Every Technique for Taking More Money from a Customer. How to Increase Your Business Profit without Attracting New Clients
Business and online-business
Views: 308

Five Simple Techniques to Increase Your Company Profits Quickly and Free

For some mysterious reason, owners of small businesses are more concerned with advertising that attracts new customers than increasing business profits without additional promotional budgets. Yet, increasing your revenue is very simple.

• Increase the average amount of sale to existing clients (average sale means the average amount of money a person pays you for one transaction.)

• Sell more products to each customer who has actually come to the store.

• Get repeat business from those who have bought something from you before.

No too many people work daily with their client database. Not everyone even keeps a list of clients. A CEO is more likely to choose a forbiddingly expensive advertising, such as a promotion on a discount website than make employees do a mailing with current offers to each client. However, unless you started your business yesterday, it makes no sense to waste money on ineffective and expensive advertising. It is much faster to earn more on each client you already have. What do you need to do?

1. Use the right “offer ladder”

The first thing you should do is to teach your salespeople to offer your product in the right order. It is best to start with the most expensive, even prohibitively so, options. Then items with a regular price will seem, by contrast, quite reasonable.

If a sales person first offers a very expensive product, then a less expensive one and then one that is even less expensive, the total amount of sale, as a rule, ends up being 15% higher than if you start with the least expensive, lowest quality product and go up. In addition, customer satisfaction with the service is greater.

Unfortunately, your salespeople typically have their own budget in mind and “take care” of the client by offering what they can afford themselves. They often do not seem to understand that an affluent client might even be insulted by an offer of the lowest-quality product. “Do I look like a beggar that they are trying to push this junk on me?” thinks that type of a client. If you do not make your sales people work properly, you alienate your clients and reduce your profits.

We taught sales people in a furniture store to first offer the most expensive set that they could not sell for three years, regardless of how richly or shabbily the customer was dressed. Then one that was slightly less expensive. When, after hearing these “ridiculous” prices, the customers learned the regular prices, they bought furniture that was somewhat more expensive than they had planned before their visit to the store. Due to the right use of the offer ladder the store revenue increased by 23%. A side effect of this was that the tremendously expensive set was, after all, sold to a man whose looks denied the fact that he had so much money to spend!

2. Make add-on sales to your customers

This is also called cross-selling. We are talking about related products.

Think of the accessories to your product that your salespeople can offer. What will complement your service?

In a restaurant, for example, we advised our client to teach the waitresses simple “skits.” The girls began, as a must, to offer the clients drinks and dessert, discretely suggesting the ones that were the most profitable to the restaurant. We changed the “skits” every three days until we came up with the most effective ones. As a result, the average sale grew by 21.6%. And, there was not a penny of additional expenses! This works even better if the waitress not simply offers dessert, but brings and shows several for the client to choose. It is rare that someone can resist a treat they can see after a meal.

Similarly, in a photo equipment store we taught salespeople to offer a case, a flash, a tripod, special lenses, photo frames and other accessories after the purchase of a camera. The salespeople offer them in packages, without troubling the customers with choices. Accessory sales grew three times! And this, without any additional money invested in advertising.

Note how this technique is used to advertise additional products in online stores.

• “You might also like…”

• “Frequently bought with this product…”

• “Those who viewed this product also bought…”

• “Frequently bought together…”

• Product of the week or popular products

• Other brand X products

• “Matches…”

3. Sell more at a higher price

This technique is called upselling – when you sell a more expensive product to a customer instead of the one chosen. Your objective is to offer a better model, additional options or services. We recommend that this technique be used when the customer has “drawn out the wallet and is handing you the money,” not when they are deliberating whether to buy or not.

Clients are happy to pay 10-15% more for a product with a number of additional functions. Naturally, your salesperson needs to explain the value of these additions.

Many customers are ready to pay extra for an extended warranty, while for you this is pure profit. After all, if the product does not break down during the lifetime of the manufacturer’s warranty, it will most likely work for many years with no problems.

Suggest buying more products or paying for additional services to receive additional discounts, free delivery, or a gift with a certain amount of purchase. That way you will increase your average sale and teach your customer to spend more money with you. This technique sometimes appears as “buy two get the third one free” or “free delivery with a purchase of $100 or more.”

4. Sell your most profitable product

This technique is called downselling – when you sell a cheaper product than the one chosen by the customer. It is used when the profit from such a sale is higher than from a product selected by the customer.

