We teach several strategies for using price to maximize your profitability. With a few exceptions, these never include discounting for discounting sake.

One of my favorite pricing strategies for dominating a market is based upon the lifetime value of the customer. This can be a game changer for a business, and this strategy has literally transformed entire industries.

The strategy involves establishing a super low initial investment for your customers, which is a fraction of the total cost of the actual product or service, and internally financing the rest. You’ve seen these type of offers by large furniture stores that offer either no money down or little money down with no interest for six months. This enables someone that cannot afford to shell out $2500 to simply make a series of “easy” monthly payments.

Game Changer Strategy Revealed

In this Profit Tip I want to share another personal story to drive home this powerful profit generating strategy. ADT Security® is a nationwide home security company that sells and installs burglar alarms. For a typical home this may cost $1,250 if they purchased from a local security company.

In contrast, ADT Security® charges a tiny fraction for their installed alarm system, around $250 in total. But ADT understood the power of the Lifetime Value of a Customer and therefore gets the customer to instead commit to a three year “monitoring service” with a monthly fee of $44 or so.

They charge $250 for the ENTIRE SYSTEM INSTALLED vs $1,250 by the competitors for like-kind equipment.

Let’s take a look at the numbers.

• Equipment and installation charge = $250
• $44 * 36 Months = $1,584.
• Total Revenue = $1,834, not counting the additional years of monitoring after the 3 years that likely adds thousands of dollars to the Lifetime Value generated from the alarm installation.

Game changer? Just try to find a local, independent security company these days that is not a dealer for one of 4-5 such national companies that has now deployed this pricing strategy. Plus ADT generates significantly more revenue and profits!

By the way, this type of strategy requires capital to finance the upfront cost of installing the equipment. If you have high profit margins you can elect to deploy this strategy as a limited time offer to control your cash flow or find an underwriter that will finance the program for you.

Unfortunately, many companies no longer have referral programs in place because they either were ineffective, or worse, caused them embarrassment. In our “16 Reasons Referrals Fail – How to Unlock a Flood of New, High Quality Customers” program we detail the mistakes that many companies make when implementing a referral system.

One mistake is not “Activating” your customers in the referral process so they connect with their friends and share the positive experience and benefits of doing business with you.

One simple method of activating your customers is by creating a viral email referral that arms your customers with your marketing message.

Netflix, the movie rental company, does just that. As you can see below, they have activated Melissa, a Netflix customer, to reach out to her friends and family by providing a gift to them… the gift of FREE Netflix.

Who would not want a free month of movies and TV shows? This makes Melissa a bit of a hero, which motivates her to share this opportunity with multiple friends, and makes the recipient feel special because they got a gift.

And in turn, Melissa’s friends and family will also want to share this gift with their friends and family… Thereby making it a highly effective viral campaign.

One more key distinction is that Netflix armed Melissa with the precise marketing message they wanted the recipient to receive in order to maximize conversions. In addition, this makes it super simple for Melissa to forward to friends without having to make up her own message.

The cool thing is, it’s relatively easy to set this up and costs little or nothing.

I am all about OPTIMIZING by making small changes that can be easily, and cost effectively implemented to produce a measurable result.

So go take action on this tip and check out ScottHallman.com Business Tools for more valuable free resources and ways to take your business to the next level.

Often products are returned because the purchaser failed to utilize the product as intended, whether due to inactivity or confusion.

Today, more importantly than ever before, it is critical that you ensure that your customers are effectively using your product and fully enjoy the benefits so they keep it, love it, and want to buy even more from you.

The Power of Compliance is about first getting the customer to utilize the product as intended. Failure to do so will ensure it is returned for a refund and often will lead to the customer no longer purchasing from you.

I bought this gadget in order to make putting up my Christmas lights easier. Simply hook the gizmo to the strand of lights, extend the pole 15 or 20 feet, and snap them on the gutter. Simple enough? Well, after 3 of us could not figure out how to get it to work, we returned it to the store along with the disposable hooks that we would have needed year after year. Simply providing more comprehensive instructions in the package as well as online, and/or an 800 number, would have ensured I used the gadget correctly.

