Three Ways To Boost Your Income This Month
January 12, 2010
The new year is off and running already! Is your business off and running, too? I don’t know many business owners who would say no to making more income right now – before the end of this month. Here are three ways to boost your income, and if you implement even one of them, you’ll have extra money to show for it.
1. Increase the number of clients or customers you have. This means letting folks who are new to you and your business know about you and the problems you solve. How can you do this quickly and efficiently?
- Ask existing customers for referrals
- Find a business networking group you’ve not been to before and attend
- Send out an e-newsletter and ask recipients to forward it to one person who might benefit from your services
- Ask friends and family to specifically mention your business to one person this week
- Post helpful resources and advice to your social media accounts
- Revamp any existing paid advertising and look for a higher return on investment
- Partner with an aligned business to advertise or do a quick special promotion
2. Increase the average transaction value for existing customers or clients. This means that you offer more value and get a greater price than you are currently getting from your customers. Here are a few ways to do this:
- Raise your rates
- Bundle several of your products or services together and offer them at a special price
- Create a VIP customer category and charge for access to VIP status
- Offer an add-on to your existing product or service. For instance, if you sell jewelry offer a color consultation (for an additional price) with each jewelry consultation or purchase.
3. Increase the frequency of repurchase by existing customers. This means that you devise options designed to encourage customers to come in more often (or order more often).
- Let customers know the benefit of increased services (massage therapy more often than once a month actually boosts the immune system, for instance).
- Package services for frequent buyers. Personal trainers, for instance, might offer a special rate for those who purchase a quarter’s worth of training three times a week.
- Let customers know about new inventory as it arrives to encourage more frequent visits to a retail shop.
- Point out that more frequent services can lead to faster results
The point is that boosting your income quickly doesn’t take months of agonizing over how to do it. Pick one of the three options that you feel will work best for you and get started right now to implement one or more strategies for it. Income doesn’t increase when we THINK about what we might do, income increases when we actually IMPLEMENT something new.
When clients come to me wanting to increase their income quickly they usually are holding that wish as something that is hard to do, scary, or impossible. One of the secrets to boosting your income is to change your own attitude about how easy it is to make more money. If you take action, it happens. If you worry about how you are going to take action then nothing happens and you continue on the gerbil wheel of “how can I do this?”
Do you want to make more money this month? Go look at yourself in a mirror, smile, and declare out loud “I”m off right now to make a bunch more money this month.” It’s pretty tough to do something you don’t believe you can do, so quit thinking you can’t and start telling yourself you can. The how-to’s are right here for you. Pick one, work on it, and let me know how much more money you have in your pocket at the end of this month. 
(c) Sue Painter
Ten Basics of Consumer Behavior That Will Help You Make Money, Part Two
December 28, 2009
In Part One of this article, we covered five of the basic tenets of consumer behavior. Understanding how and why people buy helps business owners craft their sales offers in more successful ways. Part Two talks about the second set of five tenets.
Tenet Six: Buyers are loss adverse. They want to shield themselves against loss as much as possible. So, you want to make offers that take into account the buyer’s fear that they will lose. It’s a fact of how humans think that we fear loss more than we are happy by gain. You can offer money-back guarantees as one way to make buyers feel safe against loss. The fact is, few buyers will actually ask for their money back, but buyers like to know they can if they really want to. They like the reassurance even if they rarely act on it.
Another way to combat fear of loss is to offer a small trail period. Cable companies often do this by offering a few free months of a premium channel. The strategy works because when the trail months are over, a buyer will continue the channels because – guess what? – she doesn’t want to experience the loss of the channel! Maximizing potential gains and minimizing potential losses will always help you to sell more, because buyers constantly worry about this.
If you are going to give something away for free, be sure to value it by listing it as a part of the purchase agreement and stating its worth. Otherwise, you are giving it away and gaining no perceived value with your buyer.
Tenet Seven: In your sales copy, write to the product or service’s benefits , not the features. This is so basic, yet I see people miss the mark on this all the time. Tell a buyer what problem will be solved if she uses your service, not how the service works. What will a buyer have or get rid of after they purchase from you?
Tenet Eight: The frame you use to make your offer has a big role in success. By frame, I mean how you say something. If I say to you, “You can make more money by coaching with me” it doesn’t paint a very succinct picture. The phrase “more money” is relative, isn’t it? But if I say “You can take your business past the six figure mark this year” the frame is specific and much more powerful. Research shows that if a bank says “you’ll make 5% on your savings” the reaction is favorable. If a bank says “you’ll make 5% on your account” the reaction is much less favorable. “Account” is less tangible and less emotion-laden than the word “savings.”
A subset of framing is something called priming. Priming is a fancy way to say that the environment you make your offer in will affect the results of the offer. Here are some examples:
- Back of the room sales at a big event are primed by the upbeat, motivational conversation and the excitement generated by the speakers.
