Thursday, August 8, 2013

Why it's hard to make money if you have only one product to sell

    A lesson from a mentor when I was very new in business: "Before you offer your first product for sale, have a second product ready." Why? Because the cost of making that second sale will be much lower then the cost of making you initial sale. Thus your transaction with the customer becomes more profitable, with no additional advertising expense.

    Did you know that many marketers are willing to take a loss on their first sale to acquire a new customer, because they know, from past statistics, that each new customer will bring them more than enough profit to make up for the money lost on the first sale. The hard part is acquiring new customers.

    Ask yourself why your wireless provider gives you a mobile phone for far less than the cost of the phone to them. Or why does that ink jet printer cost so little while the ink costs so much!

    Wise marketers know so well that acquiring a new customer is many times more expensive than making additional sales to an existing customer. Think of the Apple computer business for an example. Once Apple acquires a new customer -- say a teen or college student -- that customer is likely to continue buying Apple products for YEARS .. perhaps even FOR LIFE.

    Direct sellers who ship their products know that the best time to get a second order from a customer is before the first order has even been delivered! Why? Because they are catching the customer at the high point of their enthusiasm -- the point at which the product which has been ordered is still a fulfillment of a dream rather than something tangible which can be examined. The marketer is credited with providing this seemingly miraculous wish fulfillment. When the product arrives the customer, hopefully, will still be happy with it but now it is tangible and some of the mystique rubs off as it is more easily compared to someone else's product.

    Let's talk about your perfume. Are you about to launch a perfume? What else will you be selling? Look at why that second product is so important. Start by considering the time and effort and money you put into making a sale. Deduct that from the revenue you made on that first sale. Perhaps now that sale doesn't look so profitable and you wonder how others are making so much money.

    Let's assume your customer was happy with the perfume you sold her. Now let's suppose you had a second product available, right then and there, that your happy customer could, and would, buy. The sale of that second product can be made without all the fuss, effort, and expense that went into making the initial sale, hence you get to keep -- as profit -- a larger portion of the revenue you received.

    In selling perfume you probably will not want to hit your customer with a second perfume before she has used a bit of the first. But, if your first product is a woman's fragrance, your second, the follow-up product, might be a man's cologne, or a scarf, or a bracelet.

    Remember, for this second product you're not putting money into advertising. You're using the customer's enthusiasm alone to make the sale.

    When you have a customer who is responding to your sales presentation, don't lose out on potential revenue from that customer by not having a second product to sell!

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