business asset for the VAST majority of businesses (most businesses have never even heard of this concept, let alone tried to set one up with another company) and is therefore a great way to increase the earnings you make from your customer database. It could potentially fall into either strategy 2 (more sales/customer) and/or strategy 3 (more profit per sale), and is an excellent way to boost revenues without having to even sell your own product or service.
JVs work best with businesses that do have a good relationship with their customers, because the promotion they make to their client base is an “endorsed offer” – sent by someone they trust. While sending a well crafted sales letter or offer to a cold list may net a 1 to 3 percent response, an “endorsed/trusted offer” can quite often produce a response rate as high as 33%! This is an increase in response of between 1100 to 3300 percent!
I first learnt about JVs back in the 1990s from a gentleman in the States who was a master marketer – one of the best in the world. Unfortunately, he had some serious health problems and has passed away.
However, his website is still currently live on the net, and it contains his brilliant report “Sandcastles to Empires : How To Start With Nothing and Create Great Wealth” – which is his explanation of JVs, and a good basic introduction to how they work.
Rather than spend 5 to 10 pages reproducing his concepts and tactics here, I decided it would be quicker and easier to just send you off to read that report on his site instead.
His name is Mike Enlow, and the above mentioned report can be found here:
As I said, Mike passed away some time in the last few years, so his site is no longer selling any of his marketing tools or memberships, but the wisdom in that one report alone could be worth Millions of dollars to you if you implement it within your business.
The next chapter is all about increasing the frequency of sales transactions.