- A wine shop will sell more French wine if it plays French music in the store, or more German wine by playing German music.
- At a live event, making an offer for a high-level coaching program that costs five figures will go better if it’s made in a Ritz-Carlton than in a Motel Six.
- Brokers and insurance agents usually have very nice offices, their environment helps to reassure you that they are successful and their products are successful, too.
Tenet Nine: Know your connectors. Connectors are people who have a great deal of social influence. You can get a great education about connectors and how important they are to businesses in Malcolm Gladwell’s book The Tipping Point. Connectors are influential not just because they know a lot of people, but they also naturally link people together. They connect people, ideas, and things across broad lines.
A sub-tenet of knowing your connectors is understanding peer pressure and how it influences buying decisions. Buyers will conform to what others purchase so as not to stand out. We also believe that if we purchase what others buy we are reducing our risk. If your product or service becomes the “in” thing, your sales will come to you more easily over time. If buyers see several people rush to your booth to purchase a product, chances are they will also come by to have a look. Have you ever peered into the door of a restaurant that is new to you, to see how many people are in there eating? If it’s not reasonably crowded, you probably walked away. This is an example of peer pressure buying.
Tenet Ten: Social exchange breeds more loyalty and a stronger bond than economic exchange. How does this translate into your business? Offering a service to buyers without regard to getting paid for it will help to build a bond, which in turn will eventually lead to sales. For instance, you might offer to make an introduction to someone. You might offer a morning coffee meeting for 3 or 4 business owners who are potential buyers and would benefit from knowing each other, too. You might offer to come by and water the plants for someone who is on vacation.
Companies use social exchange to build loyalty. Saturn had big reunions for all Saturn owners back in time. Hyundai’s Assurance program will pay your car payment for six months if you lose your income. These social exchanges built strong bonds to both brands. Years ago, McDonald’s would fill your coffee cup for free if you bought one of their special ceramic McDonald’s cups. At the time, I worked in an office next door to a McDonald’s. We all walked over there twice a day for coffee for years, never thinking to go anywhere else. And, of course, we bought other food to go along with the coffee more often than not.
Tracking consumer behavior is fascinating, but more to the point it helps you know how to make your offers and become more profitable in your business. Sit down with all the products and services you offer in a list, and see how many of these ten tenets you can put to use to sharpen your offers. It will impact your bottom line in a good way!
(c) Sue Painter
Ten Basics of Consumer Behavior That Will Help You Make Money, Part One
December 28, 2009
A good way to start the business year is to remind ourselves of how unpredictable consumer behavior is. The more we understand about why people purchase what they do, the better we can design our marketing messages. There are 10 basics of buying behavior that can help you make money, in today’s post I’ll cover five of them, and in Part Two I’ll talk about the second set of five.
Understanding why people purchase when they do is no easy task, however. The field of behavioral economics indulges in marketing research and can give us some insight. Here are ten things we know about consumer behavior, and how you can put them to use as a small biz owner.
Tenet One: The need to express one’s individuality is a critical factor influencing the choice of brand that someone will buy. What does this mean? Well, if you’ve got this type of consumer on your hands, you want to offer a product or service that seems unique and very individualized to the person. If you are selling braided leather bracelets, for instance, this person is going to want a leather bracelet that isn’t braided, or a colored leather, or a braided bracelet with a customized charm at the end. If you are selling your cleaning services, offering a menu of tasks you do and asking this person to personalize it to their own home will make them feel they are getting a unique “brand.”
Tenet Two: Keep it simple. Too many choices confuse a buyer, and as I’ve preached for years now, a confused mind does not buy. If you offer 17 different products and services, simplify it down to no more than three. Group your products and services by broad category and let the buyer choose what she most needs. A few weeks ago, I met a concierge service owner and asked about her business. To my horror, she enthusiastically told me “we can do anything you need.” That doesn’t help most buyers, who will quickly glaze over and not be able to think about what they need at that particular moment in time. A better answer would be, “We handle shopping for gifts, office organization, and party planning.” The buyer’s mind will then sort and land on something she recently needed that falls into one of these large categories. Give a buyer a place to land and you’ll do a better job of selling.
Tenet Three: Use decoys when you package your options. Let’s say you are offering three different options for house cleaning. Make the middle option the package that you really most want to sell. Most people will select the middle option, not wanting to go with the absolute lowest cost option but then not being willing to spring for the very highest, either. So make the middle option the one you really want to sell, the one that is the most profitable for you. The others are, in essence, decoys.
Another way to use a decoy is to actually use a competitor’s product or service up against your own. Point out the added value or benefit that you have, and that your competitor doesn’t have. For instance, you may sell a face care product not that different from another product – but yours may offer 20% more product for the money. Or, it may have an added benefit that the “decoy” competition doesn’t have.
