How $350 increased profits by 150%
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I recently wrote a post on how $350 transformed a business sharing a case study of one of our one hour brainstorm clients Tom. We helped Tom have clarity of though which allowed him to drive extra revenue (and profits) whilst he was in the pub!
This week, I’m featuring another 1 hr brainstorm/consulting client called Alison. Alison increased her profits by 150% on each item she sold. This is how she did it:
How $350 increased profits by 150%
Alison produces custom made personalised gifts from items found, recycled or bought. These gifts can be personalised with names or a message, such as a birthday or anniversary.
These gifts are sold via an online retail site which sells selling lots of other types of products from small independent companies.
One of the biggest challenges in presenting your products on a website rather than in a shop is that people can’t see the quality of your product. Consequently, it’s hard for you to command a premium price for your products over similar types of items.
Also, even where the personalisation is on standard type of product such as, say a T-shirt, how much more would someone be willing to pay over a non personalised T-shirt? This is even more difficult to achieve when you’re starting out in business and don’t have a huge past customer base talking about your products.
In terms of Alison’s product costs, other than time, the biggest costs to Alison is the costs of bought in materials such as packaging.
One particular item which was a best selling item, was very popular as it had a good price entry point. Thus making it a very affordable gift.
The problem with this though is that it wasn’t particularly profitable as the packaging (a presentation box) took up a relatively high % age of the product cost.
So we created an upsell
We suggested to Alison that the packaging becomes a product in it’s own right to be charged as an extra item to be sold separately.
The packaging is actually a ribbon tied presentation box which sets off the gift nicely, but it’s not necessary. So, now Alison gives her customers a choice:
1) You can order the product in the presentation box and she charges an extra $5 including shipping.
2) Or you can order the product without the packaging.
Guess what? 95% of her customers choose to have the gift supplied in the presentation box paying the extra $5.
If they don’t, she saves the cost of the packaging which she used to give away.
Sales have been totally unaffected. So, either way she’s better off than she was before.
Given that the unit cost of each packing box is $2, which she’s selling for $5, that’s 150% return.
So, could you create an upsell for your business? Is there any part of your product which you could sell separately?
So what could we do for you?
For an investment of $350 you get 1 hour of our time by Skype and we can talk through the problem and work out a way forward to help you grow your business or make more money. To find out more and book our services click here.
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Matthew, you’re definitely helping your clients get an excellent return on their investment with you. You’ve demonstrated on this site that you are a savvy businessman with a lot of good ideas.
John Soares´s last [type] ..Resolved: Coffee Increases Productivity…
Matthew Needham Reply:
June 26th, 2010 at 11:41 am
Thanks John for the comment, much appreciated.
Hi Matthew,
I would say that Allison certainly got her money’s worth then. It’s weird how much an objective third-party viewpoint can increase our business. I’m sure that she never would have thought of selling the packaging as an extra. I know that if it was me, I would have thought it was part of the branding strategy (or USP) and just ate the cost. That’s great that something so easily changed could account for so much more revenue and without affecting sales.
I enjoyed reading this case study so thank you.
Karen
Karen´s last [type] ..How To Easily Increase Your Negotiation Skills: Getting To Yes
Matthew Needham Reply:
June 26th, 2010 at 11:40 am
Hello Karen, actually I had a follow up call with her just last week and we talked about how things were going. Her biggest regret? That she didn’t speak to me 6 mths before hand…as she realises how much money she’s ‘lost’ from not creating the upsell.
Glad you enjoyed it. Thanks for the comment!
Matthew,
These posts are genius!
What a better way to show off your coaching talents than to post the positive results on your blog. Very powerful marketing at work here. How could anyone say no to a 150% return?
-Joshua Black
The Underdog Millionaire
Joshua Black | The Underdog Millionaire´s last [type] ..Is it a Bird? A Plane? Nope, Just Another Underdog Millionaire
Matthew Needham Reply:
June 26th, 2010 at 11:39 am
Thanks Joshua, another case study next week. I hope readers who don’t necessarily want to have a 1 hr brainstorming session are also getting something out of these posts, looks like they are! Stay tuned!
I agree with Joshua. What a clever idea for a post. Not only have you given us something to think about, it’s an excellent opportunity to increase the fund for Baby Tomato. (Ooooh, you could name him Tom. Baby Tom. That would be very cool!)
Eleanor Edwards´s last [type] ..Wanted: Experts. Could you write a monthly column for Give A Brick?
Matthew Needham Reply:
June 26th, 2010 at 11:37 am
Thank you! Well, to be fair I think the original idea actually came from Joshua. He’s also suggested that I put the call onto the site, but I’ve not bought any skype recording software yet. If baby BRT hangs on any longer he won’t be needing 0-3 mth clothes! So fund will need to increase! Well we did briefly think of Tom, but middle name is already chosen and Tom wouldn’t go well with that…
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