Your salesperson can easily convince a customer that there is no need to pay more for a model with never-used features, or that they can get a product that is similar to the expensive one for less money. In addition, the clients think that you are looking out for them and for their benefit – most people will not think that you will earn more if the customer saves money.

In the training industry, for instance, it is often simpler to sell the client video training than to spend the consultant’s time. Alternatively, you can sell a service that costs you less time a bit cheaper.

5. Think of an effective line of offers

If you only sell one product and related products, you are forced to look for new clients forever and ever; especially, if you are not selling an everyday product. However, you can always expand your selection.

Add products or services that your clients need before they come to you, as well as products your clients will need after they buy from you. One-stop shopping with a trusted vendor is an additional convenience to the client. It is profitable to you. You do not need to spend money on attracting these clients, or to earn their trust, you simply make more money on the clients you already have.

Imagine that you sell baby strollers. By adding maternity clothing to your line, you increase the sales of your basic products. Obviously, a pregnant woman will need a stroller once the baby is born. Why not buy it from you? If you add toys and baby clothing, a woman who bought a stroller from you will come back for learning toys and kids clothing.

Draw a mind map. Take your basic product or service and brain storm:

 

 

1. Think of what happens to the client before buying your basic product or service; on account of what do they need this product? What event takes place in the customer’s life? What else does the client do?

In the stroller example, it is pregnancy. The future mother buys clothing, a breast-pump, special vitamins, etc. She takes birthing classes. She reads special magazines. She visits Young Mom forums.

2. What accessories and add-ons are there to your product or service? What else happens when your product is in use? Look at foreign websites of your colleagues. What related products do large online stores offer? What additional services might your clients need? What can you sell at the same time as your product or service?

3. What will the client buy a short while after making a purchase from you? Thus, after giving birth the parents will need not only a stroller, but also baby clothes, learning toys, children’s books. Why not start offering everything as “one-stop”? Often enough, there is no additional expenditure involved – all you need to do is partner with another business.

Following your mind map, you will not only competently expand your line of product, but will find original ways to advertise to your target audience. Think of new ideas for your business yourself or order a consultation with experienced experts.

Exercise

Fill out the following tables for each of your products/services.

1. Past tense. What happened to the clients before they bought from you; when and on account of what does the client require your product/service.

Product/serivce:___________________________________________________

 

Event 1

Products/services bought prior to purchasing your product

Related products

 

 

 

Event 2

Products/services bought prior to purchasing your product

Related products

 

 

 

Event 3

Products/services bought prior to purchasing your product

Related products

 

 

 

 

2. Present tense.

 

Your Product/service

Related products

 

 

Products/services often bought together

Related products

 

 

 

3. Future tense.

 

Products/services bought after purchasing your product

Related products

 

 

 

Teach Your Employees to Sell Right

There is a joke.

A new salesperson tells the customer that they do not have regular pencils. The manager is upset and tells him that next time he should offer crayons and magic markers.

In a little while a really annoyed customer rushes into the manager’s office and wants to know who hired the imbecile out there.

The manager is truly shocked and asks what happened.

“Well,” says the customer, “I asked him for toilet paper and he offered me contact paper and sandpaper instead!”

If you do not train the people who work with your clients, they may well act as the salesperson in the story. As a rule, salespeople are not your brightest employees, so it makes sense to teach them “skits,” like they do at McDonalds – “Would you like a drink with your meal?” or “Is that large fries?” but appropriate for your business. Think of different phrases to use to offer your different products. Test them and keep the most effective ones. Teach your salespeople to say these phrases automatically accompanied by an inviting gesture.

The most important point is regular training of your employees refining the “skits,” offers and scenarios. Thus, many competent managers have their trainings as follows: their salespeople spend the first work hour in refining a specific aspect of customer interaction. It works well if you pair up: the first salesperson acts as a client for the first 30 minutes and the second one – for the next 30 minutes.

Of course, you spend an hour of your employees’ time, but the other seven hours are much more effective. An additional benefit of such practice is that once the salespeople walk in the client’s shoes, they begin to perceive their offers as the clients do and stop making a lot of mistakes.

Experience shows that companies that have daily or weekly trainings of sales personnel reap a number of positive results. Not only does customer satisfaction grow, employee loyalty grows as well.

An Easy Way to Stop Losing Profits

Aren’t you tired of running the rat race and earning pennies? Would you like to increase your profit margin instantly?