The Power of Compliance applies to many types of purchases, especially those that are repeat in nature.

Apple is doing just fine… Record growth, record profits and products that are in massively high demand. This Christmas we bought one for my mom and received the following email:

Join us for a free workshop. Come back to the Apple Store for free workshops created for new iPhone owners of all experience levels. Sign up for our Getting Started and Going Further workshops to take your skills to the next level. See all workshops	Get your questions answered. If you have questions about your iPhone, our Apple support team is here to help. We can even call you at your convenience. Support calls are free for the first 90 days after you purchase your iPhone. Request a callback
Siri. Your intelligent assistant. Ask Siri to make phone calls, send messages, schedule meetings, set reminders, and more. Siri understands what you say and knows what you mean. Learn more about Siri See Siri FAQ	Find My iPhone. Set up Find My iPhone in a few simple steps. So if you ever lose your iPhone, you can see its approximate location on a map, display a message on it, and remotely erase its data. Learn how to set up Find My iPhone
Photo Stream and iCloud. With Photo Stream, take a picture on your iPhone and it automatically shows up on your iPad, Mac, and PC. Learn more about Photo Stream and iCloud	Discover the amazing App Store. You’ll find over 500,000 apps in just about any category: productivity, social networking, education, and more. And many of them are free. Here’s a handpicked collection of apps to get you started. View the Apps Starter Kit

Notice that they are focused on getting my Mom to COMPLY… or that is, understand how to use the phone and to maximize the features she uses. Instructions via video demonstrations; customer service reps standing by to help her; and even classes to teach her how to fully take advantage of these features!

Why do they do all this? Well, my guess is the reasons include the fact that it dramatically reduces returns (due to frustration or buyer’s remorse from spending too much for something they will not fully use). It also ensures she will keep the phone longer as she gets reliant on the phones capabilities – likely leading to her buying the iPhone 5 when it comes out. The more features she uses, the more locked into Apple she becomes.

Perhaps this explains Apple’s cult like loyalty, even when their products are missing key capabilities that the competitors possess (4G… Larger screen, Better camera etc).

And it does not stop there. Compliance leads to buying other Apple products and recommending them to friends.

So my Profit Tip this week is to evaluate how well your customers are utilizing your products or services and how effectively they are enjoying the full benefits. This will ensure you reduce returns, increase buying frequency, and create raving fans.

Till next time.

To Your Success,

Scott

Plus lock in customer loyalty at the same time…how cool is that?

The Success Strategy is “Offering Discounts for Advanced Purchases” where you lock in the customer for a period of time in exchange for an irresistible return on their investment (not hard when T-Bills are paying ½%).

Last year my web developer offered blocks of hours for a discount… buy 25 hours and save 10%… 50 hours and save 20%. He generated $2500-$4000 per client NOW and locked us in to utilize those hours.

How about the big guys.

Well GoDaddy® sent me this offer:

I have tons of domains so this once again equals fast cash and cements me in for all these for another year.

GoToMyPC® takes it a step further and not only gets me to renew for a year for a 20% discount but also…

includes a second PC I can apply the service to…including a REFERRAL. And this referral may become an ongoing customer after the free period is over.

One key to effectively deploying this strategy is to know your gross profit margin and current renewal rate so you know how much you can discount.

So get creative and have some fun generating FASH CASH, increasing CUSTOMER LOYALTY, and generating REFERRALS.

Here’s an interesting question. What % of potential deals do you know about?

Regardless of what method you use to generate leads, many of your target prospects still don’t know about you or the products or services you sell.

Therefore, a great OPTIMIZATION opportunity is to identify ways to get the attention of more of your qualified prospects so that you get the opportunity to “be in the game” when they are ready to buy. For many businesses this simple shift alone will certainly increase the number of new clients, customers, patients or members that do business with you.

In the first part of this series, I WILL focus on businesses that utilize a direct sales force, whether in person or over the phone.

