In last week’s post, I talked about the pros and cons of discounting.
This week, let’s focus on the other end of the spectrum….
Many businesses leave money on the table by not charging enough for their products or services. But I’m not necessarily suggesting that you go out and raise all of your prices across the board.
Provide More Value – And Charge Good Money For It!
Instead, my suggestion to you today is to think about how you could offer your clients, patients, and customers more value.
Specifically, how can you offer them more options to upgrade and customize their desired level of service?
By offering premium options and add-ons, you can often increase your average profit-per-customer by 20% of more.
(This process is known in the marketing community as “upselling” — and McDonald’s made this technique famous with its phrase, “Would you like fries with that?“)
Recently, I advised a client on creating a premium upgrade to their flagship service, and roughly 30% of their customers are upgrading to this premium option. As a result, my client is on track to earn an extra $1 million over the next year. Hopefully that got your attention!
Yes, offering upgrade options can really make an impact on your bottom line. However, when designing these options, it’s critical to keep your focus first and foremost on creating value for your customer – and not on your bank account.
Your goal should be to provide your customers with a better buying experience, where they can select the option that is best for them. And if you do a good job of presenting valuable options, your bank account will thank you later. :)
The good news is that in my experience, a significant segment of your customers will gladly say “yes” to higher levels of service and experience when offered. On average, I’ve found that anywhere from 10%-40% of people will opt to upgrade in any given situation.
What’s Stopping You?
So, why not offer your customers all the options available to them? Why aren’t more businesses doing this?
The two biggest reasons I think companies don’t offer such options is because:
1) It honestly never occurred to them
And more commonly:
2) They’re afraid of annoying or offending their customers.
The fear is overblown.
Of course, not everyone will say yes to your upgrade options, and you shouldn’t expect them to. It’s very likely only 10% of people will upgrade. Don’t worry about annoying or offending the others who aren’t interested.
The reality is that if you don’t offer upgrade options, you’re short-changing yourself AND you’re depriving a certain segment of your customer base of more value.
4 Ways to Deliver More Value
Here are 4 options to consider… Which is the best place for you to get started?
1. Higher quality of service.
If money weren’t an object, what’s the highest level of service you could offer to your clients? A small percentage of your client base may sign up.
For example, if you’re a massage therapist, you could offer home visits as a premium upgrade, where you arrive at your client’s house with your massage table and soothing music. Your clients may be happy to pay more for the convenience.
2. Higher quantity of service.
Often when offering this type of upgrade, you’ll provide a discount for volume.
For example, if you regularly offer a 45-minute massage at $50, you could offer clients to a 90-minute massage for $80 (rather than $100, so a savings of $20).
3. Pre-paid packages.
Again, with pre-paid packages you usually provide a discount for up-front payment.
Continuing with the massage example, you could offer pre-paid packages of 10 massages at a time. You could offer ten (10) forty-five minute massages for the price of 8 – a $500 value for only $400.
These types of offers are great because they provide you with immediate cash flow.
4. Complementary products or services.
You can also think laterally about all of the different needs and desires your customers may have, and offer related products and services, either through your company or through partners.
For example – sticking with the massage example – let’s say some of your clients are experiencing back pain. In that case, you could refer them to another professional who provides complementary services, such as a chiropractor.
Now, referral fees are not always appropriate in these situations. But you may attract clients through reciprocal referral relationships (the chiropractor may refer patients to you for massage).
What if some percentage of your customers upgraded to higher levels of service, and as a result, each new customer generated 20% more profit for your business… how much more money would you earn this year?
It’s worth taking some time to brainstorm options to provide your customers with more value. Providing more value to your customers is the #1 key to generating more profit in your business and gaining customers for life.
THINK: What else can you offer your customers?