Whether you’re a service business or you are a product-oriented business, you can only influence revenue by changing one or more of these three variables:
- Getting more & better buyers and referrals
- Enticing buyers to buy more at one time
- Enticing buyers to buy more often
These are the three variables of the “Revenue Ratchet Formula.”
This SlideShare presentation covers the strategy of increasing the number of people who buy from you: Getting more and better buyers and referrals.
In the first blog post in this series, Ratcheting Up Your Revenue (Part 1): Power Strategies Every Smart Entrepreneur Needs to Know, we covered an overview of the only strategies a business can use to boost its revenue. Click here to read that post
Of the three “revenue ratchet” strategies, the first one, “getting more and better clients and referrals,” is the most obvious and commonly attempted. Notably, this is the strategy that requires the most time, effort, and money to succeed.
For these reasons, we’re going to take a different approach and focus on a less costly but highly effective revenue ratchet strategy: Enticing buyers to keep coming back for more.
If you want buyers to keep coming back for more, you must make it easy and compelling for them to buy more often.
To do that, you have to make them feel good about coming back again and again. You must make it easy and worthwhile for them to do so. Common sense, right?
Recently, my business partner, Dan, experienced quite the opposite. Dan spends his summers in Pennsylvania and his winters in Georgia. His cable and internet provider in Georgia is Mediacom.
Dan left for the summer to go to Pennsylvania. Unfortunately, a family health crisis arose, which required him to return to Georgia about a month later. He called MediaCom to restart his cable and Internet service. That’s when he learned that their policy states that if you cancel service and then reinstate within three months, you must pay an extra charge of approximately $30-$40 a month.
For subscribers who need to suspend their service for extended periods, Mediacom does not offer an option that allows you to place your subscription on “vacation mode” for a small fee to maintain it, and then resume your subscription upon return. Ostensibly, the policy is designed to prevent people from switching back and forth between subscription plans to get the next introductory special deal.
Dan went to the MediaCom office to explain the situation – that he had returned for a family medical situation – and that it was clearly unexpected. He thought that once they understood that it was due to a family health crisis (not him trying to cheat the system for a lower rate), they would make an exception and wave the extra monthly fee.
Understandably, this really irritated Dan. Therefore, he did something that he had been threatening to do for a couple of years, but never had the impetus to do so because it was just easier to keep stopping and starting his service with MediaCom: he did some research and bought a Roku device for $50.
For $26 a month, he gets all the channels that he wants. Effectively, he cut his cable bill by $75 a month.
Now he owes MediaCom a big “thank you” because he would not have changed companies, except for the fact that MediaCom absolutely ticked him off by hammering him with that extra charge.
Clearly, this policy is a great way not to keep customers coming back for more. In the end, they lost a customer, worth over $100 per month.
In addition, Dan and partner, Martha, readily share this story about Mediacom to family, friends, and colleagues. In fact, one person they know of is doing exactly what Dan did: cancelling their MediaCom subscription and getting a Roku. So now, Mediacom has lost over $200 per month in revenue.
Mediacom’s shortsighted policy and lousy customer service make it difficult, inconvenient, and costly for customers to keep buying from them more often. Their practices directly feed customers to their competitors.
Answer These Three Questions to Entice Your Buyers to Buy More Often:
1. What can you do today to enhance the performance of your products and services?
2. What can you do today to make it easier and more appealing to your buyers to use your products and services?
3. What can you do today to show your clients, customers, and patients that you care and that you value their business?
Start by answering these questions for yourself. And if you really want to turbocharge your results, go out and ask your buyers these very questions.
Listen to what your buyers have to say and then show them you care by incorporating their feedback into your products and services. By doing so, you’ll be well on your way to cultivating customer loyalty and enticing them to keep coming back for more.
In Part 3 of this series, we’ll cover tips and ideas on how to entice buyers to buy more from you each time they buy. Stay tuned.