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mastermind marketing system Martin Lee on 12 Oct 2007 06:03 am

Increasing the Size and Frequency of the Transaction

This is part 5 of a 12-part summary on Mastermind Marketing System.

Also encourage your clients to buy what they need, not what they want.

Experiment with getting them to buy more at the point of purchase. Upsell them.

Make it more advantageous for them to buy more in quantity even if it lowers your margin. Lock them in to use your products.

Add backend products. A logical product or service that can go with your product. This need not be restricted to your own product, but can be something you license.

Cross-sell them.

Many people see themselves as a widget provider. See yourself not just as one product or service, but see yourself as providing the most productive and successful outcome in the category that your product or service applies. Ask yourself what goes along with what they buy from you before, during and after the sale?

If they don’t buy it from you, they are going to someone else.

You have a business and moral obligation to expand your reference paradigm and think about how your company can help your client get the best combined outcome from the purchases they make from you.

Improve your team techniques for upselling and cross selling. Train them in consultative selling. This will improve sales performance by a minimum of 10% and as much as a 1000%.

Use point of purchase promotions. This will increase the size of your transactions.

Increasing your pricing. Some people price their products all at the same margin. This is unnecessary. Some products might actually have a higher perceived value when you raise the price. Test different prices. Price perception has more with your ability to educate the client about the benefits and outcome of the product. Focus on the transactional outcome and not just the product.

Frequency of Purchase

Most people buy on their automatically at a certain time. If you become proactive in guiding them in what’s in their best interest, you can often get them to come back more often. Just by calling them more regularly and providing them with a good education, the more times they will purchase.

Attriction

If you have a 25% attriction rate and you can cut it by half, that’s like giving yourself a 12.5% growth in number of customers.

There are three main reasons why people stop doing business with you.

  1. They have an interruption in their life that is not because of you. A heartfelt communication to these people will usually get them back.
  2. They have a bad experience. Go to them in a non-confrontation way to find out what went wrong and get them to reveal their bad experience. Even if you don’t get them back, you want to make sure their last transaction with you is a satisfying one.
  3. They outgrew the need for your product or service. All the more you should go back to them again and refer them to a new business that can serve them.

To sum up, if you can increase the number of clients, their size of transaction and frequency of purchase each by 10%, you will have a combined growth of not 30%, but 33.3%. If you were making marginal profits, this 33.3% growth in revenue could double or even triple your net profit. And this makes your business asset worth much more.

6 Responses to “Increasing the Size and Frequency of the Transaction”

  1. on 12 Oct 2007 at 3:10 pm 1.Paul said …

    Good summary again Martin.

    I was wondering whether you were going to return to working your way back through the CD series which is excellent.

    Some people do have fears about up-selling/cross-selling but this is where Jay’s strategy of preeminence is so important. (readers check my blog if you are unsure what this is)

    When you know that you have the best interests of your clients at heart (and are not looking to profiteer) it makes these concepts much easier to implement. Do it for the client and you are doing it for the right reasons.

    A simple example would be when I went to but a new camcorder. I’d set myself quite a strict budget (because I have a weakness for being tempted by bells and whistles).

    Unfortunately I am disappointed with my purchase. In hindsight I could have been sold a more expensive recorder if the shop assistant had explained about how much sharper the image would have been with a better camera.

    Finally a general comment about Jay’s 3 ways model.

    It looks remarkably simple, it is now very widely known, but how many people really put it into effective action?

  2. on 13 Oct 2007 at 10:39 am 2.Martin Lee said …

    Hi Paul,

    Yes, it has been awhile with the coverage of the different events. I will be resuming with this.

  3. on 13 Oct 2007 at 2:30 pm 3.JohnB said …

    This week, I’ve been listing to an hour long speech Jay gave for the CEO club (I think you can find it at ceoclubs.org). Standard, classic Jay (which you can never get enough of).

    He went over the 3 ways to grow a business a little bit. On increasing the size of the transaction, I’ll add..

    -Be cautious if your customers/clients don’t already love your product/service. It can seem pushy to “upsell” when you dont even want the original product/service. I’ve seen it alot in real life…telemarketers, other sales people that don’t take no.

    Bigger packaging might seem like a better way to go. I.e. at mcdonalds, you can order a hamburger, fries and drink seperately…or a combo meal (or even a super sized meal for 39 cents more). Seems like it can be easier to do that, than upsell..asking for fries, then the drink, then the bigger size.

    It solves the whole problem. The outcome is to have a full meal.

  4. on 14 Oct 2007 at 12:08 am 4.Kenneth Kwan said …

    Hi Martin,

    I think pricing has got to be with the confidence I actually have. I have a business dealing with DISC Personality Profiling and Team Building programs and it was difficult initially to start high. When I was new to the market and had no track record, pricing was really difficult.

    Even sometimes when I enter a new market, its a matter of convincing why it means so much to the client. Pre-eminence and value must precede everything we do or it will just be a price to the client.

    I find that its easy to sell products in packages, but to sell services its rather different because they don’t know how much its worth until they go thru it.

    Any comments or advice on pricing?

  5. on 14 Oct 2007 at 10:13 am 5.Martin Lee said …

    Hi John,

    Thanks for the great link. I will be posting it up at the site.

    Yes, there is a finese required so that you are not seen as pushy. One good way is to continue to add value and provide education to the prospect. But a very important thing is to make sure that your prospects are targeted in the first place.

    Hi Kenneth,

    I think Jay has a very valid point when he mentions

    “Price perception has more with your ability to educate the client about the benefits and outcome of the product”

    If there is additional resistance from the client, risk reversal might be needed to increase your conversion.

  6. on 14 Oct 2007 at 2:34 pm 6.JohnB said …

    Martin,

    Here’s the full link,

    http://ceoclubs.com/audios/abraham.mp3

    Its basically a one hour summary of his life and career. Plenty of great quotes and insights.

    John

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