It is very simple – raise your prices. Most average folk do not keep track of prices. Consequently, when your prices go up, most likely, most of your customers will not even notice. In the meantime, you will earn a lot more money because your costs stay the same while your revenues go up.

Follow these steps.

1. Raise your prices by 5-10%.

2. Estimate your profit.

3. If the profits did not go down, raise the prices by another 5-10%.

4. Repeat the process until you hit the point where it is more profitable to have lower prices.

Let me repeat, most clients do not know the prices. They will most likely not notice a difference of 10-15%. If you only raise prices by 5%, the vast majority of your clients will stay with you.

Keep track of general business statistics. If at this price your profit (not number of sales, not revenue, your profit!) is higher than at the old price, then the new price is better. Keep track of the profit.

Offer your clients packages of products and/or services. Then the customer will have no way at all of learning the price – Consumer Report lists prices for separate products, while you have packages that are not priced anywhere else.

What Successful Businessmen Know That the Losers Don’t

How often have you dropped everything and rushed to the store after looking at an ad? Most likely the last time that happened was when you were a kid or not at all. Your clients are also not very disposed to part with their money without valid reasons. How can you make them come to you? How do you tempt a customer to buy half your inventory?

One of the best working models is a multi-step combination for your sales. A correctly built ladder of offers and use of multi-step combinations enable you to not only attract more clients and earn more on each one, but also to baffle your competitors as to what you make money on and why their clients are going to you.

There are three types of multi-step combinations:

• Selling the product at cost or below cost and then selling related products with a large markup;

• Selling simple and popular leading products with a minimal markup and making a profit on other purchases;

• Free (or conditionally paid) client training (mini-books, seminars, etc.) explaining why your service is beneficial and useful and then the sale of primary services or complex products.

Manufacturers usually work with the first model. You can buy an ink-jet printer very cheaply, but you will pay enormous amounts of money for cartridges.

The second model works if there is a leading product in your industry that is used to compare prices in choosing a vendor. For stationary, for example, it is white paper, for construction – drywall. You can price this product at the very minimum, or have no markup on it at all. Then you use a larger markup on all other products, larger than the competitors’. In the end, if the clients choose a vendor going by the price of the leading product – they are all yours.

A stationary stores, for example set the price on its regular letter-size paper at cost. The entire city went to shop there all the way to the outskirts; every office employee knew where the lowest prices were. However, their pens, folders and the rest of their inventory were priced higher than that of their competitors. The company made money on its large stock and saved on advertising.

This is a very effective promotion model used by most large hypermarkets and supermarkets. To attract customers, they advertise simple popular products (milk, bread) without a markup or have certain sales at vendors’ expense and make a profit on all other products. McDonalds, for example, advertises good, cheap ice-cream and has an incredible markup on drinks.

IKEA attracts clients the same way: a customer, who sees an ad for sale on cheap towels or mugs, usually walks out with a cart full of regularly priced items.

The model does not work for everyone. However, if there is a really popular product or service in your business that people use to subconsciously judge your overall price level, price them without a markup and the clients will be “all yours.” Launch an advertising campaign “If you find this product cheaper elsewhere, we will refund your money!” bearing in mind that you will be making money on related products to a multitude of customers. Make sure to train your salespeople to increase the amount of average sale effectively first, though.

The third multi-step combination model works for sale of services and complex products that are rarely bought on the spot, with no preparation. You can offer the clients a download of a mini-book, for example, or present them with a case-study brochure on how to solve their problem. Have a seminar or a webinar. In other words, you first give the client some useful information and earn trust; then you can sell them your primary service or primary complex product.

Here is an example of this complex scenario:

• In return for an e-mail address you give the client an educational e-book (or a paper brochure in return for a phone number);

• E-mail the entire class (a series of educational letters);

• Offer attending a free webinar or seminar;

• Sell the client something inexpensive;

• When the client is used to buying from you, when he or she trusts you, you can sell your primary product or service.

Exercise

Think about which multi-move combinations can possibly be used in your sales.

 

Summary

1. Teach your employees to sell right.

2. Increase the amount of sale.

3. Implement multi-step combinations and scenarios.

Tags:
Date of publication: 28 January 2018
Do you think this will be useful for your friends? Share with them in social networks!
REGISTER RIGHT NOW and
get access to free courses
AND BOOKS OF OLGA YURKOVSKAYA
Sign in