Tenet Four: You set the anchor for your price. In retail operations, the suggested retail price is the anchor, the price at which you want a buyer to compare your goods with others they may buy. In nonprofit organizations, you set an anchor by suggesting levels of giving in a campaign. It’s also possible to re-anchor prices and change a buyer’s expectation. One of the most familiar and successful examples of re-anchoring is when Starbucks began. Starbucks re-anchored the price of a cup of coffee much higher than it was in any other coffee establishment by convincing buyers that the coffee and the experience was of much higher value than in a McDonald’s or a Dunkin’ Donuts.
Tenet Five: How you package what you offer makes a big difference. In marketing research, this phenomena is called sensation transference. It means that buyers will transfer the sensations they have about the packaging of a product or service to the actual item itself. For instance, people will report that the food served on a paper plate doesn’t taste as good as the very same food served on a china plate. The “packaging” of the china plate transfers a better sensation. Brandy and perfume manufacturers heavily depend on sensation transference. You’ve probably heard before that the design of a bottle of perfume is often more expensive than the actual design of the perfume itself. The packaging makes all the difference in the success or failure of that particular scent.
There are many ways you can use packaging to help your sales. If you are a residential developer, packaging may include a fancy entrance to your neighborhood. If you are a coach, packaging might mean the extra little bonuses you offer people to work with you – things like a personalized planner, a private forum, a special event offered at no charge as part of the “package” of the coaching offer.
Think about how you can put these basic tenets to work for you, and in Part Two you’ll discover the last five tenets.
(c) Sue Painter
Why Discounting Your Prices Doesn’t Build Your Business
November 8, 2009
One of the things I hear from solo professionals pretty often is that the way to make more money is to discount their prices. I’ve railed against this for years, and told stories about talented entrepreneurs who discounted themselves right out of business. If you are one to think that discounting does your biz good, think again and take these points to heart.
- Highly successful businesses don’t compete on price alone. They are smart enough to know that being the cheapest isn’t a strong USP (unique selling proposition). Instead, they want you to spend money with them because their service is better, their designers more creative, their merchandise higher quality, they are more convenient, or their knowledge and expertise gives you a value far and above what you pay.
- You don’t want your customers buying from you only because you are the cheapest deal around. Here is one big reason why – cheap customers are not loyal customers. They buy only on price, so as soon as Sally down the street offers a floral arrangement for even one dollar cheaper, off they go. You need repeat, loyal customers. Constantly having to find new customers AND having to find them only because you are the cheapest deal around will flat wear you out. You will “churn” customers rather than create a willing customer base for your business. You will work much harder for every dollar you earn, and you will earn less dollars (because your prices are cheaper).
- When you discount constantly, you get customers trained to never pay full price. I wrote a blog post about this some time back that illustrates this. Lately, Talbot’s has gotten into the bad habit of constantly offering sales. I never pay full price there and I never will – I know that I can always wait it out and get a nice discount and maybe even free shipping. Too bad for Talbot’s that they have trained me and a dozen other people I know to never pay full price. That also gets me to thinking that if they can discount THAT much, their prices might be highly inflated to begin with – not something Talbot’s needs me to be thinking!
- It is a strange phenomena but it’s true that people will hunt down the cheapest price, gleefully pay it, and then not much value what they bought. Now what you’ve got on your hands is a customer you discounted to, and the thanks you get in return is that they really don’t even value what they got from you. That doesn’t make them want to come back to you, does it?
- If you have set your prices fairly (that means, you are making a good profit but you’re not gouging, either) then discounting may mean you don’t cover your costs. Service business are especially bad about getting themselves into this trap, because they are not purchasing product to resale. Instead, they are selling their time and expertise. I’ve seen hair dressers and massage therapists deep discount 30% only to find they are working like dogs and can’t pay their rent and utilities at the end of the month. Have they gotten clients? Yep. Are they going to stay in business? Nope. They have, in essence, worked themselves right out of business.
If you want to offer a special deal in order to grow your business don’t do it by discounting. Instead, ADD a small product or service without charge. This does TWO things – it ADDS value rather than lessens values. And, it shows your customers a new product or service that they might not have known you have – something they may decide they can’t live without the next time they are in.
Bottom line – in most cases, discounting doesn’t serve you in building your business. Solo professionals and small business owners are not the same as super-big-box stores who can spend millions advertising and churn new customers constantly. You want to cherish your customers, treat them well, offer fair value, and give true benefits in your products and services. This will build a solid business with loyal, repeat customers who value you and what you offer.
(c) Sue Painter
Quit Using the F-Word!
