The Power of Pricing Part 1
By Scott Hallman on February 3, 2012

Want to dominate your market in record speed? Now you can using the Power of Pricing in order to create an outrageous offer your competitors likely cannot match.

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.

 

 

Automatic Referrals
By Scott Hallman on January 20, 2012

Referrals are one of the top ways to generate new, high quality customers… if done properly.

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.

 

 

Using The Power of Compliance to Reduce Refunds and Increase Customer Loyalty
By Scott Hallman on January 3, 2012

Getting prospects to buy your product is just the first step.

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

 

 

How to Generate FAST CASH and Lock in Customer Loyalty
By Scott Hallman on December 22, 2011

Want to generate cash fast? Well just watch your emails for offers from companies you do business with (Savvy ones that is) and you can learn the precise success formula they use to do just that.

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.

 

 

 

Do You Need A Bird Dog?
By Scott Hallman on November 11, 2011

Part 1

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.