Often the sales representatives, as well as the business in general, rely on their warm network to learn about potential opportunities. And this is a highly effective method for ensuring that you are invited to the party when there’s a potential purchase opportunity available.

However, it often leads to missing out on a number of, potentially significant number of, potential deals they would been involved in if they merely knew about the potential buying opportunity.

As an example, a Soils Remediation client of ours has an incredible reputation and a very high closing rate when they’re invited to the GAME. Their average job can range from $50,000 to well over $1 million. That’s great news. The bad news, and therefore the opportunity to OPTIMIZE, is that they know about less than 10% of the jobs awarded in advance of the bid process.

Therefore, by simply expanding the focus of their current marketing to learning about these missed opportunities, in advance, they can produce significant upside potential.

There are many methods, depending upon the type of business, that can be used to learn about more potential purchase opportunities. One of these, is to employ a Bird-Dog. That is, someone that is dedicated to learning about these opportunities in order to arm the sales representatives with both the precise timing of any upcoming purchase; and other information that will enable the sales rep to target their efforts on getting invited to the game and therefore bidding on far more jobs than they do today.

The Bird-Dog not only can uncover opportunities that otherwise would have been missed but they also can follow up on opportunities that are likely to come up over the next several months, year, or even within the next five years. The key is to know about the job opportunity and the timing in order to create a strategic and tactical plan for ensuring that your company is one of the companies that is asked to evaluate and potentially bid on the job.

In order to determine if a Bird-Dog, whether full-time or part-time, make sense for you, simply ask yourself these questions:

• Based on our current marketing efforts, is it highly likely that we will we NOT know about at least 15% of the potential qualified opportunities for our business?
  
  
• Would knowing about an additional 5 to 10% of the potential opportunities produce added margin that would more than cover the cost of a Bird-Dog multiple times over?

If the answer is yes to these two questions, then a Bird-Dog may be just the thing for your business.

I will cover more ways to increase your exposure to YOUR target prospects in coming issues.

1. Set Boundaries on your time – Dave turns off his cell phone and email at 5pm every day and on weekends. This forces him to be more productive in the time allotted.
   ==> ACTION – Set ONE boundary that will free up quality time for you
2. Create Personal Systems – if you are multitasking so will everyone in the company. First work on your habits and set the example.
   ==> ACTION – Check emails twice a day…not whenever the bell rings!
3. Utilize State of the Art Technology – Not expensive… just up to date. Having a slow computer can add 2% to your time…Not much you say? Well, that equates to ONE WEEK a year!
   ==> ACTION – Check emails twice a day… not whenever the bell rings!
4. Upgrade Your Business Systems – if you are interrupted all the time and it seems like constant fires, then you have a “system” issue. One tactic Dave teaches is to create scheduled one on one meetings. One client gained 30% of their time with this one technique alone.
   ==> ACTION – Identify ONE frequent reason you are interrupted and look for simple ways to reduce these interruptions.

One of the CCA categories we teach in our training is "Convenience". Anytime you can make buying from you more convenient than from your competitors, you significantly increase the likelihood that individuals and businesses will buy from you.

The other day I saw an unusual application of convenience that involved an Auto Parts Store, a highly competitive industry.

When somebody is in the middle of working on their vehicle, perhaps full of grease, the last thing they want to do is get in the car and drive to the auto parts store.

As you can see from the picture below, this auto parts store aims to solve this "inconvenience" problem by providing Free Home Delivery.

For those customers that value this "convenience" this Auto Parts Store becomes the Logical Choice.

I will share more ways to create a Compelling Competitive Advantage in the near future. But for now….

How Can You One-Up Your Competition Using Convenience?

Think about additional ways you can make doing business with you more convenient for your target customers. Ask your team and your customers for ideas. "What would our customer value that we are not providing?"

It does not have to be as involved as Home Delivery or cost a bunch of money. The key is that it is perceived by your prospects and customers as valuable and beneficial.

Until Next Week.