October 8, 2008
For as long as I’ve been working with business owners, I’ve preached and preached about the dangers of “giving it away for free.” My mantra is “if you don’t value and respect your work, no one else will, either!” I’ve had to talk to many clients about continually offering free consultations, free services,and free products in an unwise and unproductive effort to lure people to become customers. The vast majority of the time it does not work – in fact, it teaches people to wait for the freebie, or the discount, or the bargain. (See my blog post Setting Your Price and Getting It“).
Now, research has shown that using the word “free” doesn’t engage your potential customers. Freebie seekers are just that – after resources that don’t cost a thing. The more you feed freebie seekers the more they will show up for more – and you will train them to keep doing exactly that! So, what to use instead? The research shows that the word “new” actually engages potential customers more than the word “free.” Try replacing the “f-word” with “new” and see what you get – my bet is that you’ll get money, which is the point of your business, after all!
(Thanks to Penny and the staff at amarketingexpert.com for pointing out the research on “new.”)
Setting Your Price and Getting It
April 29, 2008
Here’s a case study in how an art supply company trained me to NEVER pay full price.
People who know me know I’m in Internet shopper and a paper crafter. I’m always feeding my habit of new and different papers, inks, stamps, and embellishments. One business I used to frequent (notice the past tense there) was Wilde-Ideas Paper Art Supplies. For months now I have been saving their marketing e-mails so that I can show you this company’s fatal error that caused a loss of one loyal customer (me).
Take a look at their e-mail subjects:
• Exclusive 30% Storewide* Savings Holiday Sale – Final 24 Hours (12/8/07)
• 25% Holiday Savings – Still Time for Delivery by Christmas (12/13/07)
• Still Time for 25% Storewide* Savings & Delivery by Christmas (12/18/07)
• Year End Inventory Clearance Sale 35% off (12/27/07)
• Prices Slashed – up to 50% Storewide Savings (1/3/08)
• Prices Slashed – up to 50% Storewide Savings (1/6/08)
• Embellishments Blow-Out Sale – Save up to 35% Department Wide (1/15/08)
• Winter Sale – up to 50% Savings & Free Shipping Offer (1/17/08)
• Craft Tools Sale – Save up to 50%* + Free Shipping Offer (1/22/08)
• Craft Adhesives Sale – Save up to 50%* + Free Shipping Offer (1/24/08)
• Inventory Reduction Sale – up to 50% Savings + Free Shipping Offer (2/10/08)
I could go on – I actually didn’t list all the e-mails I received during this period of time. But you get the idea.
Here’s my question for you:
• Should I ever, for any reason, order from this company and pay full price?
My answer is – NO! Wilde-Ideas has trained me not only wait for a sale, but wait for a super sale with deep discounts and free shipping. This company would probably die to know that they are regularly referred to on paper artist’s chat sites with the comment “oh, just wait, the sale will get better.”
It gets worse. Not only has Wilde-Ideas (which is a neat business with lots of goodies for artists) trained me to wait for a GREAT sale, they also have me wondering:
• Do they have such a horribly high mark-up that half price is actually what I would pay every day elsewhere? Should I just go shop elsewhere?
• Is this company desperate for sales and going down the tubes? Will they ship what they promise quickly?
I don’t know who heads up their marketing, but if I was that person’s boss I would be beating him (or her) with a big stick. WHAT ARE YOU DOING?? You are training every customer on your e-mail distribution list that they should EXPECT to regularly pay less than full price.
Pricing your product and services is part science, part art. You know what your goods cost. If you sell for less than they cost you, you won’t be taking that vacation in Rio anytime soon. That’s the science part – cost out, cost in, total it up. The art part is harder to quantify but every bit as important. What is the perceived value of what you offer? If you perceive your service as worth $100 per hour and people are snickering behind your back then you’ve got a perceived value problem. On the other hand, I’ve had marketing students price their stuff so low that they will never make a decent income.
Pricing well means that your ego has not inflated what your product or service is worth, you know your costs cold and pay attention to them, you discern a fair price based on customer input, your experience, and demand for what you offer. Make note that if you have to CREATE demand you will not be able to price your product or service as highly as YOU might think it is worth. However, if you price wisely, educate potential customers, and build a business from that base you will one day be able to charge more. Why? Because, you have successfully and faithfully created MORE perceived value.
I realize there are strategies for “loss leaders” and getting people into the marketing funnel. But as a small business you do not have the deep pockets of a Wal-Mart or a Sam’s (or, apparently, of Wilde-Ideas) to offer super-low cost and freebies in order to gain customers. If you decide to do this, be cautious, wise, and infrequent.
Keep in mind that if YOU don’t value what you do, your customers won’t, either! Aim for a fair price, give outstandingly fantastic customer service, work consistently, and your business will grow. If you need an outsider’s help, ask for it! You can e-mail me or find someone else to help you straighten things out.