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Today I want to talk to you about how to increase your profitability without acquiring new customers all the time. While acquiring new customers is important to your business and your business growth, you don't have to do it all of the time in order to increase your profits. The key is in your value ladder.
A value ladder is a hierarchy of your products and services. If you only offer one or two products and services, you don't really have a value ladder. What you need to look at are ways to bring in a new customer, and then selling to the same customer over and over again using different products and services in your value ladder.
The first thing you need to look at is whether you have an introductory offer. This is a low cost product or service that you can offer your potential customers. As soon as they come in contact with you, you can start offering something for free or something that costs very little, say $20 or $10 or $5. That way they can get to know you and see what you are all about. And then you give them the opportunity to become a customer, to get to know you better, and then start thinking about buying from you again.
Now, after your introductory offer, what you need to look at is your core offer. This usually includes your main products and services. You probably have your key products or your main services, and you might have a service package that you offer most of your customers. That's what we call a core offer.
You might first have sold your introductory offer or not, someone might have just bought your core offer straight away.
In any given market, there is 10% of the market, 10% of your customers, who will be more than happy, and willing to pay more and buy your premium offer.
If you don't have a premium offer yet, you could be looking at developing one, because about 10% of your customers will probably be very happy to pay for it. A lot of people want to have the premium experience.
In my case, I offer some coaching packages and a premium offer could be a complete done-for-you solution.
Now we've talked about three different offers. An introductory offer, a core offer, and a premium offer. You can lead all of your customers through this journey and sell all of three to some of them. Not everybody's going to buy all three different offers so there are other product ranges you can offer such as up-sales, down-sales and cross-sales.
Cross- sales are complementary products and services that would go well with any of your offerings.
Some really great examples of cross-sales are, in McDonald's or Burger King, they will offer the whole meal. You can buy a burger, or you can also buy burger, chips, and a soft drink. Those are all cross-sales. They're not just selling the main product which is the burger, but they're also offering these other products.
Another example might be at a spa, or salon where they sell a massage, and then offer a facial treatment or a nail treatment or a skin exfoliation. These are all cross-sales. They go well together with the massage.
Up-sales and Down-Sales
In addition, you can have small up-sales and down-sales.
If a customer buys your main product or service, you can then say, "Okay, I also have this other product that you could benefit from" and it's an up-sell.
It costs more money to buy.
They might say, "Yeah, I would like that" so they buy and you make an extra profit from the same customer.
If they say, "No, no I'm not interested," what you can then do is offer a down-sale. A product or service that costs less than the main product that they are buying from you. You don't just take the no, you also offer, "Okay, well maybe you would like this other product." And to the down-sale, they may say yes.
Again, not all of your customers are going to buy all of your offers, but having several different offers from introductory to premium and complementary that you can use to down-sell and up-sell, will definitely help you increase your profits and make more money from each of your customers.
If they are super happy with you and they are thrilled with what you offer, they will be more than happy to buy more from you and experience the benefits of your products and services.
Now, you tell me…
How many offers do you have in your business?
Do you use value ladders?
Are they working for you?
Leave a comment and let me know. I'd love to find out.
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