To your success,

Scott

PS At www.SmallBusinessGrowthClub.com we provide comprehensive training, on how to create a powerful CCA to help you increase revenue, profit, and make you the logical choice in your market.
]]> http://scotthallman.com/differentiate-your-business-with-your-cca/feed/ 0 http://scotthallman.com/overcoming-the-embarrassment-factor-of-asking-for-referrals/ http://scotthallman.com/overcoming-the-embarrassment-factor-of-asking-for-referrals/#comments Thu, 15 Sep 2011 13:17:13 +0000 Scott Hallman http://scotthallman.com/?p=237 Continue Reading –›]]> not even asking for referrals at all, even when the client is a raving fan.

Why?

Well, a few years ago I surveyed thousands of businesses to learn why they were not effectively deploying the referral strategy in their business. And from this I created my “16 Reasons Referral Systems Fail – How to effortlessly create a flood of new clients with just a few small shifts.” (long title, I know).

Eight of these focused on Getting Referrals. One of these eight involves the “Embarrassment Factor”. That is, that feeling of discomfort and even embarrassment when asking a client for a referral. The Embarrassment Factor was created as a result of well intended marketing gurus claiming that business owners simply needed to ask their clients, customers, or patients for referrals and the floodgates would open up.

So excited entrepreneurs and their team would immediately start asking for referrals only to often experience poor results, a feeling of putting the clients on the spot, and even a feeling of rejection. After a short period of time, many of these businesses simply stopped asking for referrals all together. And some replaced personally asking with a general referral request program, which seldom produces any tangible results.

One of things we teach our coaching clients and program members is how to get the client in a “Peak Referral State” before asking for the referral. It is highly effective.

Just the other day I was working with a client on their referral program and realized that some people still feel a bit of the “Embarrassment Factor”, even when following our renowned “Active Referral System”. The clients loved them; even were willing to provide testimonials, and yet they were still uncomfortable asking for referrals on the spot.

The solution, simply ask for the referral via email or letter immediately after the customer leaves your store or office, or hangs up the phone. Although it is not as effective, it will dramatically increase referral requests if you or your staff suffer from the Embarrassment Factor.

To your success,

Scott

PS Check out the 16 Reasons Referral Systems Fail and Active Referral Systems at www.SmallBusinessGrowthClub.com. ]]> http://scotthallman.com/overcoming-the-embarrassment-factor-of-asking-for-referrals/feed/ 0 http://scotthallman.com/perception-versus-reality/ http://scotthallman.com/perception-versus-reality/#comments Thu, 25 Aug 2011 12:15:40 +0000 Scott Hallman http://scotthallman.com/?p=232 Continue Reading –›]]> A $1M+ Lesson Do your customers really value you at the level they should? If not, you will fail to retain them as long as you should; fail to maximize the frequency of their purchases; fail to get them to buy more of your other products and services; and fail to get the referrals you deserve…and of course, miss out on tons of profit.

Several years ago, after investing several hundred thousand in our landscaping, we were on our third gardener and I was once again less than satisfied and wanted to replace this gardener. Said another way, I PERCEIVED that the gardener was not doing a great job and that I was paying for hours where little was getting done.

One day I came home and the gardener was out in our front yard. He waved at me to come over by him. He proceeded to walk me around the yard and show me some of the extra things he was doing in order for my yard to be perfectly groomed. He showed me how he had trimmed my ornamental trees so that they would grow into perfect specimens.

After he finished sharing with me all that he had done, I quickly realized that my PERCEPTION was not in fact REALITY. And in just a few moments the gardener went from getting a grade C, and on the verge of being replaced, to getting a grade A and being irreplaceable.

Are you doing a good job ensuring that your customers perceive your products and services at the highest level?

If not, evaluate ways that you can help them to see the advantages you provide clearly. It can be as easy as sharing outcomes with them on occasion.

A dental newsletter client saw reorders and longevity skyrocket when they simply shared the number of leads that were generated from the newsletter and the lifetime value those patients represented. You see, the dentist PERCEIVED that they were getting few leads and PERCEIVED the value of these new patients was only the $70 initial visit fee. In contrast, the REALITY is they were getting far more leads and these patients expected lifetime value was over $6,000!

Take action on this tip and profit.

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