Find Your Business Within Your Business

by admin on June 14, 2010

A real powerful concept is to challenge yourself, your clients, vendors and employees to constantly search for new businesses within your business.

There are an unlimited number of offshoot businesses you can create. For instance, in a mail-order company, you could have an offshoot of consulting to those people that you sell to. You could then telemarket. You could then do seminars and workshops.

For car dealers, they could provide extended warranties and insurance to new car owners. For a contractor, whether it’s heating and cooling, pools, pest control or whatever, they can also provide annual service contracts.

Let me go to an example of one of these. A pool contractor for instance might use upselling through the offering of an annual service contract to clean and service a pool four times a year. This can dramatically improve his bottomline. In fact, we can actually double the value of the customers by added income from adding just 40% of the clients to an annual contract.

Let’s say the service call for a pest control or a pool service call is $100 and there are 100 customers per year. There’s a gross of $10,000, which is $100 per customer. The upsell strategy is an annual contract where you’re going to visit four times a year. The cost for each visit to the client is $100, so the total cost at this point is $400 (before giving a discount).

If they buy today, you give them a discount of $150, of which $250 is the cost to the customer. If you close just 40% of these people, your new revenue is $10,000. 40% of 100 is 40 people times $250, which is the cost of the annual contract.

So, the new value of these 100 customers is $20,000; $10,000 for the service call ($100 x 100 customers) and another $10,000 for the 40 people who paid $250 for the annual contract. The value per customer is now $200. You made $20,000.

You still have the same 100 customers. They’re now worth $200. That’s double the value.

What service can you upsell to your clients? Virtually every business can add a newsletter or an extra month of a diet plan for half the original price. Maybe a consulting service could be provided.

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